Paul Bragiel: Interview on Investing in Emerging Markets (VC Lab)

Few people have invested in as many emerging markets, and emerging managers, as Paul Bragiel. In addition to his work investing in the seed rounds of over 200+ companies (including Uber, Unity, and Zappos), Paul has started regional funds in Africa and Asia, and vertical funds in gaming and VR.

In this Q&A led by Adeo Ressi, CEO of Founder Institute and VC Lab, you can learn about what a future-focused investor looks for in interesting new markets and promising fund managers.

Watch the full video or see the highlights below:

Key Topics:

• Talent is global
• Focus on a regional or vertical ecosystem
• Viability of non-technology funds
• The importance of your investment thesis
• The size of your first-time fund
• 25+ audience questions answered (timestamps at bottom)

About VC Lab

CEO Adeo Ressi provides an overview of VC Lab:

VC Lab is a program that lasts approximately 5 months, and it is designed for new managers – individuals launching a new venture capital fund or firm – to go through a structured process and create that firm in the most efficient way possible. If you look at starting a VC firm and closing on your first VC fund, it’s a difficult and confusing process that can take anywhere from 9-24 months. People that successfully complete the VC Lab accelerator are closing on average in 6 months.

A lot of times, if you don’t know what you’re doing, you do things out of order. We’re constantly tweaking the curriculum of VC Lab so that you’re not doing things that don’t matter and you are doing the most efficient and most effective things with your time. As a result of that, you can close a VC fund and launch your firm in about 6 months.

There Are Smart People Everywhere 

Paul Bragiel shares his motivation as a VC:

Talent is global; there’s smart people everywhere. It’s just that they weren’t being serviced by most of the VCs in Silicon Valley – and so people like Adeo, myself, and a few other misfits – we made it our personal journey to bring more resources and money to entrepreneurs around the world.

Start Early in a Regional or Vertical Ecosystem 

Bragiel says that a lot of the best funds in the world are funds that started early with an ecosystem, be it a regional or vertical ecosystem:

There are certain regions that are not spoken for, so if you’re in one of those regions where there’s less than a handful of funds, then that’s an opportunity for you to be a regional fund or country-specific fund, but generalist in the scope of what you’re investing in.

But let’s say you are in Silicon Valley or Singapore or China, where there are hundreds of funds. If you’re in a place like that where you can’t differentiate yourself by being regional, then you should look at a specific verticals like climate tech or video games or self-driving cars. You should go there and be an early player.

Non-Technology Funds

In the Q&A, an attendee asked if non-technology funds are worthwhile:

Q: I know that the vast majority of VCs are focused on technology; however, I’m trying to start a film or TV development fund. Is there appetite among LPs for something like that, and would FI support a fund in the Hollywood entertainment industry?

Ressi clarified that VC Lab is not limited to the tech industry, given adequate market research:

We’re not opposed to any type of fund. Make sure there is enough deal flow out there, but also make sure there’s enough demand from LPs – you have to market test.

Bragiel adds that industries undergoing fast disruption could be niche investment opportunities:

There’s a lot of tech entering into Hollywood; it’s constantly being re-innovated and is being disrupted from many different angles, so there’s absolutely no reason why there couldn’t be a fund that focuses on film financing.

Let Your "Special Sauce" Determine Your Thesis

Ressi defines the importance of your investment thesis:

The thesis of a fund defines the stage, amount, and market. The last part of your thesis is your secret sauce: why you? What’s special about you that will make this fund succeed?

Bragiel adds that the core competencies of your team should be your North Star:

I think it’s important to reverse engineer the thesis from who you are and your team is. If you and your core founding team have no relevant experience in that core thesis, it’s dead upon arrival. Make sure you’re playing to your strengths. Don’t do things just because they sound cool on paper. It doesn’t mean you’re good at it. You could probably learn how to do it over time, but investors won’t give you money to learn on their dime. Make sure you are building something that plays to your strengths, connections, and your life’s work.

The Size of Your First-Time Fund

Bragiel says starting small has its benefits:

I am of the belief, for your first-time fund, that smaller is not necessarily bad. It helps you ramp up, close faster, and learn on less money if you mess up.

Browse the full Q&A below, or learn how to apply to VC Lab.

• 25:18: How can a VC effectively become a founder-first VC, and not financial-first?
• 26:42: How important are time horizons?
• 27:45: How can VCs work together for mutual benefit?
• 28:53: Is it feasible to start a fund as a VP/Associate and not GP?
• 30:57: How do you go about implementing a VC fund in an environment where the ecosystem is very weak or non-existent?
• 33:00: Is there an interest for Middle East and/or Africa seed funds?
• 33:50: When you set up your first fund, is it better to have more or less GPs?
• 36:33: Do LPs have thesis guides? How do aspiring VCs match our thesis with LPs whose information can be hard to find?
• 39:20: What are the mistakes you can make as a first-time fund manager that aren’t disastrous, in terms of being able to raise a second fund vs. mistakes that make you un-fundable the second time around?
• 41:00: Why do the majority of VCs suck and how do we not be one of them?
• 43:11: Are you finding that there’s supply chain congestion partially fueled by the COVID pandemic and Zoom, that has slowed down deal flow?
• 45:58: What’s the difference between a founding partner, general partner, and managing partner?
• 47:46: What are your thoughts about increasing valuations?
• 49:15: What is the one thing that 99% of VCs do wrong and one thing that only 1-2% get right?
• 51:37: How do you articulate the thesis of Bragiel Brothers?
• 52:20: Case study: $10M fund for mobile game companies in Turkey to be spent on 100+ seed-round companies?
• 54:30: What strategy would you have for generating a prospective limited partner target list?
• 56:10: How can you connect with LPs?
• 58:26: What do you think of non-dilutive revenue-based financing options?
• 59:40: Do you evaluate entrepreneurs in their 50s and 60s differently than those in their 20s and 30s? If so, on what points?
• 1:00:48: For the global nomads out there, do you need to be local to start a fund? Can a foreigner who moved to new geography ever be successful running a fund, and how?
• 1:04:30: How can you access risk from local governments that can potentially suppress internet and banking access to entrepreneurs on the ground?
• 1:06:15: What’s the ideal composition of a VC fund in terms of government, business structure, etc?
• 1:08:10: How do I transition to a career in VC in the states coming from Latin private equity?
• 1:09:27: What qualities should a founder have to become a good VC?