Q&A with Silicon Valley Bank’s Jim Marshall: Advice and Support for Emerging Managers
We recently had the pleasure of speaking with Jim Marshall, Head of the Emerging Manager Practice at Silicon Valley Bank, about his observations during his twenty-year tenure in the venture community. We explored how the venture market has evolved over the years, the challenges and opportunities of the emerging manager in today’s marketplace, and how new firms can differentiate themselves with data driven decision making.
Q: What is your role at Silicon Valley Bank?
I lead our Emerging Manager Practice at Silicon Valley Bank (SVB), which is a team of relationship managers focused on building a supportive ecosystem while providing access and connection across the SVB platform. Our team is focused on working with newer and emerging venture capital (VC) funds to help guide their growth and success.
Q: Can you give us an overview of SVB’s Emerging Manager Practice? Why was it created?
Our overall mission at SVB is to be a trusted partner and advisor to General Partners (GPs) and to help them be successful. The venture capital community is an important constituent set for SVB and has been since our founding. About eight years ago, we started to see major disruption occurring in the venture landscape. There was a shift in early stage investing that led to the formation of groups such as Y Combinator and 500 Startups, as well as an explosion of seed funds. While we had formed strong relationships with the larger established brand name firms, we saw a need to help the new growing segment of the market. We formally launched the Emerging Manager Practice about five years ago in order to deliver the entire SVB platform to the partners at these newer emerging firms nationwide.
Q: Can you describe the ideal candidate for this practice?
The ideal candidates for this practice are U.S.-based founding partners of firms who have typically three or fewer funds, each under $100MM in assets under management (AUM). We noticed early on that many of the new firm founders were previously principals or junior partners at larger firms, who were seeking to break out on their own. There was also a set of serial entrepreneurs making angel investments who wanted to transition to a full-time effort. More recently, we’ve been coming across professionals with different backgrounds who did not build their careers on Sand Hill Road. This diverse group of investors in our emerging manager cohort brings new visions for the future along with different networks and areas of expertise. It has been exciting to work with them and to support their success.
Q: With these disruptions in the venture space, do you see a change in investment theses when compared to the past? Is there more interest in a firm’s social impact or focus on a particular industry or geography?
Yes, this environment has led to a trend of specialization in the form of sector-focused funds. One of the biggest challenges today for a new firm is differentiating itself and rising above the noise in the space -- we’re tracking over 800 emerging firms, and this number continues to grow. There’s a need to differentiate but that can be difficult with so many players. Firms are garnering deep expertise in a given area and seeking to be the “go to” investor for the founders in those market segments.
Q: How does the emerging manager ecosystem differ from that of larger venture firms?
There are more resources across the ecosystems today for emerging managers to learn the business of venture, even if their background is not in the startup or investment worlds. The community is less competitive and more collaborative at the seed stage, as compared to the traditional, large VC market. The sharing of deals and the support networks within our emerging manager ecosystem is really positive and encouraging. It helps those who don’t have a track record or haven’t invested with a big firm to better understand the venture industry. We support this growth, both through individual outreach and with more programmatic methods such as targeted events and education.
Q: What benefits do fund managers in this practice receive?
I have learned in my years in the industry that there is not a single “right” path to becoming a successful venture capitalist. There are several different playbooks that work to grow a prosperous firm. We bank over 400 emerging manager firms, which provides us with visibility into the ecosystem. Part of understanding the venture business is developing pattern recognition. Our position makes us privy to that pattern recognition, and we can identify the firms that rise to the top and separate themselves. We notice the firms that are forming their brand, generating real returns, and building a differentiated platform and story. These are the firms that ultimately begin to institutionalize. We want to provide value by not only helping firms raise a fund, but also in becoming successful in building a firm.
Q: From your perspective, how can Aumni benefit emerging managers?
I know from my early days as an investor working with spreadsheets and Post-it notes, having a tool like Aumni would have been immensely helpful. New funds do not have a large staff to track deal activity and various data points across the portfolio. Yet being organized is imperative to attract institutional quality Limited Partners (LPs). Having an automated data analytics platform that centralizes information and enables visibility into the portfolio is likely to set a firm up for success.
Q: What advice would you give emerging fund managers reading this post? What should they look out for in the marketplace?
When I talk to emerging managers I urge them to explore their differentiation and uniqueness. The VC world looks glamorous, but it is a hard business in which to succeed, and the feedback loop is extremely long. Many general partners can raise funds. It’s harder to lead the best deals and drive top-tier returns. I encourage them to take a hard look in the mirror and ask themselves: “Is this something I really want to do for the next 10-15 years? Do I think we have what it takes to be best-in-class?” We want to work with firms that have that conviction and are willing to incorporate the tools and processes to get there.
The views expressed are solely those of the author and do not necessarily reflect the views of SVB Financial Group, Silicon Valley Bank, or any of its affiliates.
Aumni is an independent third party and is not affiliated with SVB Financial Group. SVB Financial Group led the Series A investment round for Aumni, as previously announced in January 2020.
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