Rob Biederman thinks there’s such a thing as too much money.
“Excess capital covers up intellectual laziness,” he said. “The best, best companies never burned any capital, because they were rigorous about finding ways to make people pay for their product.”
Biederman, managing partner of Asymmetric Capital Partners, has a point. Consider, for example, Google—which raised a mere $25 million prior to its 2004 IPO—or
Atlassian, which raised about $60 million in VC dollars before taking on the public markets. Still, these examples feel drawn from a time gone by, factual artifacts that feel roughly the way I do when I look at a rotary phone. Today, mega-AI rounds readily hit billions, and there’s a confusing but broad sense that more money flowing into a startup automatically guarantees long-term success.
Biederman’s against-the-grain distaste for excess capital isn’t just intellectual or financial.
“The emotional reason is that we want our founders to have tremendously good personal outcomes,” said Biederman, who previously spent eight years as CEO and cofounder of General Catalyst-backed Catalant. “VCs win when founders burn a lot of capital. Founders win when they don’t. So, it’s important to me that when our founders have successes, they go home with a life-changing result. And the more capital there is, the less likely there is to be a financially life-changing result.”
Biederman is a reluctant VC, tacitly accepting the label with resigned self-awareness when I assign it to him. But all things being equal, he says, Asymmetric is “an early-stage technology-oriented investment firm, because I think [the industry] has lost the plot in some respects.” VCs, he told
Fortune, are too tied up in asset-gathering over returns, tend to write off struggling startups too quickly, and just always get what drives customer value. Just because an idea is clever, doesn’t mean people need it.
“People who haven’t sold for a tech company sometimes get like ‘Oh, this entrepreneur is fantastic’ or ‘The ideas are smart,’” Biederman said. “No, people buy things that improve their lives.”
On its face, Biederman and Asymmetric’s story is very VC in certain ways. The firm was founded and raised its first fund in the 2021 boom, where a flood of emerging managers raised new funds and the IPO market was on a tear.
The real test: whether these first funds could re-up with LPs, and raise second funds. The odds are tough in the best of times (statistically, the toughest leap for any new VC firm is going from fund one to fund two), and the 2021 vintage has had it rough. Per PitchBook, only about 8% of first VC funds from 2021 have raised larger second funds—and Asymmetric, based in New York and with a team of just five, is one of them. The firm has raised its $137 million second fund, passing its original $125 million target,
Fortune has exclusively learned.
Asymmetric has been writing checks between $2 million and $10 million for pre-seed through Series A startups in the vertical software and healthcare IT sector. The firm’s portfolio includes Torc, Counsel Health, and Eagle Electronics. The firm also backs rollups in scattered industries, like Cabana, which consolidates pool services businesses in San Diego. The first fund has already had three successful exits, all acquisitions—Torc, EvolutionIQ, and Zorus—and its assets under management now stand at $240 million.
“Look, we’re never going to have the largest funds, and we’re never going to have the highest AUM,” said Biederman. “Our only North Star is returns, and having the correct amount of money to produce the best returns. We had lots of people on this fundraise say ‘Hey, can you take a check for 50 to 75.’ And I was like: ‘I don’t think you understand, I can take, max, 20 or 25 of new capital.’”
The firm has kept its LP pool small, and it includes nine family offices that’ve known Biederman for more than a decade. LP Jim Millar, Yale lecturer and former managing director of Princeton University Investment Company, said his confidence in Asymmetric in part comes from how its deal flow works: “Asymmetric cultivates founder relationships one to two years before an initial investment, and 80-90% of their deal flow comes from referrals,” he wrote to
Fortune.
Biederman wants to keep it that way, and the primary path to that is empathy for the challenges of running a startup.
“Being a founder is being in a dark room or being blindfolded in a room,” he said. “You know that there’s a fire in the room. You only have one bucket of water, and you have to throw the water onto the fire, not knowing where the fire is. You also know that if that bucket of water doesn’t put out the fire, you might not get another one.”
See you Monday,
Allie Garfinkle
X: @agarfinksEmail: alexandra.garfinkle@fortune.comSubmit a deal for the Term Sheet newsletter
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