Aakar Vachhani, Managing Partner at Fairview Capital Partners, explores the crucial role of limited partners (LPs) in the venture capital ecosystem. He delves into the distinctive characteristics of venture capital as an asset class and sheds light on Fairview's role as a fund of funds, culture, investment strategy, areas of focus, and bullish stance on emerging managers. Additionally, he shares insights on trending topics that could influence the future of the venture capital industry.
Aakar Vachhani, Managing Partner at Fairview Capital Partners, explores the crucial role of limited partners (LPs) in the venture capital ecosystem. He delves into the distinctive characteristics of venture capital as an asset class and sheds light on Fairview's role as a fund of funds, culture, investment strategy, areas of focus, and bullish stance on emerging managers. Additionally, he shares insights on trending topics that could influence the future of the venture capital industry.
In this episode, you’ll learn:
[6:15] Fairview employs a dual investment strategy to cover both established and niche areas in private markets.
[13:02] New, appropriately sized VC firms focusing on specific stages have the opportunity to generate significant returns.
[16:53] The venture capital landscape has undergone substantial changes in the past 30 years.
[27:00] Technology's pervasive influence creates vast opportunities for disruption across various industries.
[32:34] Advice for investors, especially emerging managers: Be a great investor and entrepreneur; value collaboration and sharing best practices with peers.
The non-profit organizations that Aakar is passionate about: San Francisco Achievers, New Breath Foundation
About Aakar Vachhani
Aakar Vachhani is a Managing Partner at Fairview Capital Partners and a key member of Fairview’s investment committee. In this role, he actively engages in research, due diligence, investment monitoring, and business development for Fairview's venture capital and private equity portfolios, as well as direct co-investment initiatives. He established and leads Fairview's San Francisco office.
Before joining Fairview, Aakar worked with Cambridge Associates, a prominent investment advisor catering to foundations, endowments, and corporate/government entities. Earlier in his career, he gained experience at MK Capital, a multi-stage venture capital firm with a specific sector focus on software and cloud services.
About Fairview Capital Partners
Fairview Capital Partners is a Connecticut-based investment management firm specializing in cutting-edge segments of the private markets. Founded nearly three decades ago, Fairview has evolved into one of the largest minority-owned investment firms in the United States, managing over $10 billion in fund capitalization. With a clientele including leading foundations, endowments, pension plans, and family offices, Fairview Capital's innovative and inclusive approach, coupled with its entrepreneurial spirit, continues to make an indelible mark on the venture capital industry.
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The outperformance that you can get from newer and smaller funds today, relative to more larger established firms, can be more significant than it's been in the past. We're excited about that. And then, you mentioned maybe some things that not so excited about. Solo GPs...it's something that has been a debate at Fairview for for several years.
Gopi Rangan: You are listening to The Sure Shot Entrepreneur - a podcast for founders with ambitious ideas. Venture capital investors and other early believers tell you relatable, insightful, and authentic stories to help you realize your vision. Welcome to The Sure Shot Entrepreneur. I'm your host, Gopi Rangan. I'm here with Aakar Vachhani. Aakar Vachhani is a managing partner at Fairview Capital Partners.
Fairview is a very popular limited partner in many funds, and they also do direct investments in startups. Fairview was started in 1994 and it has become one of the active and largest minority-owned investment firms.
Limited partners play an important role in the venture capital ecosystem. We're going to learn from Aakar, what is his role? How is Fairview different from other limited partners? What kind of things does he focus on? What types of venture capital funds gets his attention? Why does he invest in venture funds? Why is it exciting for him? And when does he say no? And how often does he say no? And what the reasons for saying no as well.
We're going to talk to him and learn about his world. Aakar, welcome to The Sure Shot Entrepreneur.
Aakar Vachhani: Great to be on.
Gopi Rangan: Let's start with you. Where did you grow up? You grew up on the East Coast in Connecticut, and you moved to Silicon Valley 2016 around that time, right? Tell us about that journey.
