For this deep dive, we spoke to John Backus, Managing Partner at PROOF.

John Backus, Managing Partner at PROOF

Tell us about your firm.  What makes it different:

PROOF stands for the Pro Rata Opportunity Fund.  LPs think of us as an opportunity fund on steroids.  Why?  Because we are able to invest in many of the best venture-funded companies in the ecosystem.  How?  We source our deals from hundreds of seed and early-stage venture funds.  When their best companies are raising an early growth round (we generally invest in B rounds) we will write the check that they are entitled to write, through their pro-rata right, and we will give them 10 of our 20 points of carry on a deal carry basis.   This provides a terrific alignment of interests.  The early investor makes more money on their best companies.  They stay in the board room longer.  And we can build a “greatest hits” portfolio of many of the best VC-backed businesses.

What defines your portfolio?

Our portfolio is designed to reflect the broad VC investing landscape.  PROOF gives our LPs exposure to almost all of the industries and trends that VCs are investing in during a 3-year investment period.  Enterprise, consumer, AI, fintech, healthcare, space – we do it all (except for biotech.)  We are also building a very different looking VC portfolio.  HBS professor Josh Lerner proved the 80/20 rule in venture – where 80% of the return from a VC fund comes from (Read more...)