The transition is nearly complete. And funny enough the stress level has never been higher.

It’s been a year since we firmly decided to leave Austin and move to Boulder. It was something we had been talking about for at least a year before we committed to it. Then we told our friends in January. Now, nearly 2 years on that thing we’ve been talking about has become a reality.

The movers are scheduled, houses are closing, plane tickets are purchased. The logistics are in full motion with a 1,000 moving parts that we just won’t be able to optimize. We’ve sold 2 houses, a boat, a truck, and scattered many of our goods that aren’t making the trip among friends and family vacation homes. We’ve got workers fixing things in our old houses and in our new house too. We picked a paint color on a facetime video – hope we like it when we show up. Lumens, Lightology, Room & Board, Restoration Hardware, & Amazon have all nominated us as customer of the year….

The execution is actually a distraction from the emotion. We now acknowledge that we’re likely leaving Austin and Texas with no intention or expectation of coming back. We remain super excited about Boulder and think it will be a really healthy move for us as a family and a great place to raise our kids. The two emotions of departure and arrival are actually mutually exclusive. There is a sense of change, and loss, that comes with a move. Yes, there are new dreams but you are altering so many of the plans that you had made. And you appreciate the memories but you also pine for those things that you didn’t get done. A move marks a life transition.

As much as we try to process and control it – Melissa and I both are showing signs of stress and emotion. Sleep patterns, eating habits, energy levels. The body is telling us what the mind is denying. Sometimes you just have to acknowledge where you stand.  Human like habits & stability.  We’re ready to find a new normal.

We’re spending a long weekend at Texoma with friends and family for the 4th of July. A tradition we do expect to continue. I plan to spend it engaged in the moment and remaining thankful for our time in Austin.

And hey Boulder – see you in 2 weeks!

I built my first website in 1994 at TCU in a business and MIS class, it was a really poor effort but my study partner and I got an A on the project!  Before that I had played with modems, checking out the early chat rooms, and generally geeked out on my family’s Apple IIGS (It was sweet).  Sadly, I never learned to code but was lucky enough to get exposure early.  Still mad at my mother for tossing that old computer.

Looking back, I suppose it was that first project in 1994 that started me down a path of understanding how internet/connectivity changed business models.  Our task was to create a website but without consideration we naturally built one that enabled a new business model (a marketplace for hunters & landowners).  The fact that we had grown up with the web as bulletin board and chat room certainly influenced us.  It’s very much the case that my young exposure to the web and the increasing information connectivity/flow throughout my early career has informed my interests and investments to date.

I think that a meaningful generational change is occurring again and it is one of a few macro considerations that are driving a huge innovation cycle.  A new and much larger generation, the Millenials, are coming into their prime consumer and working years.  They have grown up with a different experience.  They are digital natives that expect and depend on a different set of daily interactions enabled by the internet.  In part, it will be their generation driving how we use and benefit from technology in this innovation cycle.

Over the last few years, I noted the business innovation we were seeing across the book at UTIMCO.  This wasn’t just software or hardware.  These were new business models enabled by technology.  It was most obvious when our real estate lead or our healthcare lead would come talking to me about how technology was affecting their book.  Or the credit group would ask about our start-ups in that area.  Or when I went deep on education and saw what was happening, and what really needs to take place.  It was these observations that excite me about our opportunity set at Foundry Group Next.

I’ve been going to Boulder since the Summer of 1980 when my grandparents took me to visit my Uncle Tom Ellison. I doubt they made the Grateful Dead show that summer but I’m betting my uncle did! My mother’s only sibling, Tom moved to Boulder from Austin and bought a farm out by Boulder Reservoir in 1977. He later sold the farm to the city for open space but you can still see Ellison Lane on Google Maps. In 1989 Tom moved into my favorite neighborhood in Boulder, Mapleton Hill, where he lived on Highland Avenue through the 90s. His house on Highland will always be in my memory as the place where my cousins grew up and a place I would feel at home on the holidays or escaping the Texas heat in the summer.