Aakar Vachhani: Yeah, I mean, that was several years in the making. We can maybe talk about my career at some point, but it was a really important point in the history of the evolution of the emerging manager ecosystem in particular, which prompted the move. Fairview is based on the East coast; I grew up there; but we're beginning to realize that the rate of new firm formation was increasing tremendously, that we would be advantaged with the presence on the West Coast. Even though we had a ton of great relationships, a ton of great brands, we're seeing a lot of great deal flow the way in which firms are being formed the way in which you were intersecting with the next generation of venture capitalists was beginning to change.
So we felt like it was important for us to have a presence out there personally for my career, you know, is really excited about. Being in the thick of Silicon Valley and in the heart of the venture ecosystem. And so, yeah, it's been eight years since I've been out here on the West Coast in the Bay Area.
Gopi Rangan: You've been at Fairview for almost 16 years, a decade and a half plus. What got you to the limited partner world - the allocator world? Why is that exciting for you?
Aakar Vachhani: Yeah, the vast majority of my career at this point has been at Fairview. But if I take a look back, it definitely was a non obvious and maybe improbable career path for me.
So maybe going back, like, even before starting a formal career, when I was a kid, I was really around retail settings a lot. You know, my parents were immigrants. They co-owned a convenience store. Very much living up to stereotypes of Indian Americans. One of them, but you know, it was a good experience. I probably worked there every summer starting when I was like six or seven and I use work loosely.
I mean, I was around helping out here and there, but I was stuck in that store. It was kind of a rough neighborhood and I was in Connecticut. This was in Connecticut. Yeah. And, um, you know, so I couldn't wander around much outside there, but, you know, I was in that store and I was kind of helping out and I learned a lot of the basics of business and customer service.
Right. And I, I remember hating it at the time, but, and I was even embarrassed to talk about it. When you go back to school, everyone would talk about what do you do over the summer? And I, I would never want to mention what I really did, but, but looking back, it was a really valuable experience. And then also, like, later in high school, ended up working at some other stores and a credit union for a year.
But these are all really customer service type of experiences, which I think set a really great foundation for me. And I think it's an important skill set for anyone if you want to be successful, especially in something that's entrepreneurial. But at that time, I didn't really know what I wanted to do. I didn't have the grades or aptitude at the time to do it.
Go to like an Ivy league school or be a doctor or whatever my parents would have dreamed of, but just given my experience, the exposure I had at the time, I like this idea of business, not really knowing a whole lot about it, but I ended up going to a business school for undergrad in Boston. And during college, I ended up interning and then working at a early B to B fintech SAS company that was doing customer identity verification for banks.
And there, I learned a lot. It really got me into tech. It got me into software. It was a six person team really working close together and it was fun, you know, it kind of a lot of the elements of the startup experience that I got to have at an early age there. And that company was ultimately sold right around the time I was going to graduate.
So I had to find a real job as my parents said. And so I was becoming, that's what really got me interested in venture capital. You know, was marrying that experience in tech and investing, which I was learning about at school. But venture was interesting, but it was, I didn't have the background to really get a role, right?
Like, no venture firm would hire me. I tried with a few in Boston, but then I came across what seemed like the next best thing to me, which was a role with Cambridge Associates, which involved working with venture and private equity data and consulting teams. I figured that would be a great place to learn. But it wasn't a slam dunk. I applied three times. I was rejected twice, but ultimately got a role the third time with them in the Boston office. And I'm so fortunate for that experience because it really set the foundation for me in this role at Fairview. I learned an incredible amount there, worked with some incredible people. Got some incredible exposure early in my career to managers and learning about how the industry works at the highest levels, you know, top down asset allocation, manager selection, et cetera. For people who don't know, Cambridge is probably one of, if not the top consulting firm for institutions that invest in and allocate capital to venture capital and private equity in particular.
So it's a great experience. But, you know, from there, I learned that I wanted to have more ownership and I wanted to be on the investment side, making investment decisions and fund investing happened to align with my experience at the time, you know, which made Fairview a great fit. And I ended up joining the firm in 2008 off of an online job posting. I had no advantage or connection to the firm other than having been from Connecticut, which is where Fairview's headquartered. So, I interviewed, hit it off, fell in love with the team and the work and spent several years at the firm as an analyst went to grad school in 2012.
