E10: Michael Kim | Founder of Cendana Capital on How Small VC Funds Can Return 200X+

Fund Strategy

Michael Kim, founder of Cendana Capital, emphasizes the importance of high ownership percentages in small venture funds to maximize returns. He explains that smaller funds, like those with $12 million, can achieve substantial economic value through strategic ownership, as demonstrated by Mucker's 7% stake in Honey, which resulted in a $280 million return when acquired by PayPal 1. This approach contrasts with larger fund of funds platforms, which often act like index funds, while Cendana focuses on concentrated portfolios to find the best managers 2.

Smaller funds can actually generate substantial economic value to the fund manager.

--- Michael Kim

Kim's strategy is rooted in the belief that seed stage investors have a higher probability of generating significant returns with modest exits, provided they maintain high initial ownership 1.

   

Nano Program

The nano program initiated by Michael Kim targets sub-$20 million funds, offering a unique opportunity for small funds to achieve significant returns. Kim highlights the success of small funds like Chris Sacca's first fund, which returned 204X, and Manu Kumar's fund, which returned 100X 3. This program allows Cendana to work with emerging managers and potentially elevate them to core positions within their portfolio 4.

These small funds can actually bring back material amounts of return.

--- Michael Kim

The nano program serves as an innovative approach to venture capital, enabling Cendana to support promising managers while maintaining flexibility in fund size and strategy 4.