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Ep. 289 How I Raised It with Courtney McCrea of Recast Capital, a Fund-of-Funds

·31 min·3 clips

Courtney McCrea explains why emerging managers in funds one to three are never more aligned with investors.

Courtney McCrea is a co-founder and managing partner at Recast Capital, a fund of funds platform focused on emerging venture capital managers. Host Nathan Beckord interviews her about the firm's investment strategy and its programs for supporting diverse fund managers. McCrea previously spent a decade at another venture fund of funds called Weathergage before launching Recast in 2020. Recast Capital operates a venture fund of funds that invests in managers raising their first, second, or third institutional funds. The firm also runs two GP-facing initiatives named Enablement and Accelerate, designed to help emerging managers with fundraising. McCrea defines a diverse venture capital fund as having at least one senior investment team member from an underrepresented demographic in venture. She argues that smaller, early-stage funds run by emerging managers often outperform larger, established funds due to better alignment and the math of smaller fund sizes. The firm seeks managers with contrarian or unique investment theses that stand out from a "sea of sameness." McCrea cites an example of a fund that closed its raise in just 30 days because it was a spin-out anointed by a blue-chip brand name venture firm. Her team sources deal flow through their GP programs, their LP network, and by identifying brand-name spin-outs. While artificial intelligence remains an area of interest, McCrea notes the term is overused and valuations can be high, so they evaluate opportunities from the bottom up. The tuition-free Enablement program has worked with 116 funds, 76% of which have a female or non-binary senior investor and 63% have a person of color. A key finding was that women and people of color take two to three times longer to raise capital than their white male counterparts. This led to the creation of the Accelerate program, a nonprofit initiative fiscally sponsored by Pivotal Ventures, Melinda French Gates's firm. Accelerate provides $100,000 in operating expenses to cohorts of 25-35 female and non-binary led funds, who in turn report on the demographics of the founders they back. McCrea's top advice for emerging managers is to "find your people" among LPs and avoid twisting their strategy to please everyone. She advises that having a diversified LP base is a luxury for a first-time fund, and managers should prioritize proving they are good company pickers first. For a $10 million fund, she suggests targeting high-net-worth individuals, corporations, and family offices over large institutional investors, which often have minimums too high or lengthy processes. She highlights corporations and state-managed SSBCI capital as active but underutilized funding sources for emerging managers. The tone is conversational and educational, blending McCrea's direct, institutionally-trained advice with practical anecdotes from her experience. The style is advisory, with McCrea acting as a straight-shooting mentor to the emerging manager community. This episode is ideal for aspiring or current venture capital fund managers, especially those from underrepresented backgrounds, seeking concrete fundraising tactics and LP targeting strategies. Listeners interested in the mechanics of fund of funds or the data behind diverse investing may also enjoy it. Those solely focused on startup fundraising or seeking highly produced narrative storytelling might find it less relevant.

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