I also interned at a venture firm in Chicago during grad school, but I think after all that experience, you know, that was a possible inflection point for my career to maybe doing something different. But I had learned kind of through my experience to that point and through business school that in this industry, and maybe this applies universally to some extent, but certainly in venture capital and private equity, for sure, you really have to trust the people you work with and love the culture of the firm and the style of investing. And if you don't have those things, you're not going to be able to live up to your potential. And if ever you had all of that for me, then I knew it. And so there's no reason to try something different.
So I ended up rejoining the team and moved out to California in 2016 and I'm managing partner today. That's kind of the journey to get to getting to Fairview. But I will say, like, looking back, it was really important to have a broad range of experiences before I committed myself to this work, which incidentally also just marries a lot of the experiences I had along the way - things like entrepreneurship, technology, research, venture, you know, understand the venture business, sales, marketing, investment management, all that stuff.
Gopi Rangan: Now, while you were helping out your folks at the convenience store, you couldn't have predicted that you would be at a top, fast growing investment firm and you'd be living in the Silicon valley.
Aakar Vachhani: Absolutely not. Yeah.
Gopi Rangan: Can you give a quick description of what is Fairview and how is Fairview different from other firms?
Aakar Vachhani: So, fairview is a fund of funds, meaning we primarily invest in other funds. We also do direct deals alongside the funds we invest in. And we have two main investment strategies.
One is investing with top tier, well established, tenured, often recognizable brand name type venture capital firms. And then the other is investing with emerging and diverse managers. These are typically newer and smaller firms. And these are when you look at the bigger picture of the private markets, these are kind of niche areas.
And so I think to understand what we do a little better, it's probably important to understand some of the dynamics of the private markets and in venture capital in particular, right? It's a very unique asset class because unlike the public markets, you can really exploit the efficiencies. You can take advantage of information arbitrage.
You can leverage your network. You can access early stage opportunities and top entrepreneurs that for most of the population and most investment firms are inaccessible. And also, this is a category of investing where, as an investor, or as a limited partner, you can actually influence your investments in a pretty meaningful way.
And so, as a result, the upside potential is incredible. Most of the investments are in high growth technology companies, of course. And venture historically has been the top performing asset class over several decades. However, it also has some of the highest dispersion of returns, which essentially means that it's risky and it means that you need to be in the right deals and be invested in the right funds to realize that return potential.
Otherwise, it's not an asset class worth investing. You don't want to be in an average venture capital fund. And not only are the individual deals risky is everyone probably understands. But even investing in venture funds has a very wide potential range of outcomes. And so you need to invest broadly, but not too broadly and increase your chances of having exposure to the generational companies that will become performance drivers. So that's kind of the background and a fund of funds is important because we solve some of the major issues that investors face, including sourcing and being able to see these opportunities access. A lot of times relationships, networks, reputation and brand really matter for some of these things you want to be able to access the best funds.
Diligence is also very hard. So you need to have the right networks. You need to have a prepared mind on investment themes.
And then diversification is, of course, really important. We build portfolios that span several years that will include typically like 15 fund investments, give or take.
We also saw an issue of check size. So a lot of large institutions are too big to write the right size checks that you need to participate in smaller venture funds. And conversely, some investors are too small to be able to build a diversified enough portfolio.
And then a fund of funds model also tends to be cost efficient in a lot of ways, because to do the type of work that we do, you'd have to hire a really large team. And even then, you probably can't replicate the experience and the access.
And then ultimately, you know, this is a part of the market where the difference in returns can be really significant. And so it's really worth the specialization that we've developed at Fairview.
Gopi Rangan: I want to talk about the funds you invest in, but let's start with your limited partners. Who are your limited partners?
What kind of LPs invest in Fairview?
Aakar Vachhani: Yeah, we typically serve larger institutional investors primarily. So think public pension plans, both like state level pension plans, cities, municipalities across the whole country. We also serve institutions like foundations and endowments. Uh, we work with a lot of corporations and some of our LPs are public.
So folks like New York Life, Ford Foundation, public pension plans would be like state of Connecticut or cities like city of Dallas or Chicago, or, you know, a bunch of smaller municipalities across the country. And, you know, more recently we've been working with some larger family offices, like one that's public is Steve Ballmer and the Ballmer Group.
