"Down Rounds Build Character"
Dear Limited Partners,
It was a year of growth — personal growth, mostly, since there was no other kind available. Our portfolio raised round after round, each at a lower price than the last. Where a lesser fund sees value destruction, we see a character-building exercise for everyone involved, ourselves included.
A down round, properly understood, is a gift. It teaches founders humility. It teaches employees that their options are decorative. And it teaches us, the investors, that our previous markups were a form of creative writing.
We have built a great deal of character this year. Our flagship company completed a "recapitalization," which is the financial equivalent of shaking an Etch A Sketch. Everyone's ownership reset to roughly nothing, and we all emerged stronger, poorer, and wiser, in that proportion.
If hardship forges greatness, this fund is on the verge of being the greatest in history.
Characterfully,
Chadwick "Chad" Burnsworth III
Managing Partner