April 6, 2023

Why founders should consider the importance and impact of limited partners

When a tech company IPOs or gets acquired, it’s a thrilling occasion for the founders and team. If all goes as hoped, many will experience meaningful wealth creation. As an investor, it may be hard to imagine anything better than watching a founder enjoy the satisfaction and rewards of many years of sacrifice and hard work. But, there is nearly unlimited potential for joy and fulfillment beyond this outcome. Here at Felicis, we have the undeniable privilege and responsibility of ensuring that the investment returns from our funds have a butterfly effect that can improve global society. We do so by partnering with LPs that have a positive mission or high-impact networks.  

We welcome all of our founders to ask about our LPs. Not only because LPs gain a lot from lucrative exits but also because they can become incredible partners and customers for startups (more on this below), and we don’t want founders to miss out on this opportunity for knowledge and value alignment. As founders contemplate Felicis as an investment partner, we hope they will learn more about our values by understanding our capital sources.

Since our first institutional fundraise in 2010, we’ve thoughtfully curated our LP base to include hospitals, organizations promoting social equity and supporting children, front-line worker pension funds, world-renowned universities, research institutions, the arts, and environmentally-focused organizations. While most of these groups prefer to stay out of the limelight and thus go unnamed, there is not a single entity we’d hesitate to tell our children, partners, and founders about. 

Prioritizing this approach to raising capital has not been easy, especially when starting out as a new venture firm over 12 years ago. We recognize and appreciate that our ecosystem includes many capital formation strategies that other investors may prioritize differently. The commitment to our style of LP partnership has been worthwhile for Felicis because it creates a foundation of purpose that motivates all stakeholders, has been a source of inspiration for our entire team, and adds value for our founders.

In aggregate, our LPs have:

  • Helped over 500K students from historically marginalized communities earn college degrees
  • Employed and funded the research of over 200+ Nobel Laureates
  • Improved childhood cancer survival rate by 4X
  • Protected over 100M acres of land (including 12% of the Amazon rainforest) and 5M2 KM of ocean habitat

In addition to this wonderful impact, over 50% of our LPs have at least one female decision-maker on their investment team.

There can also be more to LPs beyond their influence on the world; they can be actively involved with companies when there is clear symbiosis. For instance, one of our LPs is a leading hospital system in the US, and they became a partner to Guild, a Felicis portfolio company. Guild offers a platform to employers that provides learning and education benefits for workers looking to advance in their careers. For example, nursing assistants are able to pursue a nursing degree via their organization's employer-funded education program through Guild, all while remaining at their current employer. This remarkable result addresses a real problem—the urgent need for more nurses in the US labor market—through a connection between an LP and a startup. 

Rachel Romer, CEO and co-founder of Guild, understands the impact LPs can have on her company’s mission, and we love that she is willing to ask VC firms questions about their LP base. 

This topic matters. The last 30 years in Silicon Valley have had many large financial outcomes. We are proud to be able to celebrate these moments with our founders. And when they occur, we feel unbridled joy—because we know who benefits from their hard work. LPs are more than just capital; they can be a key part of a coalition between individuals and institutions—from founders to foundations.