Venture Unlocked: The playbook for venture capital managers (Samir Kaji)

Follow me @samirkaji for my thoughts on the venture market, with a focus on the continued evolution of the VC landscape.

This week we are joined by Eddy Chan, founding partner of Intudo Ventures, which employs a hyper-local strategy by backing entrepreneurs in Indonesia. With over $230M in AUM, the firm has become one of the largest Indonesia-only based firms.

Eddy and I had a fun conversation on the reasons why hyper-local strategies can work, what these regions need to scale, and some of the interesting ways they leverage their LP base to help with portfolio building.  

Frank, Rimerman + Co.’s history is closely intertwined with that of Silicon Valley. With humble beginnings similar to so many start-ups, Frank, Rimerman was formed with a desire to serve the entrepreneurial and venture communities of the Valley and the determination to think outside-the-box.

When it comes to venture funds, we work with almost 500 VC groups from over 20 states across the USA. We have worked with over 400 fund groups during their first year of operations, making us one of the leading providers in the country to emerging managers.

No one wants to be bored at work. That’s why we chose to work with some of the most innovative and creative people – people who are changing the world around us every day. Their excitement fuels our passion and determination to grow and serve this special community.

Frank, Rimerman + Co, Passion Works Here.

www.frankrimerman.com

About Eddy Chan:Eddy Chan is a founding partner of “Indonesia-only” Independent venture capital firm Intudo Ventures with over US$230 million in committed capital, that acts as the Indonesia beachhead strategy for dozens of leading institutions, funds, and family offices from around the world. Intudo portfolio companies include Xendit, Pintu, Pinhome, Halodoc, TaniHub, Kargo, PasarPolis, BeliMobilGue (acquired by OLX), Nalagenetics, Populix, and more.

Prior to co-founding Intudo Ventures, Eddy worked on venture investments in startups since the late 1990s, including PayPal, Palantir, and Affirm, founded and operated venture-backed technology companies with operations in Silicon Valley and Asia, practiced corporate/M&A law and worked as an investment banker.

Eddy holds a J.D. from Georgetown University and a B.S. in Business Administration from UC Berkeley.

In this episode we discuss:

(01:32) Why Eddy founded Intudo in 2016(05:47) The reasons Eddy thought Indonesia was ready for a hyper-local fund(09:52) Capital availability for companies that are in Indonesia(16:01) Navigating hyper-local challenges of getting companies far enough so that they can attract that Series A and how its different from Silicon Valley(22:55) How the first fundraise went and why LPs are more comfortable now(28:41) Why independence is a core value to Eddy and why no single LP can be more than 10% of the entire fund(31:16) How Intudo’s portfolio becomes a beachhead into Indonesia and the larger Asian market for its LPs(37:01) Intudo’s concentrated portfolio construction(41:09) Balancing due diligence and the speed of the market

I’d love to know what you took away from this conversation with Eddy. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Podcast Production support provided by Agent Bee Agency

Follow me @samirkaji for my thoughts on the venture market, with a focus on the continued evolution of the VC landscape.

This week we are re-joined by friend of the pod Ryan Hoover who is the Managing Partner of Weekend Fund and Jordan Gonen, Co-Founder and CEO of Compound, a fintech platform that provides wealth management and advisory services to founders and employees of startups. 

This was a special episode covering the growing intersection of the private wealth sector and venture capital investing, and what trends we are all seeing. 

We hope you enjoy my conversation with Ryan and Jordan.

Frank, Rimerman + Co.’s history is closely intertwined with that of Silicon Valley. With humble beginnings similar to so many start-ups, Frank, Rimerman was formed with a desire to serve the entrepreneurial and venture communities of the Valley and the determination to think outside-the-box.

When it comes to venture funds, we work with almost 500 VC groups from over 20 states across the USA. We have worked with over 400 fund groups during their first year of operations, making us one of the leading providers in the country to emerging managers.

No one wants to be bored at work. That’s why we chose to work with some of the most innovative and creative people – people who are changing the world around us every day. Their excitement fuels our passion and determination to grow and serve this special community.

Frank, Rimerman + Co, Passion Works Here.

www.frankrimerman.com

About Ryan Hoover:Ryan is the founder of Weekend Fund. He started his professional career as a product manager in the gaming industry. His fascination with technology and behavioral psychology led him to help write Hooked: How to Build Habit-Forming Products.

