The interview below is part of a series from the McGuireWoods Emerging Manager Program featuring impressive emerging managers. The McGuireWoods Emerging Manager Program supports emerging managers throughout the most critical stages of a fund’s evolution. It offers a differentiated and proprietary approach to connecting emerging managers with limited partners, providing intelligence on market terms and preferences, and advising emerging managers on all components of building a durable brand as an investor. To recommend an emerging manager for a future interview, email [email protected].
Q: What led to the decision to raise your initial fund? What were the indicators that you were ready?
Abhi Tiwari: The popular market narrative when my team and I were raising Blank’s fund was that fintech was dead. But fintech and commerce are everywhere and are intertwined. Fintech is very much alive. The movement of money and goods and the impact of financial services are ubiquitous.
It may not seem an obvious time to focus on fintech and commerce as a capital allocator, but that excites us. Whether we considered financial services disrupting the $250 trillion annual payments ecosystem or saw the impending $80 trillion wealth transfer in the next decade, our narrative was clear: The next generation of companies will transform the economic yield of financial services across industries.
The Blank team had collectively invested in over 70 companies over the past decade, creating more than $40 billion in enterprise value. We saw a unique opportunity in the market to hone our specialization in intelligent systems, financial services and commerce, leaning in at the earliest stage of company formation. We’re obsessed with being founder-first and diving in on day zero to be in the trenches with founders from the beginning. The opportunities and founder pipeline we had at the time made it an easy choice to raise the initial fund.
Q: How did you think about assembling your team?
AT: At Blank, our focus is on making founders successful, starting with our team composition. Each member brings unique skills and complementary strengths, from helping founders with product development, pricing strategies and go-to-market plans to guiding them through regulatory and compliance hurdles. We’ve intentionally kept our founding team small, allowing us to stay agile, multitask effectively and respond swiftly to challenges. Our team collectively has decades of experience operating financial services businesses, leading venture investments from seed to IPO, and serving on boards of private and public organizations.
When founders partner with Blank, they get our full team’s expertise from day one, empowering them to craft their category leadership narrative alongside us.
Q: What were your most important considerations when choosing LPs to pursue for partnership?
AT: We were intentional in choosing LPs across three major vectors: supporting Blank’s founders and portfolio through network relationships, customers and partnerships; providing expert networks and coaching to help founders build the right culture and team foundation for rapid prototyping and commercialization; and offering follow-on capital that could support company growth from seed to IPO and further.
As a result, our LP base includes C-suite executives from large financial services companies and multibillion-dollar startups, as well as large global family offices, industry conglomerates and global sovereign funds.
Finally, as capital allocators, we consider ourselves fortunate to have an eclectic board of LPs and advisers who serve as mentors and thought partners. They’re helping us craft Blank into a generational fund, positioning us for success with future fund vehicles.
Q: What did you prioritize when developing an investment strategy for your initial fund?
AT: Our team set out to determine why founders would pick us, where did we have an edge? Capital, although not as easily accessible as it was in the past, is commoditized. You need to have clear differentiation as well as a robust portfolio support strategy to compete and win the right to be part of the founder journey.
For the Blank team, developing our strategy was easy. Being specialized gives us that edge. We add value because of our network and experience, and that has compounded over many years and investments.
Tactically, we didn’t want a “spray-and-pray” strategy because we want to be in the trenches with founders, and you can’t do that with a lean team when you have 60-plus investments. We also didn’t want our portfolio to be too concentrated. Our strategy is to invest in 30-35 companies per fund, with a target ownership of 5-10%.
Q: What do you foresee with respect to LPs’ willingness to invest with emerging managers?
AT: Ongoing market volatility and geopolitical tensions create economic stress, forcing general partners and LPs to make tough decisions. Our team is observing a flight toward quality and a fundamental shift in LPs’ portfolio allocation. LPs increasingly segment managers, particularly emerging ones who can demonstrate outsized alpha.
Given the macro-context, we’re also witnessing asset class diversification across buyouts, secondaries and venture, as well as fund manager diversification. This strategy aims to mitigate concentration risk and exposure to localized economic headwinds.
The bar is high for emerging managers in this environment. Those who differentiate themselves do so through their ability to specialize and drive outsized returns for investors.
Q: What are some teachable moments you encountered along the way?
AT: Perhaps the most crucial lesson was that there’s no shortcut to building genuine relationships with LPs. It takes time. Simultaneously, a manager must demonstrate unique market positioning, a strong team, a solid investment strategy, and the ability to win deals that align with LPs’ interests and allocation mandates.
It’s important to recognize that not all LPs will be the right fit for your fund strategy. It’s best for fund managers to select out LPs early in the process if there’s a mismatch. Beyond crafting a well-thought-out investment strategy, managers often overlook the importance of building the right fund infrastructure. This includes assembling a competent legal team, fund administrator, and accounting and tax resources. All these elements should be consolidated into a resilient infrastructure to present to prospective LPs.
LPs have limited bandwidth and juggle multiple funds — both existing investments and new opportunities. As an emerging manager, it’s crucial to build and present an efficient data room. This could include a deeply analytical track record, fund strategy, portfolio model, private placement memorandum, investment memos and references. A well-organized data room streamlines the process for LPs, making your fund more attractive and easier to evaluate.
Q: What is the best piece of advice you received when raising your first fund?
AT: “Fund strategy is your fund size.” This advice might seem oversimplified, but it’s incredibly potent, as it relates to all facets of team construction, fundraising, investment management and returns. For a first-time fund, sizing matters more than most experts would admit. A first fund serves as a proof of concept, anchoring outcomes based on whether the manager accomplished what it set out to do. Hence, finding your optimal fund size is key. Raise too little and your portfolio sample size or win rates might not correlate with what you aim to accomplish for your LPs. Raise too much and you risk improper investment sizing and delivering suboptimal results compared to expectations based on your track record and investment outlook.
About Abhi Tiwari
Abhi Tiwari is co-founder and general partner of Blank Ventures, an early-stage venture fund focused on advancing the economic yield of financial innovation. Prior to Blank, Tiwari held leadership roles in mergers and acquisitions and business development at Stripe, Amazon and Dell, where he led over $90 billion in investments and acquisitions.
To contact Tiwari and Blank Ventures, email [email protected].