Sam Sadowsky is a Partner at Twelve Hundred, an early-stage investment platform investing in fund managers and founders building companies shaping the future of humanity. The long-term vision of Twelve Hundred is to be a systemic value creator by becoming a leader at partnering from the Seed stage towards regional, global and planetary impact.
What is the most important factor you consider when evaluating emerging managers and funds?
When evaluating emerging managers, it's never one most important factor. There are a lot of nuances in underwriting for emerging managers especially for a Fund I or II. The combination of excellent references from founders / ex-colleagues, coupled with proven domain expertise are key. Another large factor is understanding the managers primary sourcing channels. Sensibilities around portfolio management and being hell bent focused on executing the strategy and thesis they are selling to the market is another key factor. You're going to find you are underwriting for people, which is largely qualitative when looking at emerging managers, similar to how you would look at a founder profile for a pre-seed or seed deal. Most emerging managers aren't in market without a track-record and given that past performance isn't indicative of future returns, yes the track is imperative to de-risk their ability to select best of breed founders and win allocation in highly competitive deals, but it also demonstrates they can see investments through to liquidity events, and source high a volume of quality deal flow. The bulk of conviction building is largely going to be centered around the people, strategy, domain expertise, network, and differentiation.
How does your fund investment thesis inform your direct investment strategy in terms of the specific stages and sectors you focus on?
We believe our investment thesis allows for advantages in asymmetric insight and time to build direct conviction in look-through portfolio companies where we would consider taking a more concentrated approach. Our view is that backing managers focusing on the earliest stages allows for an understanding of how these founders and their business are progressing and de-risking in advance of subsequent rounds of capital.
What is one piece of advice you would give to emerging managers launching their first fund?
Own your thesis. You've built conviction around it for a reason and just because you may see specific sectors or strategies have particular appetite from LP's, there's always going to be an ebb & flow to what's "hot" at any given moment and it's not a “strategy” to chase or pivot off headlines. Confidence and focus on where you can generate alpha and being able to articulate and demonstrate the why and how is especially important.
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