Hunter Walk, Homebrew & Screendoor

Homebrew's Structural Shift (2022): Hunter Walk and Satya Patel transitioned Homebrew to a self-funded, evergreen vehicle ("Homebrew 4"), eliminating external LPs and management fees to align incentives 100% with founders and the firm.

• Decision Rationale: The move was driven by a desire to avoid the "commoditization" of venture capital, where larger funds prioritize fee generation and scale over founder alignment.
• Economic Structure:
  • Capital Source: Walk and Patel act as the sole Limited Partners (LPs), risking their own personal capital.
  • Returns: The firm retains 100% of the carried interest (outcomes) rather than the industry-standard 20% split with external LPs.
  • Investment Size: Checks are typically between $100,000 and $500,000 at the seed stage, with no target for ownership percentage or fund size growth.
  • Team Upside: Unlike the industry norm, all staff members (including operations and talent) receive unbounded upside in the form of fund carry, aligning all employees with firm success.
• Operational Philosophy: The firm operates without a "fund life" (no 10-year deadline), allowing them to hold investments indefinitely and deploy capital based on opportunity rather than timing constraints.

Screen Door Fund of Funds (Launch 2020-2021): Screen Door was established as a fund of funds specifically to support emerging managers (first and second-time GPs) with capital and structural mentorship.

• Founding Partners: Created by 10 industry veterans, including Walk, Kirsten Green (Forerunner), Charles Hudson (Precursor), and Kanye Rackabella (Kindred).
• Capital Strategy: Screen Door anchors emerging funds by writing checks representing 10% of the target fund size (e.g., $2M check for a $20M fund; $10M for a $100M fund).
• Value Add: Beyond capital, the firm provides "community and ongoing relationship" support, offering mentorship to GPs who lack structural firm-building experience.
• LP Model: Screen Door's capital is primarily sourced from institutional LPs (endowments and foundations) who lack the bandwidth to underwrite hundreds of small emerging managers individually.
• Portfolio Focus:
  • Current Status: Has deployed capital to 16 emerging managers as of the interview.
  • Selection Criteria: Managers must demonstrate a clear "why" for their firm's existence that resonates with both founders and LPs; they are not scouts or minor leads for Screen Door's own deal flow.
  • Geographic Scope: Focuses on North and Latin American funds, excluding global strategies due to underwriting capacity.

Market Analysis & Industry Trends: Walk argues that the venture capital industry is suffering from "Darwinian slowness," where mediocre large funds persist despite poor performance due to inertia and misaligned incentives.

• Incentive Misalignment: Large funds often prioritize fund size growth (to increase fee revenue) over creating alpha, leading to a homogenization of strategies and a focus on consensus deals.
• Emerging Manager Outperformance: Historical data and Walk's experience suggest that emerging managers, particularly those with differentiated identities, networks, and lived experiences, often outperform established large firms.
• Cycle Dynamics: The industry reacts quickly to "fear or greed" (e.g., SPACs, crypto, AI) but is slow to correct structural inefficiencies or hire diverse talent when market conditions are calm.
• Concentration Thesis: Walk advocates for smaller, concentrated funds that match specific strategies, contrasting with the industry trend of ever-larger "megafunds" attempting to cover all bases.

Fundraising Advice for Emerging Managers: Walk provides specific structural and strategic advice for GPs raising their first or second funds.

• Minimum Viable Fund: Fund 1 should be the "minimum viable proof of concept" raised on potential; Fund 2 should be raised on momentum; Fund 3 on proven results.
• Time Boxing: Managers should set a final date for raising their first fund and deploy capital immediately rather than fundraising for an excessive duration (e.g., 18 months), which causes mental exhaustion and delays value creation.
• Avoid Over-Capitalization: Fund size should be designed to match the manager's ability to lead rounds and maintain target ownership; raising excessive capital does not improve deal-picking ability.
• LP Selection: Managers should prioritize LPs who are willing to re-up based on performance and shared values, rather than chasing strategic LPs (e.g., corp CVs, diversity-focused checks) that may withdraw support when their strategic needs change.
• Introspection in Decks: Pitch decks should include analysis of failed investments and wind-downs, demonstrating the GP's ability to learn and recover capital, rather than solely marketing past successes.

Performance Metrics & Outcomes: Homebrew highlights specific investment successes and operational philosophies.

• Track Record: Homebrew has made 28-29 investments with a reported "100% win rate" (no exits to date for the first cohort, but all companies are performing well).
• Recycling: Early funds were highly effective at recycling capital; Fund 1 was a $35M fund but deployed over $42M through recycling of proceeds, effectively leveraging returns to increase investment volume.
• Notable Investments: Early portfolio includes Chime, Plaid, Cruise (exited), Gusto, and Shield (defense tech).
• Midas List Status: Homebrew is ineligible for the Midas List due to having no external LPs and using a consensus-based decision model, which they view as a strategic non-goal.
• Investment Philosophy: They aim to be "venture Dei" (a vehicle with a societal strategy) by backing managers who bring unique perspectives to the asset class, without using those managers merely as scouts.