In 2013 he founded Product Hunt, inspired by his curiosity and a desire to support early-stage makers and founders. The company raised capital from Y Combinator, Andreessen Horowitz, and others before joining AngelList.

About Jordan Gonen:Jordan Gonen is the Co-Founder and CEO of Compound. Prior to that, he was at Scaphold (YC W17) and Pluot (YC W16). He also had stints at Inside, RealtyShares, Cultivation Capital, and more.

Jordan’s writing has been featured in Forbes, Fortune Magazine, Startup Grind, Entrepreneur, Business Insider, Inc., Time, Mashable, Elite Daily, the Huffington Post, and others. Jordan studied at Washington University in St. Louis.

In this episode we discuss:

(02:20) Why Jordan started Compound(05:06) Why High Net-Worth Individuals seek out Alternative Investments(08:31) Motivations for becoming an LP(12:08) Advice for those new to Venture Investing as an LP(16:46) How you should evaluate a fund manager(23:04) Building deal flow as an emerging manager(27:22) Red flags when evaluating an investment(32:31) What the markets will hold in 2023

I’d love to know what you took away from this conversation with Ryan and Jordan. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Podcast Production support provided by Agent Bee Agency

Follow me @samirkaji for my thoughts on the venture market, with a focus on the continued evolution of the VC landscape.

This week we are joined by Shuly Galili, Founding Partner of UpWest, an early-stage firm founded in 2012 with her partner Gil Ben-Artzy to invest in seed-stage founders from Israel that are seeking to expand into the US market. UpWest has 4 funds under management and has invested in nearly 100 companies at the early stage that today have a collective market cap of over $20B. 

A word from our sponsor:

Privately owned and headquartered in New York City, Grasshopper Bank is built to serve the business and innovation economy. As a client-first digital bank, Grasshopper combines the best of banking technology and years of industry expertise to deliver best-in-class experiences with trusted security and unparalleled support. Grasshopper's digital solutions are tailored for venture capital and private equity firms, startups and small businesses, fintech-focused Banking-as-a-Service (BaaS) and commercial API banking platforms, and more. 

Serving clients globally, Grasshopper provides flexible, firm-focused lending solutions, as well as a dedicated Relationship Manager committed to meeting the unique needs and strategic focus of your firm across all entities, including funds, general partner and management companies. Grasshopper is a member of the FDIC and an Equal Housing Lender.

For more information, visit the bank's website at www.grasshopper.bank or follow on LinkedIn and Twitter.

About Shuly Galili:Shuly is a Founding Partner at UpWest, a Silicon Valley seed fund investing in startups at the Israel-US technology junction. UpWest portfolio crossed $2B in VC funding and includes companies such as SentinelOne, HoneyBook, Stampli, CyCognito, Imubit, and more.

She helped found the California Israel Chamber of Commerce (CICC), a business platform for ongoing tech exchange serving a network of over 10,000 companies. Under Shuly’s leadership as Executive Director, CICC had a significant impact on its members’ success in securing millions in venture capital, establishing US/Israel offices and R&D Centers and branding Israel’s emerging tech industry in Silicon Valley.

In this episode we discuss:(02:23) What gap they saw they wanted to fill in 2012(08:45) How the go to market strategy is different in the US vs. Israel(10:51) What their first fundraise was like with a new strategy(14:03) The strategic support UpWest received from its early LPs(15:39) The realization that they needed to grow to realize their vision(18:10) How Fund II changed their investing strategy and approach(21:50) When do you know it’s time to raise your fund size?(25:42) What early-stage investors should optimize for(30:32) Defining a healthy venture GP partnership(33:57) UpWest’s decision-making process(35:20) How Shuly and Gil maintain their partnership(38:14) Advice to her younger self

I’d love to know what you took away from this conversation with Shuly. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Podcast Production support provided by Agent Bee Agency

Follow me @samirkaji for my thoughts on the venture market, with a focus on the continued evolution of the VC landscape.

This week on the show we’re joined by Dana Settle, Co-Founder of Greycroft. Founded in 2006, Greycroft began with a mission to invest in areas outside of Silicon Valley and specifically in NY and LA. The firm currently has over $2B in Assets Under Management, over 60 employees, and has invested in companies such as Bumble, Scopely, Plated, and Maker Studios among many others. 

