Interview, Fireside Chat
Henri Pierre-Jacques: How I Founded Harlem Capital; Our $134M Fund | 20VC #901
- The firm anticipates deploying capital over a 20-year horizon to back 1,000 diverse founders, aiming to evolve into a multi-billion, multi-asset class global business.
- For Fund II ($134 million), checks will range from $1 million to $2.5 million in exchange for 10% to 15% ownership stakes, while sub-$50 million funds typically target 5% to 8% ownership and nine-figure funds require 10% to 20% to achieve returns.
- Investment strategy prioritizes consistent net returns of 3x to 5x over time rather than relying on outlier outcomes, with a specific expectation to generate 2x returns across 10 funds instead of a single 5x return.
- The firm expects to shorten deal execution to 48 to 72 hours through internal diligence processes and aims to close deals by utilizing detailed 50- to 60-page PowerPoint deal memos to short-circuit subsequent due diligence.
- Selection criteria currently require two of four boxes (founder, market, business, ownership) to be "great," with plans to evolve toward allowing more risk as the firm matures.
- A separate growth fund may be launched as the organization scales, and the firm expects to hire five new partners or staff members from an intern program growing from 125 to 1,250 annual applications.
- The firm expects to place 24 former interns at other Black funds or venture firms to advocate for diverse founders, while planning to hold three intern classes per year with six interns each.
- To manage financial pressure from stacking GP stakes, the firm utilizes a GP credit line to leverage 60% of its GP stake and adopts a "one person" GP commitment strategy capped at the fund target.
- The firm expects to scale operations by building significant "machinery" and infrastructure, viewing this team growth as the primary challenge to reaching the 1,000-founder mission.
- Market expectations include recurring corrections and a shift toward normalization, alongside a belief that LPs will increasingly take risks on diverse GPs and micro funds based on process rather than just historical track records.
- Fundraising dynamics are expected to change via a confident, "cocky" approach and deep, targeted networking, rejecting mass emails as ineffective, with minimum LP check sizes anticipated to increase as funds near close.
- The firm anticipates that institutionalizing the fund through rigorous processes will appeal to LPs seeking long-lasting institutions, potentially modeled after firms like Andreessen Horowitz.
- Risk management involves a 50% reserve model for institutional investments, such as reserving $50 million on a $100 million fund, and defining deal prices relative to the fund size and required ownership for returns.
- The firm plans to address the need for role models through high-frequency media visibility and a "humanizing" approach that prioritizes founder well-being, specifically resonating with founders who have experienced trauma.
- Decision-making processes include the firm going last in investment committee meetings to prevent junior member bias and rejecting feedback on quantitative beliefs without supporting data.
- The firm expects that the market will continue to evolve its investment criteria regarding diversity and that their data-driven approach will eventually shift industry mindsets.
- Specific investments, such as in Mushi, are expected to deepen relationships and build human connections with founders in specific regions like Miami.
- The firm acknowledges that their strategy of not accepting feedback without data and their "cocky" confidence serve as both strengths and weaknesses in their decision-making and fundraising interactions.
- Long-term sustainability is tied to time management strategies, including blocking calendar time for personal life, and a "partnership" view of personal and professional success.