It wasn’t until 2007 when I led UTIMCO’s first  investment in Foundry Group that I began a new relationship with Boulder. I now had an excuse to see family and spend time with one of our GPs. Double bonus.  The Foundry guys don’t mind me saying that the initial diligence trip was certainly enabled by the location! Once we had invested, the trips to Boulder became more frequent. In fact I started bringing my wife and girls along as well. We would often stay in a short term rental in that very same Mapleton neighborhood. We later anchored an investment in Techstars Ventures, another great Boulder firm. Around the same time, Melissa and I started spending a good portion of our summers in Boulder, taking the girls and even our dog to stay in Mapleton. I would take over one of Foundry’s conference rooms and even steal Jason’s bike to ride to work. I imagine you can guess where this is going…

It’s rare for an LP to build strong relationships across a firm. But truth be told, Foundry is a rare exception to many VC paradigms. Through nearly a decade of fun and working together, the Foundry partners have become close friends whom I trust and respect.  Melissa and I have had opportunities to spend time with their spouses and children. Traveling together, bluegrass and wine festivals, a bachelor party, a wedding, a European marathon, hiking, big birthdays and lots of Legitimate Front shows have provided the opportunity to really bond with the individuals, but also to see inside a super healthy partnership. Other GPs will tell you that I often hold up Foundry as the leading exemplar of firm dynamics. They also live the #GiveFirst ethos providing help, advice, and mentorship across the entrepreneurial ecosystem to both founders and VC firms. Foundry partners are seen as the “good guys” in the industry.  They would don the white hats in a Western.

When we first started exploring my potential role at Foundry, my biggest concern was whether we (and with Foundry it’s your whole family) would upset the beautiful dynamic that exists within the partnership. We didn’t want to change the balance in the existing group.  So although we had shared time in the past, we made sure that Melissa and our daughters had more time with the extended Foundry family.

Our history of fun and work combined with common ideals made this partnership feel really comfortable. I had even spent an inordinate amount of time with all of the wonderful team at the office over the past few summers. So when it came time, we, as a family, were really comfortable with the move and are really excited about joining the broader Foundry family. This is a long term commitment that we don’t take lightly. Foundry is trusting us  to be a part of their family and I can tell you that I will work a little bit harder just because I don’t want to disappoint my friends and partners.  

“Baby, Baby, Baby, I’m coming home…”

Setting aside all the wonderful partnership reasons for moving to Boulder, Melissa and I really feel like we’re coming HOME. Boulder has been our second home and we are excited to make it our primary home next summer. We laugh because we already have more babysitters in Boulder than in Austin, a yoga studio picked out, and know our way around the grocery store. As moves go, this one should be easy. We’ve found a wonderful home in Mapleton that perfectly fits our little family and my girls already have the neighborhood boys asking when they will be back to stay! CUTE for now, TROUBLE later. We’ve got two partners and a number of friends that live within a few blocks of us with schools and the office less than a mile away. Watch out Boulder, here we come…another branch of the family moving up from Austin!

I think Melissa says it best with – “I’m genuinely excited about Boulder, but separately I already miss Austin.”  A long post coming on this sentiment but I should note that I’ve told Melissa and the guys that I’m only going to amp up the Texas, and you can bet that the girls won’t forget that they were born in Austin!

But all along the Rockies you can feel it in the air

From Telluride to Boulder down below

The closest thing to heaven on this planet anywhere

There will be a time and place to talk about all the career reasons for this move. What I want to talk about here is Trust. and Family. And to borrow a term from Jamey Sperans (another Foundry LP and close friend)…….Business Love.  

Jamey coined the term “business love” at a fun NVCA speaking event we did together, when he noted that partnerships function best when there is more than common economic alignment but also true emotional engagement among members. I couldn’t agree more. I plan to spend the rest of my career surrounded by friends and partners that I respect and love. We are all in the human capital business. People matter most. I’m very blessed to share a partnership of values, ideas, and capital with some of the best investors in the world. Boulder or Bust.

The Path and the Process

As I considered my next path after UTIMCO, I went through a series of considerations that revolved around some fundamental questions: What are my strengths? Where does my passion lie? Who are my people?  

First, I sought out the intersection of the first two:  My strengths and my passion.  It didn’t take much time to determine where my focus should be: Optimizing venture capital exposure for institutional investors.

In my experience, the best fund and company founders were ones who set out to solve a problem they knew deeply.  They were functional experts who have lived the challenge.  I was keying in on my greatest challenge and greatest successes at UTIMCO by focusing in on venture capital.  

LPs large and small need help in navigating venture capital as it offers the highest returns set against the greatest dispersion of outcomes in private markets. While there are those LPs that perform extremely well, success remains elusive for many others. Consistently accessing those high venture capital returns is challenging. The best and perhaps only way to win is to bring talented investors to bear against a right sized capital base, and then allow those investors to focus, recognize early trends, and create an optimum structure that aligns incentives.

