The specific portfolio construction changes one emerging manager made after learning hard lessons in Fund I and why Fund II should be a redesign, not just a bigger version of the same fund.
Fund I: The Learning Portfolio
Raoul Felix Maier built Fund I with about 30 companies. The check sizes were small. The sector coverage was broad. The stage was specific. At the time, each of these choices felt reasonable. In hindsight, each was a lesson.
“Fund I is more like a learning portfolio. You do more investments at smaller check sizes. It’s a little bit like you’re still figuring out the game.”
For emerging managers, this is the natural pattern. Fund I is how you learn what your actual edge isand what it isn’t. The portfolio construction changes Raoul made for Fund II were each a direct response to something Fund I taught him.
Change 1: Fewer Companies, Larger Checks
Fund II targets around 25 companies, down from 30, with larger initial check sizes and a higher ownership target per deal.
The lesson from Fund I: spreading across too many companies diluted both the signal and the ability to support portfolio companies meaningfully. At small check sizes, you own too little to move the needle at exit, and you have too many companies to give each real attention.
Fund II concentrates on fewer, higher-conviction bets from the start.
Change 2: Less Follow-On Reserve
Reserving significant capital for follow-on investments feels prudent in theory. In practice, Raoul found it often doubled risk without proportionally improving returns.
“Mathematically it’s usually not good. You’re getting incremental additional ownership, but you’re doubling your risk. We had a situation where we thought we had insider knowledge and needed to double down. It didn’t work out. Your risk exposure doubles, but your impact only increased marginally.”
The venture capital portfolio construction logic for Fund II: deploy more at entry, reserve less for follow-on, and be disciplined about when doubling down actually adds value versus when it just adds risk.
Change 3: Narrower Sector Focus (AI Only)
Fund I covered software and software-enabled businesses, including e-commerce, marketplaces, and companies with physical product components.
“We did a lot of businesses that had physical product components. Even if we didn’t do hardware, we would do e-commerce, marketplaces, lots of stuff that has atoms. That didn’t work that well because of natural supply chain issues, capital intensity, slower scaling speed.”
Fund II is digital only, almost exclusively AI. The focus is tighter. The thesis is clearer. The competitive advantage is more defensible. For emerging managers building a Fund II, clarity of sector thesis is often what separates managers who can attract institutional LPs from those who cannot.
Change 4: Broader Stage (Seed Through Series A)
This change went the opposite directionbroader rather than narrower.
Fund I targeted post-seed specifically. The logic was to find a sweet spot between seed and Series A. The reality was that it unnecessarily constrained deal flow.
“That’s limiting the universe unnecessarily, we learned.”
Fund II targets both seed and Series A. The stage expansion opens up more high-quality deals without compromising the core thesis.
The Pattern: Narrower Where Too Broad, Broader Where Too Narrow
The four changes follow a coherent logic. Where Fund I was too spread out, Fund II concentrates. Where Fund I was unnecessarily restricted, Fund II expands.
Fewer companies. Less reserves. Tighter sector. Wider stage. Each change was earned through the experience of Fund I.
Fund II Is Not Fund I With More Money
The temptation for many emerging managers is to simply scale up: double the fund size, double the check sizes, keep everything else the same. Raoul’s approach is different.
“This was a natural evolution that was by design.”
Fund II should reflect the conviction you gained in Fund I. Fewer bets, but bigger. Less hedging, more thesis. Narrower where it matters, broader where it helps.
Fund I teaches you the game. Fund II lets you play it with conviction.
Emerging Institute helps Fund I emerging managers design and execute the portfolio construction strategy needed to attract Fund II and Fund III institutional LPs. Applications for Cohort 4 are now open.