The bootstrapped SaaS VC firm with 1.46x TVPI after 2 years

Today, we launch our report onEarnest Capital: The Bootstrapped SaaS VC Firm With 1.46x TVPI After 2 Years.

Read it, and drop a reply to this email to let us know what you think.

Earnest Capital is a fund that invests not in high-growth startups but in bootstrapped SaaS companies. After recording a well above-median 1.88x TVPI on his first fund, GP Tyler Tringas is now giving retail investors a chance to back him via Wefunder.

We put together this short-form research note to shed some light on Earnest Capital's model and vision, but also to analyze the economics behind this particular iteration of GP crowdfunding via Reg CF.

Some key points from our analysis:

  • As of December 2020, Earnest’s Fund 1 and 2019 cohorts have outperformed the pooled and median benchmarks for 2-year old venture funds, with all investments made in 2019 up 250% since time of investment in terms of total value growth.

  • Because Reg CF investors get a 10% slice of Tyler's carry rather than a portion of all returns (as regular LPs do), new funds raised and DPI are the two most crucial levers for the appreciation of their investment.

  • Earnest can hit an IRR of 35% if they deliver on their goal of 3x cash-on-cash returns and raise $80M in new funds: comparable to the BVP Nasdaq Emerging Cloud Index, which has generated 36% IRR since inception in 2013.

Check out the report for our full analysis.