Sarah Smith Launches $16M Fund for Solo GPs - AI Investment

Sarah Smith Fund Closes $16 Million Fund I

Sarah Smith, the founder and managing partner of the Sarah Smith Fund, revealed on Thursday the completion of the final closing for its inaugural $16 million Fund I.

Ms. Smith initiated her fund in 2022, following a seven-year tenure as an investor at Bain Capital Ventures. She operates as a solo General Partner (GP).

The Impact of AI on Venture Capital

Smith expressed her astonishment at the potential of AI to revolutionize firms like hers, particularly those that are solo or next-generation. She stated that she now finds it difficult to envision conducting venture capital investments without leveraging AI tools.

She believes that while collaborative team efforts remain crucial for company building, the initial stages of investing are optimally managed by a single individual.

Benefits of a Solo GP Model

A key advantage of her approach is the ability to make swift decisions, unhindered by the need for committee consensus. She has also actively integrated AI to streamline various aspects of her work.

“I continually explore new methods to enhance support for my portfolio companies, integrating my experience and network with the capabilities of AI,” she explained.

AI-Driven Efficiency Gains

As an example, Smith recently facilitated a values articulation project for one of her founders. This task, which previously demanded approximately 20 hours of her time, was completed in just two to three hours with the assistance of AI.

She posits that an AI-native firm capable of delivering tenfold value in one-tenth the time can effectively manage a substantial portfolio with a single operator.

Fund Details and Investment Strategy

Prior to launching Fund I, Smith managed a $3 million rolling fund and dedicated a year to fundraising for this new vehicle. Fund I aims to invest in 50 companies and has already provided funding to 17, with an average investment size of $250,000.

The fund’s Limited Partners include Pear VC, Ulu Ventures, and Verdis Investment Management.

Focus on the Stanford Ecosystem

Fund I’s investment focus is primarily directed towards startups within the Stanford ecosystem, a strategy supported by Smith’s own affiliation with the university as an alumna.

Research substantiates this focus. Data from Ilya Strebulaev indicates that 11% of unicorn founders have a connection to Stanford University.

“Stanford has generated more unicorns and exit value than any other university globally,” Smith noted. “Consequently, while many established firms concentrate their efforts in San Francisco, I am strategically reinforcing my presence on the Stanford campus.”