So it's a really diversified mix of LPs.
Gopi Rangan: Well, thanks for sharing. You know, in the limited partner world, it's hard to even find the limited partners who they are. And most limited partners are very quiet. Nobody gets to see how the limited partners operate. So thanks for sharing how your firm works.
And now let's talk about the funds you invest in. Yeah, I mentioned two types of funds that you invest in. One is established brand name funds, and the second group is the emerging managers. Let's talk about the emerging managers more because that's, I think, is more interesting because it's a more complicated world in the venture capital ecosystem.
What kind of funds get your attention? How many funds do you have relationships with and how often do you add new funds?
Aakar Vachhani: Yeah, we've been investing in emerging managers since the founding of the firm, 30 years, which is as far as we know, longer than any other organization out there.
Let's maybe define emerging managers for us. It may vary a little bit, but generally it's, it's new firms, typically first, second or third time funds. And it's generally smaller funds, usually, you know, funds adventure less than 250 million in size. And the reason that this part of the market is compelling is that these characteristics are really conducive to outsize returns, newer firms, typically the better alignment of interest, you have maybe more novel ideas, you have more nimble teams and, and then the smaller fund sizes generally, you know, if you have an outsized outcome can result in an outsize return at the fund level.
However, it's a challenging part of the market to invest in because one, there's been a ton of new firm formation in venture over the last decade plus in particular, which means it's very hard to source and sort through all the opportunities and figure out who the best managers are going to be. And again, as I talked about earlier, selecting the right managers is really important.
So for us, we take an approach where we want to start with a blank slate. You know, we don't really want to prejudge managers. We're not too dogmatic. We generally don't follow other LPs. We don't chase managers that that may be hot. We take meetings. We have an open door policy, and we kind of have this mindset where we don't think you can bias yourself into thinking that only a certain type of person or a certain type of strategy is going to work. You absolutely need a prepared mind, but you also need an open mind in this part of the market, because there's always new strategies, new people that may be the next great fund. And you don't want to miss out on those. So we cast the wide net certainly wider than I think most other firms in the industry, and it's kind of a lot of firms may invest just based on the network or think that they have knowledge of the best opportunities. But we think it's foolish to maybe miss something because you think that you already know who the best people are.
So, we have this reputation as a result of being a place where general partners can feel free to be themselves. You know, I would say a lot of managers come to us early knowing that they're going to get a fair chance. They're not going to be mistreated. They'll get respect. And for us, that's really gold because it gives us an opportunity not only to be real with people, but we also just get a real read on their motivations or capabilities, like the real risk, real opportunities. And that's something that you can't just say you want to be like that. Like, you have to have that reputation. You have to earn that right over time.
So, that kind of foundation really helps us avoid bias. And we then just to find the folks that we think are best positioned to generate the best returns. You know, who's intersecting with the best entrepreneurs, who's seeing ideas that other people aren't seeing. And who's really a firm builder, not just an investor, because when you're talking about emerging managers, not only do you have to invest in people that are great investors, but they also have to be great firm builders. They have to be able to coalesce a team around them, build a community around the firm and build an institution, which is not an easy task.
So those are some of the things we look for. And in terms of how we deploy, we typically in a given portfolio, probably have 15 or so managers across three years. But at any given time, we're usually investing out of several pools of capital. We invest through a traditional multi investor fund of funds, but we also invest actually the bulk of our capital through single LP funds of funds where we have discretion, but we've kind of customized the strategy for a large institution.
Gopi Rangan: I see that Fairview has always had an open mind and you applied for a job out of an online posting and here you are 16 years later and you have one of the top jobs at the firm. I can see the culture of being open minded thrives at the firm.
Aakar Vachhani: Yeah, yeah, it really does.
And I think we've been around 30 years, right? And I will say, like, a lot has changed over that time. Um, and even the 15, 16 years I've been at Fairview, a lot of things have changed. But the key has been finding a balance. And maybe this is important, really, for any company in any industry, but finding a balance about taking the things that make a company special, you know, and preserving that.
