GP Interview: Charles Hudson
Charles Hudson is the founder and managing partner of Precursor Ventures and lives in the Bay Area. This is his Emerging Manager interview.
👉 Big Learning Up Front (B.L.U.F.): Hiring a part-time CFO has been a big productivity gain. Adding this person helped revamp our wire process and brought much more order to the management company finance process.
Charles, tell us about yourself
I am originally from Michigan and I have lived in the Bay Area for 25 years now. I moved to the Bay Area to study Economics and Spanish at Stanford, thinking that I would go back to the Midwest or the East Coast after graduation. I graduated into the Web 1.0 tech boom and, after interning at Excite@Home (bonus points if you are old enough to remember that company!) I ended up taking an Analyst role at In-Q-Tel. After bouncing between startups, public companies, and investing, I started Precursor in 2015. I live in San Francisco with my wife and son and enjoy cooking, running, riding my Peloton, and probably work too much for my own good. I am also really into wine and consider myself fairly versed in all of the best-remodeled playgrounds in the city of San Francisco.
One other thing that I am really passionate about is helping other emerging managers get their funds off the ground. I spend a fair amount of time trying to help everyone I can learn more about starting a fund, finding the right LPs, and figuring out if the solo GP lifestyle is right for them. Helping other people figure out their own path in venture is one of my favorite things to do.
Describe your fund, Precursor
I started Precursor in 2015 because I felt there was a class of entrepreneur who was being overlooked by the then-successful seed funds. Lots of those seed funds had gotten to a place where they had deep networks and big funds. As a result, it really felt like their business model pushed them toward funding people they knew, people who already had traction, or people who were spinning out of reputable, well-known companies. I felt like there was a gap in the market for people who were outside of that spec, many of whom needed $500K to $1 million to get from idea to launched product with data.
We will typically invest in 25-30 companies per year, with the majority of those investments being $250,000 checks into pre-launch, pre-traction startups. I am a total generalist and will invest in just about anything unless it requires real knowledge of chemistry, biology, or physics; I don’t have the background to evaluate those companies.
Share 1 process improvement you’ve used individually or as a team which has made you a better fund manager
For our first two funds, we had a fund administrator but I did not have a CFO. I thought about hiring one, but our budget didn’t support it. I distinctly remember talking to Aaron Holliday at 645 about his plans for scaling and he told me about his plans to add a CFO to the team. After talking to him, I realized I was doing way too much work that sat at the interface of fund admin and the fund. We brought on a part-time CFO who helped revamp our wire process, bring much more order to the management company finance processes, and get us on better footing when it comes to our investment closing and documentation process. I really wish I had brought on someone specifically to do the things that fall between what a GP wants to do and what a good fund admin will do as that work just creeps up on you as you raise more funds and your organization gets more complex.
Which founder from your portfolio has had the greatest impact on you and why?
This is incredibly difficult for me to answer as there are many contenders across the portfolio. If I had to pick one person, I would pick Tammy Sun at Carrot Fertility. When I met her, she was starting her first company in a space that she didn’t know super well at the time and with a business model (selling to employers through the benefits channel) that was not widely understood by VCs. Tammy has proven herself to be an incredibly talented entrepreneur and I am so proud of what she has built. Whether she knows it or not, she has also referred some of our best portfolio companies to me (I won’t name them so as to not embarrass her); in addition to being a great entrepreneur, she also has an exceptional ability to spot other talented entrepreneurs as well. Tammy also has reinforced to me that many entrepreneurs have lots of capacity to execute if you give them room and let them know that you are there for them when they need you but that you also trust them to run the company as they see fit.
What’s 1 thing you wish you knew before you became a VC?
Prior to starting Precursor, I worked at Uncork. I had no idea how much work Jeff Clavier did to keep Uncork running, including leading fundraising, talking to LPs, getting the year-end close done, meeting and supporting companies and building a team. I underestimated the amount of fund management that goes into running a VC fund and I wish I had fully grasped that before I started my own fund.
Tell us the story of a rabbit hole you recently fell deep into
This has absolutely nothing to do with anything about venture and tech. During the pandemic, I bought a smoker and have gone way down the rabbit hole when it comes to smoking meat. I have bought a lot of Thermoworks products and probably more different types of charcoal than any one person should own and have been running lots of experiments on different techniques for smoking ribs and chicken. I bought a little journal to keep track of all of the tweaks I make with each variation and have been dialing into something that really works. It feels like there is no end to it at all.
Name 1 GP and 1 LP everyone should learn from -- and whom we should feature next
GP: The real godfather of pre-seed, in my opinion, is Manu Kumar. He is incredibly talented and successful, but he does not seek the spotlight or look to promote himself at all. I think he is excellent at this work and I don’t think there would be a Precursor without K9 as an inspiration. When you have returns like his, you can just let the work speak for itself.
LP: On the LP front, I am hesitant to mention any of my LPs by name to keep their inboxes manageable. For me, though, Steve and Jamie from Verdis were such a breath of fresh air when I first started Precursor. As someone with a very unorthodox portfolio construction by conventional standards, they were the first LPs I met who really liked my model. Getting their support after hearing a lot of negative feedback on our lack of concentration and large company count gave me a lot of energy and good vibes when I needed it. They continue to be strong, supportive LPs in addition to being really awesome people.
Finally, what are the 3 best emojis?
🤦🏾, any family emoji, 😬
Charles Hudson is now on the EM roster at EmergingManager.vc. << View all these EMs, learn from them and then teach me some new things.
Charles was such an important part of us getting Trucks off the ground back in the day. He's also the most commonly mentioned name from other GPs when answering the question 'name 1 GP everyone should learn from.' Charles’s contact: charles@precursorvc.com, @chudson, LinkedIn
Thank you — @reillybrennan, rpb@trucks.vc, Trucks portfolio