This was a special episode where we unpacked all of the components of firm-building including team development, fundraising, investment decision-making, and evolving to market dynamics. 

We hope you enjoy my conversation with Dana.

Program note: This was recorded prior to the issues arising in the banking sector.

A word from our sponsor:

Privately owned and headquartered in New York City, Grasshopper Bank is built to serve the business and innovation economy. As a client-first digital bank, Grasshopper combines the best of banking technology and years of industry expertise to deliver best-in-class experiences with trusted security and unparalleled support. Grasshopper's digital solutions are tailored for venture capital and private equity firms, startups and small businesses, fintech-focused Banking-as-a-Service (BaaS) and commercial API banking platforms, and more. 

Serving clients globally, Grasshopper provides flexible, firm-focused lending solutions, as well as a dedicated Relationship Manager committed to meeting the unique needs and strategic focus of your firm across all entities, including funds, general partner and management companies. Grasshopper is a member of the FDIC and an Equal Housing Lender.

For more information, visit the bank's website at www.grasshopper.bank or follow on LinkedIn and Twitter.

About Dana Settle:Dana Settle is a Co-Founder and Managing Partner at Greycroft. Dana’s active investments include Acorns, Anine Bing, Avaline, Bird, Citizen, Cloud Paper, data.ai, Goop, HamsaPay, Happiest Baby, Merit Beauty, Mountain Digital, Pacaso, Seed Health, Tapcart, Thrive Market and Versed. Her notable exits include Bumble (IPO), Maker Studios (acquired by Disney), Pulse (acquired by LinkedIn), The RealReal (IPO), Trunk Club (acquired by Nordstrom), and WideOrbit (interest sold to company management).

Prior to Greycroft, Dana spent several years as a venture capitalist and advisor to startups in the Bay Area, including six years at Mayfield, and investment banking at Lehman Brothers.

Dana holds a BA in Finance and International Studies from the University of Washington and an MBA from Harvard Business School.

In this episode we discuss:

(02:03) What led to the creation of Greycroft(06:46) How they found believers in their hypothesis and got their first fundraise completed(08:19) Advice for managers and entrepreneurs raising in the current market(11:34) Building a distributed and remote-first culture outside of Silicon Valley(15:33) The role of diversity when building strong partnerships(19:00) Traits Dana values when she is hiring for the firm(21:09) Why curiosity is so important and how she uncovers that in candidates(23:55) The importance of creating a safe space for new voices to be heard in a firm(27:59) Why Dana hated the internal politics of old Silicon Valley and wanted to remove that from Greycroft(30:54) The decision to follow-on invest in their portfolio companies(33:11) How Greycroft manages conflicts within the partnership(35:01) The philosophy around team-building within the firm and how that benefits their portfolio companies(37:19) How Greycroft remains nimble with such a large organization(39:26) The bull case for Venture Capital moving forward(42:09) What Greycroft got the most correct and the most wrong in its history

I’d love to know what you took away from this conversation with Dana. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Podcast Production support provided by Agent Bee

Follow me @samirkaji for my thoughts on the venture market, with a focus on the continued evolution of the VC landscape.

I started Venture Unlocked to bring more transparency to firm building by bringing on guests whose unique insights and experts could help venture fund managers, limited partners, and founders with their journeys. This week, we have a special guest in Anubhav Srivastava, Founder and CEO of Tactyc, who saw the pain point managers were having in portfolio construction. Prior to Tactyc, managers often used excel spreadsheets and other methods for forecasting models. Tactyc is a dynamic software dashboard that makes ongoing portfolio modeling easy.

Anyone who has listened to this show knows that portfolio construction is one of my favorite things to talk about, and Anubhav provided his data-driven insights on what he’s seeing on how emerging managers are modeling portfolios around number of companies, reserves, recycling, and follow-ons.

Here is a completed dashboard that shows the Tactyc platform in action. You can also schedule a 1-on-1 demo with Anubhav, Tactyc's founder directly here.  

We hope you enjoy my conversation with Anubhav.

