We Didn't Follow the Lead Investor: How We Learned to Love Due Diligence

This is part 5 of 10 of our 10 Years of Laconia Series.

Power laws seem to be ever-present in human endeavor, or at least in the conduct of rigorous due diligence (DD). Warren Buffet famously noted that a receding economic tide reveals who’s swimming naked. A view into the conduct of VC due diligence can be just as revealing.

To be fair, there is some impressive DD being executed within our industry, but we learned early on that when it comes to how many firms actually conduct rigorous DD, let’s just say that the 80/20 rule is still very much alive and well.

Early on as angel-investors-turned-VCs, we were inclined to be in awe with “institutional” investors. After all, they were the big kids vetted by LPs and empowered by fee-funded resources. We couldn't wait to be in syndicated deals with the pros, hungering for all that we would learn from them. And learn we did; the good, the bad, and ugly!

Fortunately, it was an early deal that humbled our naivete. We were invited into our first syndication with some very established VCs; a pinch-me moment. Part of the syndication was an opportunity to see for the first time other VCs’ DD and deal memos. Holy grails of learning, we thought.

Ouch! Where was the detailed P&L analysis, thoughtful bottoms-up TAM assumptions, investigative insight into the founders, prospective customer feedback, pro-forma org chart visualizing the functional and reporting to be built with our capital, a granular map of competitive risks; we could go on. So much was either missing or superficially commented upon.

Our own analysis revealed some key concerns. And yet, these were the pros. They were intuitional investors with years of experience. Maybe we were missing something. We placed more weight on their reputation than we did on our own analysis and moved forward with the investment. And that was the last time we did that!

Original and rigorous DD, and not following the VC pack, became our bedrock tenant, so much so that we have led more deals than not, even when we are not the largest check. We have learned that the value of sound DD goes beyond the identification of a good deal – it can build lasting trust with founders. The DD process, when done rigorously, can help a company create a more effective capital strategy and show a founder that we are willing to roll up our sleeves and work side by side with them. It also produces better ROI!

David Arcara

Why Raising Fund 2 Was Harder Than Fund 1

This is part 4 of 10 of our 10 Years of Laconia Series.

When we raised Fund 1, it was fueled by the trust and camaraderie of friends and former colleagues. These were people who had seen David and me in action, knew our work ethic, and were willing to take a chance on us as we transitioned from angel investors to venture capitalists. For that, we will forever be grateful. But fast forward two years, and we were back in front of these same LPs, this time asking them to take another swing—not just because they trusted us personally, but because they believed in the vision we had for Laconia.

Fund 2 was the inflection point that meant we were all-in. By the time we began raising it, we had brought on Geri as our third partner and were ready to scale and grow a truly special venture firm. But there was a big hurdle: Fund 1 was still in its early days, and venture funds take time to show results. While we had a few markups in Fund 1, it wasn’t enough to point to a proven track record. Asking Fund 1 LPs to reinvest without fully realized results was daunting.

It’s worth noting that we returned Fund 1’s initial capital within those first four years (and have since returned more). This performance underscores the strength of the companies we backed and the value we’ve created for investors, even in the early stages of building Laconia.

To their credit, 85% of our Fund 1 LPs came back in for Fund 2. That kind of loyalty and trust is rare and speaks volumes about the caliber of people who believed in us from the beginning. But even with that vote of confidence, we needed to expand our LP base to build momentum. And that’s where the real challenge began.

David and I are not natural self-promoters. The fundraising process for Fund 2 required us to stretch beyond our comfort zones. Networking became our daily reality. We leaned heavily on referrals and spent countless hours explaining our vision and strategy to potential LPs who had no prior history with us. This wasn’t just about pitching a fund; it was about selling the long-term vision for Laconia and the value we could bring as a concentrated, boutique venture firm focused on pre-seed and seed-stage B2B companies.

Through grit, determination, and a lot of late nights, we secured $13 million for Fund 2. By some measures, that’s not a large fund. But for us, it was significant. We’re a concentrated firm by design, intentionally working closely with fewer companies. Fund 2 allowed us to double down on our thesis and continue building something unique in the venture ecosystem.

Raising Fund 2 taught us that being a good investor is only part of the job. Building a venture firm requires a strong LP pipeline, constant relationship-building, and the ability to communicate your vision in a way that resonates with others. It’s not easy, and it’s not natural for everyone. But for David, Geri, and me, it became an essential part of growing Laconia into the firm it is today and will be as we enter the next decade. 

Looking back, Fund 2 was harder than Fund 1 in every way. But the challenges we faced during that time laid the foundation for everything that followed. And for that, we’re deeply grateful.