But then there are always going to be other things that you constantly need to innovate on to stay relevant. And for us, if we couldn't constantly innovate, we wouldn't be able to survive. You know, the fund of funds industry is really hard. There's a lot of intense pressure to outperform because of this extra layer of fees.
And if you don't do that, you won't last. So certainly a lot of things at Fairview work. I mean, we couldn't have gotten lucky for 30 years, but some of that is rooted in the mindset and the culture of the firm. We always have this mindset of wanting to always improve and constantly innovate.
And for a lot of things we do, like every day is day zero, you know, always question if we could do things better. We're not wed to any process or any product or any model. And so if there's something we can do better, we have this culture where we encourage our team to explore and be comfortable sharing those ideas.
So even the leadership of the firm always has had an open mind, and that certainly spills over into the investment side of things. Nobody is guaranteed a re up for Fairview. We just try to look at everybody again with a fresh lens.
Gopi Rangan: Really? Like no one's guaranteed a re up.
I mean, GPs would expect to start a relationship and keep the relationship for at least three funds before you begin to review whether to pull out.
Aakar Vachhani: Yeah. Well, our bias is to continue to support the managers we back, but they have to demonstrate that they're on the right track. like team cohesion, the strategy should indicate that it's working some of the basics like that. But yes, when we do commit to like a first time fund or second time fund, typically we are signing up for a couple funds. That's generally our MO. We are also pretty loyal, but nothing's guaranteed.
Gopi Rangan: So what has changed over the past 30 years?
What are the top two or three things that are very different today compared to when you started?
Aakar Vachhani: Yeah, I mean, I think the, especially in the emerging manager side, you know, the market really has exploded. The number of managers in the market has changed dramatically. When I started, it was easy to know every new manager in the market every year, and we could see everybody. And that made our jobs a lot easier in some respects.
The cost to start a company having come down over the last couple of decades, you saw the emergence of seed-stage investing and the proliferation of seed funds that lowered the barrier of entry to venture. And you just saw a ton of new firm formation.
There's a lot of talent has come into the industry. There's a lot of interest among young people in venture and in tech. And so we've just seen an explosion of emerging managers. And that really changed the dynamics of how we have to operate.
So, we've really stepped up what we do on the sourcing front. We certainly get probably some of the highest levels of inbound deal flow for some of the reasons I mentioned, but we've had to become really proactive.
So we've become a lot more thesis driven and one of the things we found is that a lot of new firm formation happens in clusters around new ecosystems or new investment themes. And that's been a really rich source of uncovering new managers and intersecting with them.
Gopi Rangan: Can you give an example?
Aakar Vachhani: Yeah, just take at the highest level, take seed investing as one, right? I mean, seed, believe it or not, at one point was a new category in venture. And so we had to develop a thesis in that area, understand where these managers are coming from and find ways to intersect with them.
If you think about ecosystems geographically, we spent a lot of time earlier in my career looking at New York City. Post the great recession that market became clear that it was going to start accelerating. Similarly, we've done work in like L. A. and Seattle and other ecosystems around the country.
Over the last six or seven years, we've spent a lot of time on AI, which has become really hot today. But, you know, understanding that landscape. And today, we're just seeing obviously a proliferation of AI focused funds or firms pivoting into AI. And so having done that work has really positioned as well to understand who the investors are in that space and, just having a lot of background on that category has been helpful. so those are some examples.
Gopi Rangan: What is difficult about picking managers? Why is it challenging to find the right kind of emerging manager to add to your portfolio?
Aakar Vachhani: Ultimately, we are tasked with making a set of really consequential long-term decisions every year that you can't reverse, right? I mean, we may in a given portfolio, like I said, 15, roughly say partnership investments. That's like 5 decisions a year but they're really big decisions. And these funds have 10 year lives and really, you know, they send for a couple of years. In our experience, these funds can last 20 years. So you're really making long term decisions. And ultimately you're investing in people and ideas. These are blind pools. You don't know what the investments are going to be. So not only do you have to deeply understand the investment strategies. You really have to, especially for emerging manager investing, trust the people that you back to make good investments on your behalf. And you have to be able to have deep relationships, a really deep understanding of people's real talents, their motivations, their commitments to this work and building the firm, their networks, their reputations. And again, that's on top of being able to assess investment acumen, the soundness or viability of the
Gopi Rangan: strategy. do all that? A lot of this sounds very subjective and qualitative. What questions do you ask emerging managers? How long does it take for you to get to know the manager before you say, yes, I want to invest in this?
