I spend a lot of time evaluating innovative business models to help close the loop on systemic issues/opportunities. Servicing emerging managers is certainly one of them. Most start with relatively small funds, lack working capital at inception, have unique operating needs, and require a long-term commitment.
When I started FullCircle, I thoroughly evaluated partners for legal, banking, fund administration and tax services. I spoke to some of the brightest, most creative, abundantly energetic and positively minded people I’ve ever encountered. Kimelberg got me off the ground with a solid set of docs. Carta ensured they could adequately service my permanent fund model and have ever since. The team at Weaver has provided excellent, clear, concise tax counsel, always remarkably timely.
At first close, First Republic Bank set me up with all the necessary accounts within a week. They seamlessly integrate with Carta, I’ve never been hit with any fees (for wires, low account balances or any other reason), and every person I’ve interacted with is pleasant and professional (including the wire fraud detection team). I am undoubtedly one of their smallest accounts. Yet my banker, Vince Timoney, promptly returns my calls and proactively seeks to partner in every way that might be helpful to emerging managers and the venture ecosystem more broadly. Hiring Caroline Hale was a clear demonstration of the bank’s dedication to continue building that ecosystem. She is simply wonderful and has built a strong network of investors looking to back new funds.
When it comes to evaluating banking partners, there are three main considerations: 1) security and safety (actual and perceived), 2) operational ease and required level of service, and 3) economics, ideally including the availability of financial products to help boost returns. After this weekend, the pendulum has clearly swung in the direction of perceived safety. Few institutions offer the right balance and are equipped and looking to serve emerging funds as part of their business model.
I launched FullCircle with a permanent fund structure because it was the right business model to accomplish my objectives. It better suits my investing strategy and is intended to deliver stronger returns as a result. It drives closer alignment both with my investors and my founders, whom I back at the earliest possible stage because I want to build a lifelong relationship with each of them and earn their trust over the very long run.
I chose FullCircle’s vendors equally deliberately. They have all made the decision to serve emerging managers because they see it as a sustainable business model prone to drive outsized returns. They understand what they need to offer and the compromises required to earn that business (capped or deferred fees, no or lower account minimums etc.). They are not just willing to do it. They have made it one of their core competencies and demonstrated an unwavering commitment to it. They have recruited and staffed their teams accordingly and worked hard to build valuable partnerships across the venture ecosystem to start a value-creating flywheel that benefits emerging managers and, most importantly, the founders they back. They are part of the innovation backbone and have an integral role to play in solving our most pressing challenges to create a better future.