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How’s it going, everyone? Today, I want to tell you about my interview with $650M fund manager, Sid Krommenhoek!
I had the pleasure of meeting Sid when Fund Launch was first started a few years ago. Here’s part of his intro from my video…
Sid Krommenhoek
I’ve started 4 companies, and the latest one was Album VC, a seed stage fund.
Sid’s VC fund focuses primarily on early-stage software companies in Utah.
Album VC hard capped at $100M and also raised an opportunity fund of equal size.
Sid started his first fund in 2014 and now has $650M aum!
The SVB Effect
Bridger: How did the Silicon Valley “bank run” affect your fund?
Sid: About 3 weeks before everything went down, a friend told me that SVB had bought all these long-term bonds, but our bankers said it was nothing to worry about.
On March 9th, we were at the Mountain Mingle event hosted by SVB in Utah!
The SVB representative in Utah did a good job of handling the situation, but my takeaway was that this was a big miss on the CEO’s part.
We started telling our portfolio companies to address the problem right away.
“At least half of our portfolio was banking with SVB, along with us, the fund.”
It was definitely a fire drill that weekend, while we were communicating with our founders and our LPs.
Diversification?
Anyone in finance knows about diversification, like investing in diverse types of assets, for example.
However, do corporate treasuries now need to make sure that the banks they are using are diversified? Instead of sticking with a single account?
Venture Debt
Venture debt is a type of loan offered by banks and nonbank lenders that is designed specifically for early-stage, high-growth companies with venture capital backing.
Sid says it was a super convenient service offered by SVB, but he now thinks that there is not enough due diligence performed compared to how risky the investment can be.
He then said that about 1/3 of the start-ups in his portfolio used SVB venture debt!
Conclusion
Well, this blog only covers the first 10 minutes of our conversation, so click here to watch the rest!
Hopefully, you learned something today from the $650M fund manager, Sid Krommenhoek!
If you’re interested in learning more about fund managers or wanting to be a better one, visit Fund Launch!
That’s it for today!
Thanks,
Want to get direct guidance for your fund? Schedule a time with my Fund Advisors!
DISCLAIMER: This content is for educational and informational purposes only. It is not to be taken as tax, financial, or legal advice. You should always consult a legal professional before taking action. Furthermore, this is not a recommendation to buy or sell any security. The content is solely just the opinion of the authors.