Jeffrey Silverman

How We Met Geri – Another Serendipitous Moment

This is part 3 of 10 of our 10 Years of Laconia series.

There’s something funny about serendipity – you never know when it’s going to raise its head. In building Laconia, we’ve experienced more than our fair share of these moments. One of the best examples? Meeting Geri Kirilova.

It was a cold and wet Monday night in the fall of 2015. One of our LPs was celebrating her 50th birthday at an Irish pub in the Financial District. I’ll be honest: I wasn’t exactly thrilled about going. It was miserable outside, I lived uptown, and the thought of schlepping downtown was far from enticing. But this person meant a lot to me, and I couldn’t miss the chance to give her a big birthday hug. (Yes, I’m a hugger.) So, I pulled on my coat, hopped on the 6 train, and off I went.

The party was on the second floor of the pub. I climbed the stairs, and as I reached the top, I bumped into an industry peer. Standing next to him was a young woman with wild hair – the kind of hair you don’t forget. We exchanged quick small talk, and I learned she was a senior at NYU Stern. It was one of those blink-and-you-miss-it moments – maybe a minute with the peer and 30 seconds with the young woman before I moved on. I made my way through the room, doing my rounds: hug, kiss, hug, kiss. Thirty minutes later, I was back on the 6 train, headed uptown, thinking little of it.

A few weeks later, David and I were having a working lunch. We were tossing around the idea of bringing on an intern – yes, a paid intern – to help us with some projects. And out of nowhere, I thought of the young woman I’d met that rainy night. I told David, “I met this young lady at a birthday party. She made a strong first impression.” That was it. We decided to reach out.

Fast forward: That young woman was Geri Kirilova. Today, Geri is our third pillar and Laconia, our LPs, and the founders we support are all better off because of her. What started as a brief, forgettable moment at an Irish pub turned into one of the most serendipitous decisions we ever made.

Geri’s growth from intern to Partner has been nothing short of extraordinary. Her tenacity, judgment, and keen understanding of early-stage investing have played a critical role in shaping Laconia into what it is today. 

As for serendipity? Sometimes you just have to take the 6 train on a rainy night, climb the stairs, and say hello.

Jeffrey Silverman

If We Knew How Hard Building a VC Fund Would Be, We Might Not Have Started

This is part 2 of 10 of our 10 Years of Laconia Series.

When you’re angel investing, you’re playing with your own capital. Maybe you bring along a friend or two, and you’re taking risks that are, at the end of the day, yours to own. It’s exciting, it’s personal, and it’s flexible.

But starting a venture fund? That’s an entirely different game. Suddenly, you’re not just betting your own money—you’re responsible for other people’s capital. With that comes fiduciary responsibility, a term that doesn’t get thrown around lightly. It’s not just a legal obligation—it’s a promise. A promise to make decisions that are in the best interest of your investors, to manage their capital responsibly, and to build a level of trust that can’t be broken. It means no shortcuts, no excuses, and no putting your ego ahead of the people who believed in you.

At the time, we thought, how hard could this be? We loved angel investing, we’d been operators for years, and we had built strong networks. But what we quickly learned is that building a venture fund is so much more than just finding amazing founders and backing them. It’s about creating a foundation that balances vision, discipline, and long-term responsibility, and that’s a far bigger challenge than we ever imagined.

We understood the importance of fiduciary responsibility from our years as operators. Running businesses taught us the weight of accountability—to our teams, boards, and stakeholders. But launching a fund took it to another level. This time, it wasn’t just about day-to-day operations. It was about building fund management systems and tools that would stand the test of time: audits, quarterly and annual reports that would follow the fund for its entire lifetime, and figuring out everything from asset allocation strategy to recycling capital. The processes we put in place mattered as much as the deals we made. This wasn’t just about investing—it was about operating a financial institution.

Part of building something hard is knowing your strengths—and your weaknesses. Out of the gate, I (Jeffrey) knew David was the right partner. Where I saw my own shortcomings, David filled the gaps. He brought a sharp financial mind and an extreme eye for detail—qualities that would be critical as we moved from writing small checks to managing institutional capital.

On the other side, I was the extrovert to his introvert. If David lived in the numbers, I lived in the room—building relationships, telling our story, and creating momentum. It wasn’t just that we liked each other; it was that we complemented each other in ways that made us better as a team.

More importantly, we had a tremendous amount of mutual respect for each other. If I liked a deal and he didn’t—or vice versa—we never let it become a dead end. Instead, we’d ask each other, “What does the other see that I don’t?” That respect pushed us to think harder, dig deeper, and make better decisions. We never argued or let ego get in the way. It wasn’t about being right; it was about getting it right. That mindset created a foundation of trust that carried us through the toughest moments and set the tone for how we would operate as partners.

