Legitimacy over Wealth: How Harry McLaverty Wants to Change VC Funding
Harry is a GP, LP, film enthusiast, and non-stop thinker. And after 10 years in the VC world, he has some ideas on how to support emerging fund managers.
Emerging fund managers—especially those raising their first fund—tend to be the most passionate when it comes to defining and defending their theses. I find that the brightest sparks are those who are truly unique, not just in their ideas, but also in their experience and approach to investing.
Wildcards, if you will.
So when it comes to both funds and startups, the best teams and theses will receive investment, right? Because the free market is definitely based on merit and has nothing to do with existing networks, wealth, or FOMO?
Sarcasm aside, this issue of “merit” has been a longstanding topic in the online venture discourse. As Geri Kirilova of Laconia Capital wrote regarding the “two worlds of venture”: “If you’ve ever heard the saying that underrepresented founders have to be twice as good to get half as much, this is why: without the advantage of circumstantial privilege & long-standing personal relationships, undeniable performance is often their only way to get investors over the trust & belief hurdles.”
The same applies to GPs raising their funds, though that gap between worlds may be even wider. And the way Harry McLaverty sees it, the entire system needs a serious revamp. “The whole venture model right now—in terms of fundraising for a fund—is based on wealth over legitimacy,” he claims. “It needs to be the other way around.”
About Harry’s Many Ventures
Harry has always had a mind for wealth-building. When he enrolled in Warwick University, he immediately saw the potential for an incubator, and started WarwickTECH to bring together all the people necessary to make a startup successful.
As he continued his progression in the VC world, Harry evaluated hundreds of pitch decks and startups. Like most investors, he saw many that didn’t interest him, let alone meet his standards for receiving VC investment. “A lot of people have spoken about venture in terms of being like rocket fuel. But most companies don't need rocket fuel,” he laments. “And the definition of what kind of companies need rocket fuel changes over time.”
Harry, however, has already determined what kind of companies he wants to fuel: “They really have to be strong, impactful tech companies that solve problems for half of humanity. I’m interested in solving big, economic problems for large numbers of people.”
This desire to solve deep-rooted problems has occupied his thoughts for the past decade, from wealth disparity to social infrastructure. He recently wrote a rather provocative article accusing the European venture ecosystem of putting an undue emphasis on race when investing, arguing that the biggest barrier is instead personal capital and networks.
Investing in Wild Cards
Industry incest has made VC an increasingly difficult career path for most emerging managers to navigate. While it may be admirable for Tier 1 funds to invest in smaller, first time funds, the consolidation and “pie fingering” within VC can also complicate the goals and strategies of VCs and LPs. In fact, it can even detract direct LP investment into emerging fund managers.
Yet there is historical precedence for investors to take the risk in investing in first-time fund managers. “Chris Sacca’s Lowercase Fund I is the highest returning VC fund of all time. And he didn't go through any of the standard paths of setting up a fund,” Harry explains. “He wasn't a founder with a billion dollar exit. He wasn't a Tier 1 spin out. He wasn't really an angel syndicate institutionalizing his fund either. So if the highest returning fund comes from this wildcard investor, then there are almost certainly other wildcard GPs out there who don't even know their GPs yet.”
In an effort to identify and support the best possible funds, Harry started Simplify in order to incubate and seed overlooked wildcard fund managers. “Simplify is based on the notion that small teams have very good judgment and very good access [to dealflow], but no capital.”
Regardless of the cause of the wealth disparity, Harry wants to close the gap by putting capital in the most capable hands, full stop.
Can’t Stop, Won’t Stop
Simplify isn’t the only investment vehicle Harry has. His entity Transcendence is backing deep tech projects, while Rotas focuses on “practical applications of technology.” And if that isn’t enough, his single family office fund Inversion Holdings will also invest in emerging opportunities. “I might be an emerging angel and an emerging GP and an emerging LP and an emerging single family office all at the same time,” he says.
Solving major world problems doesn’t happen overnight, but Harry is certainly making progress.