A word from our sponsor:

Privately owned and headquartered in New York City, Grasshopper Bank is built to serve the business and innovation economy. As a client-first digital bank, Grasshopper combines the best of banking technology and years of industry expertise to deliver best-in-class experiences with trusted security and unparalleled support. Grasshopper's digital solutions are tailored for venture capital and private equity firms, startups and small businesses, fintech-focused Banking-as-a-Service (BaaS) and commercial API banking platforms, and more. 

Serving clients globally, Grasshopper provides flexible, firm-focused lending solutions, as well as a dedicated Relationship Manager committed to meeting the unique needs and strategic focus of your firm across all entities, including funds, general partner and management companies. Grasshopper is a member of the FDIC and an Equal Housing Lender.

For more information, visit the bank's website at www.grasshopper.bank or follow on LinkedIn and Twitter.

About Anubhav Srivastava:Anubhav Srivastava is the Founder and CEO of Tactyc. He is a former bulge-bracket investment banker with extensive experience in M&A and financing transactions. Having spent more time than is healthy with Excel models, the idea for Tactyc was born out of his observations of how he saw people using (and misusing) Excel-based models.

Prior to Tactyc, Anubhav was a Vice President at Evolution Media Capital and started his investment banking career at Deutsche Bank.

Anubhav has an MBA in Finance from the Wharton School of Business and a B.S. in Electrical Engineering from Georgia Institute of Technology.

In this episode we discuss:(02:26) Why Anubhav started Tactyc and what it does(05:10) The reason why using Excel becomes a pain point over time(08:10) How deeper portfolio analysis can give LPs peace of mind(10:55) Who has been more successful in raising over the last year(14:09) Trends of portfolio models in terms of initial valuation at the pre-seed, seed level today versus 2021(16:04) Changes in check sizes and dilution in recent months(18:04) How reserves and follow-ons have changed(19:36) The most important metric for a sub-$50 million fund(21:32) Portfolio strategies for nano-funds(23:32) How successful managers take emotions out of the equation in follow-on investments(26:46) What managers are seeing with follow-on MOIC hurdles(28:59) Why some managers are over-reporting to LPs to navigate this downturn(31:22) The biggest mistakes managers make in portfolio construction reporting(34:57) Understanding the difference between a management fee recycling and exit proceed recycling(36:53) Example of management fee recycling(39:08) What success for Tactyc looks like over the next 5-10 years

I’d love to know what you took away from this conversation with Anubhav. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Podcast Production support provided by Agent Bee

Follow me @samirkaji for my thoughts on the venture market, with a focus on the continued evolution of the VC landscape.

On this week’s show we’re fortunate to be joined by Hunter Walk and Satya Patel, founders of Homebrew, a seed-stage firm founded over a decade ago that’s backed companies such as Chime, AngelList, and Gusto. Just over a year ago, Homebrew announced that it was moving away from a seed-focused traditional LP-backed fund to an open-ended evergreen structure that is funded from the proceeds of prior investments.

Additionally, they are also leading up efforts of Screendoor, a fund of funds focused on supporting underrepresented fund managers by offering capital and counsel. 

Satya is coming back on the show for the second time, and it was fun to have Hunter on with him this time, as we dove deep into their learnings from building homebrew, what they look for when back fund managers, and their view on what makes a great partner for founders. 

This was a fun one, and we think you’ll really enjoy hearing their thoughts. Let’s now get right into it!

A word from our sponsor:

Privately owned and headquartered in New York City, Grasshopper Bank is built to serve the business and innovation economy. As a client-first digital bank, Grasshopper combines the best of banking technology and years of industry expertise to deliver best-in-class experiences with trusted security and unparalleled support. Grasshopper's digital solutions are tailored for venture capital and private equity firms, startups and small businesses, fintech-focused Banking-as-a-Service (BaaS) and commercial API banking platforms, and more. 

Serving clients globally, Grasshopper provides flexible, firm-focused lending solutions, as well as a dedicated Relationship Manager committed to meeting the unique needs and strategic focus of your firm across all entities, including funds, general partner and management companies. Grasshopper is a member of the FDIC and an Equal Housing Lender.

For more information, visit the bank's website at www.grasshopper.bank or follow on LinkedIn and Twitter.