We were cautious with our first fund. Truthfully, we weren’t sure if this “venture thing” was going to become our next career. We were curious, excited, and maybe a little unsure of what we were really signing up for. So we set the bar low—or what we thought was low at the time—and decided to raise a $5 million fund.

And yes, we knew this wasn’t the direct path to getting rich—a $5 million fund with a 2% management fee and 20% carry; you can all do the math. Prior success provided us with the path to test these waters out. Our focus was to see if we could build, run, and succeed in running a venture fund. Right or wrong, building the Laconia brand or nurturing and growing our LP pipeline took a back seat. As soon as we closed that first fund, we put our heads down and focused on executing.

We can’t begin to tell you how grateful we are to the friends and former colleagues who believed in us before we fully believed in ourselves. They were the ones who stepped up to be our first LPs. Looking back, those early commitments weren’t just about the money—they were votes of confidence that gave us the courage to take the leap.

Starting Laconia was harder than we ever expected. But looking personally and professionally, we’re so glad we didn’t know just how hard it would be as we find ourselves today blessed with the people we get to work with day in and day out and grateful for the job we have.

Jeffrey Silverman

Our Path From Operator to Angel to VC

This is part 1 of 10 of our 10 Years of Laconia Series.

Serendipity. It’s a word we both love and one that truly captures how we see the world. By definition, it’s about stumbling into something good without really looking for it. But to us, serendipity is more intentional—it’s about being open to possibilities, curious about the unexpected, and ready to follow where life takes you.

The formation of Laconia was all about serendipity. There was no roadmap, no master plan to build a venture capital firm. It started with a casual bar conversation about angel investing with a close friend—one of those “off the cuff, over a drink” chats that you don’t expect to lead anywhere. But it sparked something.

From there, it was a series of moments we could never have predicted. Each of us started doing angel deals without a real understanding of the investment side. We were founders and operators at heart—building businesses was second nature, but investing? That was a whole new world.

Eventually, our curiosity about angel investing led us to The New York Angels, where we both found an opportunity to meet like-minded individuals and learn how to approach investing with a bit more structure. It was there that our paths officially crossed.

We say officially because, as we got to know each other, we uncovered a pretty wild realization: serendipity had been at work long before that NY Angels meeting. We had unknowingly lived just a block apart in NYC for 15-plus years. Our kids were not only at the same school—they rode the same bus every morning. And professionally, our firms had even done business with each other without us ever putting the pieces together.

At this point, Jeff—being the more social of the two of us—was already hosting quarterly dinners with friends and former colleagues who were also curious about angel investing. These weren’t stuffy, formal meetings. They were casual, convivial nights filled with great food, great conversation, a shared interest in something new, and the joy of bringing old and new friends together.

At each dinner, Jeff would bring along 3-4 founders he liked to pitch the group. The idea wasn’t just about writing checks. It was about rolling up our sleeves, sharing expertise, and leveraging our personal and professional networks to help these early-stage companies succeed.

Then, in August of 2014, the group pushed us in a direction we hadn’t even considered. Over dinner, someone asked Jeff: “Why aren’t you doing a venture fund? You seem to not only like investing and mentoring, but you’re pretty good at it.”

Jeff—never one to enjoy working solo—admitted he was interested but needed a partner. That’s when David raised his hand and said, “I’d explore this idea with you.”

The next six months were all about mapping out the type of venture fund we wanted to build. We knew two things for certain: we wanted to stick with what we knew, and we wanted to do it our way.

As operators, we had spent our careers building businesses in the B2B space, so staying focused there was a no-brainer. We also wanted to be shoulder to shoulder with founders, rolling up our sleeves and leveraging our operating experience to help them execute and scale. That’s why focusing on Pre-Seed and Seed stage companies made the most sense.

At the same time, we couldn’t ignore what we loved most about angel investing: the collaboration. Those dinners taught us that when you bring the right people together—people who genuinely care about a founder’s success—you create a multiplier effect that’s hard to beat. We wanted to bring that spirit of collaboration and partnership into the very DNA of the fund.

By early 2015, we had our vision. It wasn’t just about writing checks; it was about building a venture fund that felt as hands-on, connected, and collaborative as those early dinners had been.

And with that, Laconia was born. We didn’t plan it, but step by step—through serendipity, curiosity, and collaboration—we built something that matters. Looking back, we wouldn’t have it any other way.

David Arcara & Jeffrey Silverman