Aakar Vachhani: I think it's a combination of things to triangulate to some of the things I've been talking about. There are lines of questions you can ask, but I think more importantly, it's spending the time to get to know people. Well, up front, our introductory meetings are generally just half an hour, and that's certainly not enough time to get to know anybody.
That initial screen will give us a sense of whether or not the strategy is a fit and if these are people that we think have the capability to execute on that strategy, but from there, if we have some conviction, we really have to spend more time with the managers. There's really no other way around it, and we'll do that in obviously more diligence meetings, but we, we like to spend time with GPS and different settings, whether it's on the road, conferences, informally, just to get to know them. And the other really important thing we do is we leverage our network. So the advantage that we have of having been doing this work for 30 years is that we kind of know everybody or there's one, maybe two degrees of separation max from anybody that's starting a fund and that is great because we can quickly find somebody in our network that has invested with a GP that we're looking at, or it has a relationship with them.
And these are people that we trust, right? That we also have long term relationships with that are going to be honest with us. And that can accelerate our understanding of people's motivations and commitment and things like that. But we've gotten good, you know, we think we've gotten good at that, piecing all those things together.
It's kind of like putting together a puzzle.
Gopi Rangan: These decisions are not made in one or two meetings, you spend a lot of time, you get to know the VCs, you do a lot of due diligence, you do reference checks, and you watch their portfolio evolve, you get a feel for how they're building their strategy. It takes time, should it take time, like that much time?
It takes months, sometimes even years, and in the end, you're writing a 5 or 10 million dollar check into the fund, and I know I'm kind of challenging you here. Yeah. Should it take a year to make these decisions? While in the business world, the 5 10 million transactions happen so often, so easily.
Aakar Vachhani: Yeah, it's funny. I think people think that venture is a fast moving asset class because of the companies that venture firms invest in, right? These are fast moving startups that are growing quickly. But venture capital, paradoxically, is just like one of the longest term asset classes there is. Right. Like I said, these funds last 10 years, it really probably take 20 years, but fully realize a fund you really have to like, and, and by the way, as a fund of funds, you're, we're deploying capital over three years. And so a fund of funds has an even longer lifetime, so that's been very patient. You have to be very patient. And so we kind of apply that same mindset to investing and even committing to a fund. It's a blind pool investment. Our GPs are typically investing capital over two three and a half years and we don't know what the market is going to be like in two years from now or three years from now and so, you know, we're trusting these people's judgment and their ability to adapt and change.
It's really worth taking the time. And, we know that there's going to be great opportunities, 2, 3 years from now, so there's no rush in missing immediate opportunity. And especially when you think about what's venture fundamentally investing in. It's these long term secular trends around technology.
And that may go through high cycles like AI is today, but these are all long term trends. You can generally see them coming. Like I said, for AI, for example, and we've written 2 white papers on AI starting like 7 years ago and started forming a thesis on how to invest as an LP in the category a long time ago. So we're not in any rush to jump on the next hot fund.
Gopi Rangan: Now, over the past 30 years, a lot of things have changed and you highlighted a few trends. You also describe how Fairview is an open minded organization. You get a lot of inbound interest from VCs. You get to see various different types of VC firms.
And over the past few years, there is a strong trend where lots of new firms are formed. The innovation ecosystem is evolving rapidly. What kind of trends are you super excited about? You mentioned AI and a few themes like that, but are there also some trends that you are skeptical about? Maybe solo GPs or certain vertical for industry focused funds or certain geographies that have become extra hot and you're not that excited about it.
What are you excited about? And what are you not excited about?
Aakar Vachhani: Yeah, I think you have to be an optimist to be in this role. So, in general, we are very optimistic about the innovation ecosystem and the technology trends. And, you know, everything that is happening with is really going to permeate pretty much every industry.