I took these lessons and this model from my experience at UTIMCO. Given our endowment’s size and public nature, we had developed a specialty for seeding or anchoring emerging GPs, an area at which I became particularly adept. And I loved helping GP entrepreneurs build their firms and funds. (On a related note, you can only help your peers form a new fund so many times without catching the bug!) I certainly wanted to stay on the path of investing in new funds: Identifying and supporting the best investors in the world to establish their own funds while continuing to work with my valued relationships from UTIMCO.

My experience helping funds had also proved to be my strength. Based on investment returns at UTIMCO alone, my net fund investment multiple was greater than 3x in technology venture funds and well north of that multiple when you looked at funds out of their investment period. I also had developed a number of meaningful relationships with top venture firms and my network proved to be incredibly strong. Focusing on venture alone made perfect sense across both criteria.  I loved it – and I thrived within it.

I knew my next step had to be technology venture with a focus on creating real partnership,  leveraging my relationships at UTIMCO and investing in new, exciting  firms.

What structure makes sense?

Combining a love for technology and creating partnerships made sense for me but the answer begged more questions.  Did the world really need another fund of funds? Was this really optimizing venture exposure?  

The short response was No. Yet another stand-alone fund of funds didn’t make sense. To be sure, there are a number of groups (many of whom are my friends) that do it right, but I had seen too many peers get sucked into the “assets under management game” while competing on lower fees. This strategy led to constant fundraising and poor investment decisions. Too often the portfolios became over-diversified, protecting the downside but giving away the opportunity for outperformance.

One friend in the business was Michael Kim at Cendana Capital, where he solved many of the challenges by focusing on a specialty market of micro-VCs who retained high return potential. Michael has a great business that provides interesting and complementary exposure to his clients. In working with Michael, I confirmed that there was an opportunity  to go “Next Level”.  

What is Next Level?

I’ve always pictured LPs as sitting one level above GPs, who sit one level above portfolio companies.  As an LP, we mimicked the best themes, investment processes, and organizational structures of our GPs. In turn, our GPs were learning from, adopting, and sharing the best ideas, management techniques, and sector knowledge of their portfolio companies.  

As an LP, you benefit from some of the best knowledge and thinking available. You are provided a singular view but also limited by internal or market constraints in your ability to invest behind that perspective. I was seeing changes in company formation and financing markets that presented an opportunity to cut across the traditional roles. The opportunity is a reflection of the boom in company formation and the explosion of micro-VCs.  A recognition that successful investments may come from any market or any fund but they still require capital to scale as market leaders. The changing nature of capital efficient start-ups has affected the company and VC layer but the traditional LPs have not yet, and may not be able to adapt.  I felt that we needed to go next level – to the portfolio companies – in a capacity well beyond traditional co-investment. To combine the benefits of a diversified GP portfolio with a direct investment ability anchored in the DNA of a GP.  We needed an exceptional direct investment capability within the strategy as well.

What is the portfolio construction?

This is perhaps my favorite question for GPs and one that I spend a lot of time considering. What combination of GP portfolio and direct exposure adequately diversifies the portfolio while retaining upside through individual deal performance?  Simply put, what is the mix?

Based on my experience with the strong performance at UTIMCO, I knew a portfolio of funds performing at 3x or better should provide a diversified base return that returns a majority of the capital, protecting downside and setting up the possibility of an asymmetric return profile. This portfolio would also create a sustainable sourcing advantage for direct investments.

A portfolio of individual direct investments should provide upside with the potential for any single deal to return a meaningful portion of the entire capital base. The individual investments ideally of a size to meaningfully scale the underlying company while ensuring enough ownership to generate a large absolute dollar gain on the capital base.  

Access and opportunity set would define the capital base, but the GP portfolio should certainly represent a minority of the capital to allow for greatest upside from the direct portfolio, reflecting the asymmetric return goal and preserving the long upside tail of outcomes.

The right partners and platform

I had answered “the what” question?  Now I needed to address “the how” which quickly brought me to “the who.”  With whom could I partner to  bring an exceptional direct investment capability to bear? I needed talent that stood apart from others and brought value to the portfolio company? And then…

The Perfect Fit.

I’ve been close with Jason, Seth, Ryan, and Brad since UTIMCO funded Foundry Group in 2007.  It felt natural to reach out to them as I was thinking about my own path over the last two years. Fortuitously, they were also contemplating their future and the alignment was deep.  We have been formulating  strategy, portfolio construction, structure and alignment back and forth honing in on ideal elements for each.  When Jason called me and said, “Welcome to Foundry Group”, I knew we had something special.

Beyond the personal and the cultural fit, from an investment and strategy standpoint there was clear overlap in style and investment themes. We even share a number of previous investments.   