About Satya Patel:Satya Patel is a Founding Partner of Homebrew and Co-Founder of Screendoor. Prior to Homebrew, he was VP Product at Twitter, building and leading the Product Management and User Services teams. Before Twitter, he was a Partner at Battery Ventures, where he co-led the seed and early-stage investing practices. He joined Google in 2003 and was responsible for AdSense product management and partnerships.

Before heading to Silicon Valley for Google, he worked for DoubleClick, in venture capital, and as a strategy consultant.

He has a BS in Finance and a BS in Psychology from The University of Pennsylvania.

About Hunter Walk:Hunter Walk is a Founding Partner of Homebrew and Co-Founder of Screendoor. Prior to Homebrew, Hunter led consumer product management at YouTube, starting when it was acquired by Google. He originally joined Google in 2003, managing product and sales efforts for AdSense, Google‘s contextual advertising business.

His first job in Silicon Valley was as the founding product and marketing guy at Linden Lab.

Before graduate school, he was a management consultant and also spent a year at Late Night with Conan O‘Brien. He has a BA in History from Vassar and MBA from Stanford University.

In this episode we discuss:(03:32) The decision to move to an evergreen fund structure with Homebrew(07:32) The biggest constraints when early-stage fund sizes balloon(17:34) How to survive a down market and become a force multiplier on a cap table(24:58) The inspiration to start Screendoor(33:33) The type of managers they are looking to back at Screendoor(37:54) Patterns they’ve seen in great investors(42:13) The most important question they ask GPs(44:42) The biggest lessons from their time as investors

I’d love to know what you took away from this conversation with Satya and Hunter. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Podcast Production support provided by Agent Bee

Follow me @samirkaji for my thoughts on the venture market, with a focus on the continued evolution of the VC landscape.

This week on the show we’re joined by Meghan Reynolds, partner and head of capital formation at Altimeter. Founded by Brad Gerstner in 2008, Altimeter has backed companies such as Snowflake, Unity, Gusto, and Modern Treasury. Prior to joining Altimer, Meghan worked in a variety of investor relations roles including TPG, Goldman Sachs, and JAZZ Ventures partners.

She’s also quite prolific on Twitter with her insights on the LP world. This conversation was great as she went through the system she uses to form and maintain relationships with world-class LPs.

A word from our sponsor:

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It’s time you talk with Juniper Square: the first technology-driven fund admin built for sophisticated venture capital firms. 

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About Meghan Reynolds:Meghan is the Head of VC Capital Formation and Fundraising for Altimeter, a lifecycle technology investment firm. Prior to joining Altimeter, Meghan was Managing Partner and Co-head of Fundraising at TPG. She began her career and spent nearly a decade in the Investment Management Division of Goldman Sachs. Sh

Meghan is also currently a Venture Partner with JAZZ Venture Partners, an early stage Venture firm focused on the intersection of technology and human performance.

Meghan graduated from the University of Notre Dame.

In this episode we discuss:

(02:42) Meghan’s career path that led her to Altimeter(05:40) How Meghan defines capital formation(10:33) Making decisions that allow the investment team to thrive while balancing LP interests(14:03) Building the right frameworks with LPs who may ultimately become long-term partners(17:03) Ways managers can differentiate outside of returns(19:44) Other factors that go into LP relationship management(23:16) The importance of transparency with your LPs(26:01) How LPs are reacting to current market trends(29:17) Using an LP Advisory Committee strategically(35:00) International sources of institutional capital(40:14) Fundraising advice for solo GPs(43:32) What to look for when hiring for a capital formation role(47:16) Predicting the market over the next 5 to 10 years

I’d love to know what you took away from this conversation with Meghan. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Podcast Production support provided by Agent Bee

Follow me @samirkaji for my thoughts on the venture market, with a focus on the continued evolution of the VC landscape.

This week we’re joined by Scott Kupor, Managing Partner at Andreessen Horowitz. Scott was the first employee of the firm alongside Marc Andreessen and Ben Horowitz. He has been instrumental in the firm’s growth to now having north of $35B in AUM. Scott also authored a Wall Street Journal bestselling book called Secrets of Sand Hill Road: Venture Capital and How to Get It, and previously also served as chairman of the board of the NVCA. 

Scott goes through the history of a16z and the learnings along the way in building the multi-product investment company it is today.

