Rolling fund Diaspora lures Marvin Liao in as partner

Marvin Liao, a noted seed investor and a former partner at 500 Startups, has joined Diaspora Ventures as a partner, he told Venture Capital Journal.

The firm launched last year to help French start-ups relocate to the US, but Liao says its regional focus has expanded to working with seed and pre-seed companies throughout Europe that are interested in the US market.

Marvin Liao

Liao is no stranger to the European start-up scene.

In 2014, he joined 500 Startups – now known as 500 Global – to help open its San Francisco office and operate its local accelerator. Liao, who was previously an executive at Yahoo focused on emerging markets, estimated he has worked and invested in more than 400 pre-seed and seed-stage start-ups worldwide, including in Europe and Russia, where he says he has a solid network to tap into.

Among his prior investments is Printify, a Latvian company that provides on-demand printing services.

Liao left 500 two years ago and had been working as an adviser and investor since.

Interest in European start-ups is spiking, he says, especially in light of large Silicon Valley firms Sequoia Capital and Lightspeed Venture Partners opening offices there in the past year. Sequoia brought on Luciana Lixandru as its first female first partner in Europe, based in London. Lightspeed has hired two VCs for its European push.

“We’re seeing a lot of high-quality founders come out of Europe,” Liao says. “I bump into a lot of people I know from Silicon Valley whenever I’m there in Europe.”

Liao is a notable addition for San Francisco-based seed-stage firm Diaspora, which was one of the first emerging managers to take advantage of AngelList’s rolling funds early last year. In a rolling fund vehicle, LPs contribute to a fund’s coffers via a minimum quarterly subscription. Standard management fees and carry are usually included.

The advantage to emerging GPs is that they can raise money quickly and begin investing right away rather than going through a long roadshow of 12 to 18 months of meeting with prospective LPs.

For LPs – often high-net-worth individuals in rolling funds – the investment vehicle offers more flexibility as they typically can increase, stop or decrease their investments each quarter.

Diaspora lists more information about its rolling funds for LPs on its website.

Liao says the rolling fund structure “is like SaaS for LPs.”

“It’s the democratization of VC, opening it up for more people to start and back a VC fund,” he says. “It also puts the onus on the GPs to do a good job and make it worthwhile to the LPs who regularly commit.”

Liao estimated the firm raises about $500,000 a quarter as it invests in four to five deals every three months.

One of the more well-known rolling funds is operated by Sahil Lavingia, founder of company Gumroad a decade ago, who launched his rolling fund early last year. Lavingia has a Twitter following of more than 260,000. Liao says it is key for rolling funds to be active on social media to help with deal sourcing and working with LPs.

Lavingia’s rolling fund LPs reportedly include VCs Arlan Hamilton of Backstage Capital, Josh Kopelman of First Round Capital and AngelList founder Naval Ravikant.

Lavingia says on his website, which also includes information for LPs, that he invests more than $10 million a year in early-stage tech companies via check sizes that range from $100,000 to $250,000.

“For LPs, a rolling fund is a great way to test out emerging managers,” Liao says. “And it gives the LPs early access to the up-and-coming VCs.”

To connect with Liao, you can check out his personal website.