The scale at which technology is today is like, you know, everything is a technology company and. Can be in every industry is right for disruption in some ways. So it's such a vast opportunity that we're just excited about that broadly. But within that, certainly, you know, I is an area that we're paying a lot of attention to. But like I said, we're, we're not in any rush. I mean, this is going to be a very long term trend that's going to create opportunities probably over several decades. So we're going to patiently deploy capital with some level of focus in the area, I think.
I continue to be really bullish about emerging managers, especially now. We have seen more tenured firms get larger for the most part. A lot of these firms have become platforms and they're not proven at scale. Venture, I think, is very difficult to scale. And I think that's created an opportunity for newer firms that are right sized. That are stage focused to really come in and generate outsized returns, especially on a relative basis.
And I think that the outperformance that you can get from newer and smaller funds today is relative to more larger established firms can be more significant than it's been in the past. So excited about that. And then, you know, you mentioned maybe some things that not so excited about. You mentioned solo GPS. that that's something that has been a debate at Fairview for several years, but ultimately, you know, we've decided that we prefer to invest in teams and, you know, a lot of the new from formation in several years has been, you know, this trend around solo GPS. And there are certainly a lot of advantages there around, you know, being able to move quickly and avoiding your issues around partnership dynamics and team cohesion, et cetera.
But we've kind of come out with a strong belief around a few things. You know, 1 is that diversity of thought leads to better outcomes. We certainly embody that at Fairview and how we've built the firm and how we make decisions. And we think that's very true of venture firms as well, especially as, you know, the markets become bigger and more complicated. There is advantages to having very perspectives, you know, when it comes to evaluating opportunities.
And then the other reason is really that the venture industry is so hard, you know, it's so hard to build a firm and it's so hard to raise capital and you know, you're going to make mistakes along the way. No firm has a linear path to growth. And even the firms that today you think of as brand name firms, I promise you, they had challenges. And so it's very hard for an individual to shoulder all that burden and go through the ups and downs. And so just having a team really makes a big difference. And, you know, particularly a team of people that trust each other and are committed to each other can really make a big difference and then and also like scalability is very difficult with the solo GPs.
We've decided as a firm generally to avoid solo GPS for that reason. And there's tons of great teams. So we, we feel like there hasn't been a reason yet to make a leap to investing in solo GPS. And there's, it's still a new trend. So we haven't seen a lot of data that proves definitively that solo GPs can outperform.
So, I mean, unless we get something like that, think we're going to stick with our preference for teams.
Gopi Rangan: This is very interesting. You're sharing your thoughts and opinions of what kind of decisions you will make and how you are influenced. And of course, there are some trends that are very exciting.
And I see that Fairview has developed a thought around what to do with solo GPs and perhaps other topics as well. I'm curious, what's your average day like? What happens? How does your calendar look like?
Aakar Vachhani: The thing I love about this job is that the days are incredibly diverse. You are evaluating investment opportunities. You're taking introductory meetings, you're taking deeper due diligence meetings, you're meeting with LPs because again, we have to raise our own capital too, or we may be doing fundraising or updating LPs or fielding LP requests, we may be doing marketing related things, maybe working on strategy initiatives, research projects, writing our own theses and white papers, maybe working on reporting or fund administration duties, you know, for management responsibilities. It's a very, very schedule from day to day, but I do like to carve out time to every day read and be able to think about what's happening, even though, like I said, it's a very long term industry, you know, you need to understand what's going on day to day and what people are talking about. So I generally carve out, you know, an hour or so just to read and think about, you know, what's going on. And then from there it's trying to just optimize your day around what's most important tends to be prioritizing what our LPs need. And then, and then what, what's important on the investment front at that given time. Yeah, that's the day. And then there's a lot of travel, you know, we end up traveling a lot for conferences and, industry events and annual meetings for the funds that we're in due diligence trips et cetera. So spent a fair amount of time on the road too, but it's a fun job for people that, you know, like to be doing a lot of different things.
Gopi Rangan: I see you, you spend a lot of time with people both at the firm and outside the firm. It's a very social job, indeed. It is. Yeah. What's your advice to VCs, general partners who come to meet you? What can they do to prepare themselves so they can have a productive meeting with you now?
Besides the the usual basic stuff, what are a few tips that you would like to share with them?
