Flying solo: A new generation of VCs are rewriting the Sand Hill Road playbook and anointing themselves general partners of their own funds

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A new generation of tech investors are raising their own venture capital funds as solo general partners. The number of micro-funds is actually on the decline, but the solo general partner's ranks are expected to grow as more companies go public and capital becomes more available. The solo general partner participates in the crowded early-stage investing space, but their size and background gives them an advantage over institutional funds. Click here for more BI Prime stories . Sand Hill Road is paved with venture firms raising bigger and bigger pots of money.
Call it the SoftBank effect: The biggest venture capital fund in history has forced rival firms to take more money from outside investors, which is then pumped into the startups in their portfolios. Investments of $100 million or more, known as mega-rounds, accounted for almost 25% of the capital put into early-stage startups last year, according to PitchBook data.
But there's a flurry of activity taking place at the opposite end of the spectrum too: A new generation of tech investors are raising funds on a more modest scale, and they're doing it outside the confines of the traditional institutional investing firms.
Say hello to the "super angels," a special breed of investor that has carved out a valuable niche in a tech landscape increasingly dominated by giants.
These solo general partners invest in mostly early-stage startups and writes checks in the range of $25,000 to $500,000, based on the fund's size. The deals are especially competitive in early-stage investing, but some of these fund managers say they have an edge. Their small size lets them move fast on deals, and their personal operating experience gives them instant credibility with founders.
These one-person funds aren't especially common. In fact, the number of micro-funds that closed on $50 million or less has been halved since 2014, PitchBook found. Still, the ranks of solo general partners are expected to grow, as more companies go public and free up their employees to pursue new opportunities, like raising a fund.
—Erik Torenberg (@eriktorenberg) February 4, 2020 "There's this sort of new class of people who are entering early-stage investing," said Ryan Hoover, the founder of Product Hunt and an investor through his fund, Weekend Fund . He described it as a close group of operators, knitted by the same relationships and even some of the same deals.
"In some ways, it feels like we're all learning together," Hoover said.
The rise of the solo GP The name "super angel" is a misnomer. An angel investor describes someone writing checks with their own money, as opposed to an institutional investor, who pools money from outside sources to purchase shares of a private company.
The name is more a reflection of the super angel's background. A good number of them start out investing their own savings — money stashed away from years working in tech or from cashing out their company shares after an exit. Of those founders who leave a business after an acquisition or an initial public offering, at least 5.7% go on to become angel investors, according to PitchBook , though its senior analyst Alex Frederick says the percentage could be much higher because many angels are unnamed in regulatory filings.
Katie Jacobs Stanton is a solo general partner. Helena Price
Some of those angel investors graduate to raising a fund. They can access better opportunities with more money to play with, said Katie Jacobs Stanton, the sole general partner of Moxxie Ventures .
Twitter's former head of media came out of its market debut with enough cash to start angel investing. She continued to work at Twitter while making a side hustle of investing in companies like Carta, Lambda School, Coinbase, and Color, where she took a job as chief marketing officer.
Last year, Stanton turned in her badge to become a full-time investor. She raised $25 million from some of the most recognized figures in the valley, including Marc Andreessen, Chris Sacca, and Susan Wojcicki, for her debut fund.
"What I needed to become an even better investor was more capital," Stanton said.
Some super angels we spoke to also considered joining a traditional VC firm's "scout program," which enlists founders to bring deals to the general partners in exchange for a cut of the profit. It provides a shortcut to institutional investing, though some restrictions may apply. Most scouts have a budget of a few hundred thousand dollars, and they can't close a deal without a partner's approval.
There's never been a better time for investors to strike out on their own The solo general partner has been buoyed by two forces.
Ryan Hoover, a solo general partner, raised his fund on AngelList. Flickr/TechCrunch
The tools for fund managers are getting better. Companies like AngelList and Carta have put out software that eliminates some of the overhead of starting a firm. AngelList's service can set...