An Open Letter to Diego at LTF Ventures

Dear Diego,

I recently came across your post about Learning To Fly (LTF) Ventures and the changes it’s making this year.

Then I read the rest of your Substack posts about LTF. I know firsthand how much you, and the entire RSO, care about student founders in The College at the University of Chicago. I’m excited to see what this change means for both you as an individual and your organization, and incredibly impressed by your courage to share your thoughts on this transformation publicly.

Not many investors, let alone undergraduates, would entertain that.

Let me put my perspective plainly: I think your new way of writing about founders is a material improvement over your old approach. Great founders are a necessary condition to make great startups, and the new format is far more compelling. 

However, I am less impressed by your approach putting founder profiles ahead of what you describe as “traditional metrics like industry, problem, or product” as you make decisions about what to back; I don’t see great founders as a sufficient condition by themselves. 

That’s driven by the lens through which I have to look at founders at Dorm Room Fund. I’m happy to assess the entire difference as a result of this difference of perspective, but I’m still broadly unconvinced it’s the right move — regardless of whether the goal is to enable specific entrepreneurs at our school or support entrepreneurship on campus, and even if LTF’s backer is motivated by philanthropy as opposed to DRF’s backers who are seeking financial returns. 

This speaks to our diverging goals of founder-enabling philanthropy and investing at a similar stage. There’s clear similarities in the effects we aim to have on founders, but because our capital comes from different sources with different desired outcomes, there’s a massive difference in the investing experience between our teams. 

It also forces an almost existential question: from the program participant (investor) perspective, what exactly are your club’s objectives?

Is your goal at LTF Ventures to train your members to think like early-stage VCs? Is it to help the best undergraduate founders you can find on our campus get the best long-term outcome? Is it something else? I think that however you answer this, it should guide how you’re thinking about the importance of the founders in making decisions.

While the founder experience should be very similar as long as you’re running a founder-friendly process (and from what I’ve heard, you certainly are), perhaps your goal for investors might more explicitly drive your investor experience and decision-making processes, to the edification and pre-professional benefit of your membership. 

Speaking of membership, I’m intrigued by your new approach to making decisions to back founders. I’ve simply never heard of anything quite like it. Normally there’s compelling reasons to not allow decision-makers to delegate (Limited Partners are buying the General Partners’ investing judgment with management fees and carry), but that doesn’t affect how you operate. I do think you’ll have to be careful about implementation for a few different reasons, but those are easily solvable problems. 

Part of why I think it’s so fascinating is because it’s not the usual approach to high-conviction early-stage investing. All the VCs I’m familiar with who say they have a high-conviction approach use the term with respect to portfolio construction. They’re typically solo GPs, and basically are so confident in their ability to pick winners that they forego the more normative approach to building a diverse portfolio, and make relatively few investments in startups – but with much higher concentration. This is a really cool experiment you’re kicking off, and I plan to follow it closely.

I appreciate that this experiment is driven by your running out of capital to employ earlier in your fiscal year than you might have liked. But in your case, I don’t actually agree that running out of money early one time indicates a systematic pacing problem. 

Rather, I interpret it as fairly strong evidence that LTF Ventures’s historical approach to developing the entrepreneurial community at the University of Chicago was working! 

On this indication of success, I offer my congratulations, and whatever support I can provide. 

Yours,

Aaron