Aakar Vachhani: Yeah, I think, especially again for emerging managers, we've recognized that it's a totally entrepreneurial thing, right? And so we're looking for entrepreneurs and firm builders in GPs, not just great investors. I think that's like a prerequisite.
There's a lot of smart people. There's a lot of people with great track records, a lot of people with great investment theses. But we really, I think, especially maybe today, now more than ever, given, where we are in the market and how large the ecosystem has gotten, you really need that entrepreneurial spirit as a GP.
And it's pretty difficult today to build a new firm in this market. So you have to have that conviction in yourself, that belief system in your strategy. And then you kind of take that and you go for it. And like I said, like no firm is at a linear path to growth and success. And there are going to be challenges.
So, you know, we're looking for firms that, you know, have this ability to think long term that can roll with the punches, keep learning, you know, have this mindset of like, we're going to keep learning. We're going to keep improving. We're going to keep building and that are humble. And I think the rest often takes care of itself again, especially if you've already screened for people that are smart, have good track records, et cetera.
Also, I think it's important to lean into community. You know, and mentors and trusted advisors. Certainly it's been important in my career, but I think it's also important for emerging managers. We've been doing this again for a long time, and we've seen that support systems matter. Having a community around your firm matters, like being able to share best practices with others really matters. And then if you think collectively about the ecosystem, emerging managers maybe don't realize it a lot, but they're kind of all in this together. So, there is this element of working together to advocate for more awareness of the category and more capital and try to unlock that at the highest level.
So, finding groups of people that are in a similar place with you, if you're a GP, I think is important. You'd be surprised how helpful that could be to you.
Gopi Rangan: This is valuable advice indeed. What's your most common reason to say no to VC firm?
Aakar Vachhani: Well, there's two things. When we initially screen, if it's a strategy that's not a fit, that's a clear no. Beyond that, if we get into diligence, it tends to be around maybe not having enough conviction in the team and the team cohesion. If it seems like it's a collection of people versus a team that tends to be a no. If there's inconsistencies in the strategy and where the team's experience lies, that's generally hard to get comfortable with. Bad references we'll do it all the time, you know, like that's, that's a clear one for us. And that's sometimes surprising because we may think really highly of a team. And then we start digging and talk to people on our network and kind of learn that maybe these are not the type of people that we want to be in business with.
And so that can lead to an immediate no. So those are probably some of the things that would be high up on the list of reasons we say no.
Gopi Rangan: We're coming towards the end of our conversation, and I want to ask you about your community involvement. Is there a non profit organization you are passionate about?
Which one?
Aakar Vachhani: Yeah, um, two things that I'm involved in, one is San Francisco achievers, which is a nonprofit basement in San Francisco, obviously that provides opportunities for underprivileged kids in the city for scholarships and mentorship through the college experience, which for me, education has been just a really important thing. And that's the reason why my parents immigrated to the US, you know, to give me that opportunity. I believe that talent is equally distributed, but opportunity isn't and I was fortunate enough, even though it wasn't easy to have opportunities to be in the position I'm at.
And the other is a foundation called New Breath Foundation that on the board of where we deal with issues related to immigration and challenges faced by the Asian American community. In particular, there's not a lot of nonprofits that focus on Asian Americans and it's kind of underserved in general.
So. That's another one that I'm, I'm passionate about.
Gopi Rangan: Akar, you started with how your parents wanted you to be a doctor. Like every immigrant parent wants their kid to be a doctor, but I think you've had a stellar career and impact that you have on so many companies, so many families, so many people's lives is tremendous and it is only going to grow.
I hope your parents are very proud and I hope you continue to do the good work in supporting entrepreneurial venture capital managers the way you have done for many years now. Thank you very much for sharing your nuggets of wisdom, sharing your personal experiences, your opinions. It's very rare to find a limited partner who is open minded to share a lot of thoughts like this.
I really appreciate that. I look forward to sharing your nuggets of wisdom with the world.
Aakar Vachhani: Thanks, Gopi.
Gopi Rangan: Thank you for listening to The Sure Shot Entrepreneur. I hope you enjoyed listening to real-life stories about early believers supporting ambitious entrepreneurs. Please subscribe to the podcast and post a review.
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