The General Partnership’s services-focused venture strategy

I'm Phin Barnes, co-founder of the General Partnership. We're a services-first venture capital firm partnering with a small number of exceptional founders at the formation stage and the breakout stage of company development. 

The General Partnership is a new type of venture firm. We started in June of 2022, but really the history goes back a lot further. And so where we're the firm gets this ethos and sort of our critical point of differentiation in the market is from my partner Dan Portillo and the work he did at Sweat Equity Ventures. So the three things you need to build a great company are great people, great products, and then access to customers. And so he found a way to support startups in those three areas. And then we came together because his customer, the startup, was asking for support in a fourth area, which was capital. And so, as we came together to form the General Partnership, we added capital as a fourth leg of the stool in the Sweat Equity Ventures model.  

The first fund is a $240 million vehicle, and that fund is focused on supporting founders at two stages. We're supporting founders at what we call the formation stage, which is true formation. So we have oftentimes we're meeting founders and engaging with them prior to them forming the entity, and then pre-seed and seed companies make up the rest of that formation business. And then also the breakout stage. And breakout tends to be companies that are post-product market fit and where they have almost unlimited access to capital. But they need the domain expertise and experience of our team to help turn that capital into enterprise value and to hit that next inflection point, and so those are two areas we focus. We think that the portfolio will be a concentrated portfolio. And so, at the formation stage, we think we'll see probably 25 companies making up that portfolio. And then, at the breakout stage, we think it will be somewhere between eight and ten companies. And so, across the fund, we think the capital allocation will be about two-thirds to the formation side and one-third to the breakout side.

The General Partnership has a very unique structure. We, at a high level, we look like and act like any other venture firm that an LP could invest in. So we have a carry and fee structure. We have a single pool of capital, and the returns will be generated by the equity that we acquire in exchange for that capital. However, the largest single investment that we will make as a fund is into a services entity. That services entity has the ability to hire incredible people and pay them market-rate salaries similar to what they would make at a late-stage private company. And then those people do work in exchange for equity in the underlying startups that we partner with; that equity comes into the services org, but then a term of the investment that the fund makes in that services organization is the right to acquire 100% of that equity and so ultimately the fund that the LPs invest in owns 100% of the equity that we acquire. And so the result of that is that we, as a firm, uniquely have two paths to acquire equity in a company. We're able to offer an unbundled offering to founders so we can come to them and understand their needs, and then we can address those needs uniquely in exchange for equity. If that need is capital, we can address that need. If that need is recruiting or product engineering or go-to-market help, we can address those needs all in exchange for equity, and all of which flows back up to the LP as those startups hopefully become worth, you know, increasing amounts over the years to come.

The General Partnership is a generalist venture capital firm. We don't have a specialty in a given industry. At the same time, we tend to appeal to founders who have deep experience within a given industry, have an insight from working inside that company, a very clear North Star, and tremendous urgency to build the product that they want to put into the world. They tend to work on elements of infrastructure or technical infrastructure, security, risk, and fraud in the fintech space. We also have a focus in sort of B2B enterprise software, SaaS businesses. We have a benefit of sourcing companies and meeting entrepreneurs in a very different way than most VCs. We have this large services team, and because of our structure, the services team at the General Partnership is all very senior people who have worked in the industry for a long time and have amazing networks. A tremendous amount of the carry in the fund goes to members of that service team, so, therefore, reinvesting and creating that great opportunity for them to come join. 

The General Partnership services are focused in three pillars. We focus on recruiting, so helping founders at the earliest stages build their teams. We focus on product and engineering where we have senior staff or principal level engineers from large, either private tech or public companies who've led and built massive pieces of infrastructure at scale and also typically were acquired into those companies from their own startups. So they have startup experience and understand how to operate in a 0 to 1 environment. Who can do hands-on keyboard engineering work in partnership with the founders, can do product discovery and customer development work in partnership with the founders, and really shape the products that founders are putting in market and help them find that product market fit. And then we have a go-to-market team that focuses on helping usually deeply technical founders understand how to take their insight and the products that they're developing and make them palatable to customers, both in terms of how they shape their product, but also in terms of how they structure their pricing, and then the tactical ways to approach a sales process and manage a sales funnel. And we offer those services in exchange for equity in startups at the earliest stage. And then also at what we call the breakout stage. 

The durable advantage that we're trying to create is this third path for tremendous talent in the startup ecosystem, where they don't need to choose a single company at the very early stage to join for five years. They don't need to choose a later-stage company that, you know, maybe can give them a better immediate economic opportunity or something a little more certainty. They can choose to come work for us. They can do the work that they're best at in the world. So, hands-on keyboard engineering with no management overhead, no performance reviews, colleagues who are also at your level, no management or mentorship of junior people. And they can come in and do that work. They can deliver against the highest value problems that founders face at the two most interesting times in a startup's life. So 0 to 1 finding product market fit and then one to end, helping startups scale, are the two most exciting times. I think that allowing these folks to have that opportunity and also being very open to the idea that at some point they may want to join one of those companies or they may want to start their own company and viewing that as a feature of our model, not a bug. Because if we've created the opportunity to be a springboard for them into the startup of their choice, we believe that that network just continues to become richer and richer and will potentially bring them back into the fold over time. And we have sort of this amazing talent network that we build out, and that's the true differentiator.