The Foundry Group brand is deservedly strong.  Foundry was one of the early movers a decade ago that recognized the changing venture environment, and they are clearly a star in today’s generation of leading venture firms. They are sought after by entrepreneurs and other venture capitalists as value-added investors with a sterling reputation for treating people right.

The Foundry returns have been impressive across both their early stage funds, for which they are well-known and more recently, their Select Fund which makes growth stage investments within their portfolio. From my vantage point, there may be no better partnership given their cultural  fit, sterling reputation, and history of direct investment returns.  

(Wait, there’s more!) The Foundry Group has also been quietly investing in a portfolio of other GPs over the last decade. These investments reflect their powerful network. They have befriended, advised, and sometimes sponsored other venture investors. Their #Givefirst attitude has helped them to identify the best investors early and to spread that positive DNA more broadly in the venture ecosystem.  Much to my delight, they have also outperformed even my own fund investment track record!  

By combining our respective histories and shared ideals, we think our new strategy, Foundry Group Next, will truly optimize venture capital exposure for LPs.  We will build a portfolio of direct investments underpinned by early-stage funds in a right-sized portfolio.  A portfolio big enough to support companies and GPs but not too diversified to limit returns.  We will share that #Givefirst attitude, believing that supporting entrepreneurship will help us generate returns for our investors and support a technology driven renaissance in our economy.  

I know that Foundry Group Next checks all the boxes from an LP perspective. It’s a differentiated, advantageous strategy for venture investment with the right team, focused and aligned with LPs in the proper structure. My goal to optimize venture capital exposure for institutional investors is achievable and I believe all the building blocks are in the right place.  I’m very excited to partner with Jason, Seth, Ryan and Brad in this new venture!

(And to make the the lawyers in our lives happy, we need to say that in no way is this announcement an offer to sell securities or an advertisement of us raising a new fund.  We have yet to announce anything regarding any new funds that we may raise in the future)

When you grow up in Texas, it’s quite common for your parents to ship you off to summer camp starting about 8 years old.  Some kids love it.  Some are homesick.  With the benefit of hindsight and my role as a parent, I now know that none of us kids realized just how happy our parents were to have a 3-4 week childless break themselves!   I can’t wait until Melissa and I have that same break together.  Yes, the girls were signed up for camp right after they were born. 🙂

In my case, I went to Camp Longhorn in Burnet, Texas.  It was a great experience.  I was homesick the first time but made friends and loved all the activities.  I was particularly gifted at the Blob jump given my hefty kid status.  We would put the smallest kid in the cabin at one end of the Blob (which is shaped like an inflated pillow) and I would jump from the tower sending all the air expanding straight to the back of the Blob thereby catapulting tiny Tim 2-3 stories in the air.  Yes,  that was fun.    But back to the story.

One of our favorite activities towards the end of camp was to take the rafts over to Devil’s Hole at Inks Lake State Park.   We would all line up and jump off the 25-30 foot cliffs.  Fairly harmless but SCARY FUN for a little 8-12 year old.   There was another rock, positioned above and well behind that lifted you another 20+ feet and set you at least 6 feet of ledge before you were over the water.  We called it “Counselor’s Rock” as only a few of the older kids or counselors were willing/able to jump that rock.  Counselor’s Rock make quite an impression on that little 12-year old.   It stuck in my head.  I WANTED TO JUMP OFF THAT ROCK.

Two years later, in 8th grade another family invited me to go camping with them to Inks Lake State Park.  I would have another shot at the Rock.  I showed my friends Counselor Rock and told them I was going to jump off of it.  This time, I had processed the risks and steeled myself for the jump.  I was determined to force myself out of my comfort zone and GO FOR IT.   In the moment,  I seemed to hover in mid-air for an incredible amount of time before impacting the water.   When I came up for air, it was an exhilarating moment.  One not forgotten 30 years later.

As I’ve gone through life and the first part of my career, I’ve repeatedly found that you have to force yourself out of your comfort zone to experience a new level.  I think back to leaving a great job and good friends at KPMG for the unknown outcome of business school in Austin.  Or taking a role at UTIMCO while still in school.  Or asking my beautiful wife to marry me.  KIDS, now that was a jump…

AND most recently – leaving UTIMCO.  I’ve left my comfort zone again and I know that I can draw on that experience at Counselor’s Rock.  I took the time to process the risks and forced myself to “jump” out of my comfort zone so that I might prove something to myself.  Thus you have – Lindel’s Leap…..