Frank, Rimerman + Co.’s history is closely intertwined with that of Silicon Valley. With humble beginnings similar to so many start-ups, Frank, Rimerman was formed with a desire to serve the entrepreneurial and venture communities of the Valley and the determination to think outside-the-box.

When it comes to venture funds, we work with almost 500 VC groups from over 20 states across the USA. We have worked with over 400 fund groups during their first year of operations, making us one of the leading providers in the country to emerging managers.

No one wants to be bored at work. That’s why we chose to work with some of the most innovative and creative people – people who are changing the world around us every day. Their excitement fuels our passion and determination to grow and serve this special community.

Frank, Rimerman + Co, Passion Works Here.

www.frankrimerman.com

About Scott Kupor:Scott Kupor is Managing Partner at Andreessen Horowitz, focused on growth-stage companies building in the bio and healthcare industries, manages the firm's investor relations team, and is responsible for the firm's growth initiatives. 

Scott was the first employee at Andreessen Horowitz and managed the firm's growth from $300 million in AUM to more than $30 billion. Prior to joining the firm, Scott worked Hewlett Packard, Opsware, and represented startups through M&A processes.

Scott is the author of the Wall Street Journal bestselling book, Secrets of Sand Hill Road: Venture Capital and How to Get It, and serves on the boards of Cedar, Headway, Foursquare, Labster, Ultima, and SnapLogic. He also served as chairman of the board for the National Venture Capital Association.

Scott earned a bachelor’s degree and a JD from Stanford University.

In this episode, we discuss:(02:24) Scott’s journey to a16z(04:52) Lessons from the dotcom bubble (08:29) Why the original thesis for a16z was so different(12:33) How Mike Ovitz and CAA inspired them(16:44) Early days building the firm and recruiting the team(20:26) Running the firm like a startup(25:58) Challenges of building and maintaining a culture(30:01) Building cohesion with a global workforce and work from home(33:18) What “founder-friendly” means at a16z(36:34) Advice for new managers(40:49) Where we are in the current market cycle(44:59) The advice Scott would give e himself as a new graduate.

I’d love to know what you took away from this conversation with Scott. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Podcast Production support provided by Agent Bee

Follow me @samirkaji for my thoughts on the venture market, with a focus on the continued evolution of the VC landscape.

We’re joined by Stephanie Palmeri and Melody Koh, Partners at NextView Ventures. Nextview was founded in 2010 and recently raised $200MM for their new set of funds. Located in SF, NY, and Boston, the firm invests all across the US and has invested in over 170 companies at the seed-stage since its founding, including Devoted Health, Thread up, and Attentive. We had a great conversation about how NextView thinks about firm partnerships, what seed and pre-seed investing look like today, and what they believe it means to successfully work with founders. 

About Stephanie Palmeri:Stephanie is a Partner at NextView Ventures and is based in San Francisco. She focuses on the power of technology to positively transform how we live, work, learn, play, and care for our planet and each other. Her investments in the “Everyday Economy” have spanned many industries, including social commerce, circular retail, education, digital health, marketplaces, transportation, and finance. 

Previously, Stephanie was a partner at Uncork Capital, where she spent a decade investing in dozens of seed stage companies, including Poshmark ($POSH), Clever (aqu. by Kahoot!), Chariot (acq. by Ford), ClassDojo, Carrot Fertility, Hallow, Panorama Education, Phil, Wrapbook, and Wonderschool. Before venture investing, Stephanie worked as a technology consultant and marketer at Accenture, Estee Lauder, and several startups.

Stephanie holds an MBA from Columbia Business School and a BS in Marketing and Management Information Systems, magna cum laude, from Villanova University.

About Melody Koh:Melody is a Partner at NextView Ventures, based in its New York office.

Prior to joining NextView, Melody was Head of Product at Blue Apron (NYSE: APRN). Melody joined Blue Apron as the first product hire when the company was 18 months old with 20 HQ employees. She helped scale the business through hyper-growth (25x in 3.5 years) and to its IPO.

Previously, Melody was a Product Manager at Fab.com leading marketing & analytics products and the founder/CEO of a seed-funded wine subscription e-commerce service. Melody was also a venture investor at Time Warner’s strategic VC group and was one of six inaugural members of First Round Capital’s Product Co-op initiative. Melody began her career as a tech/media M&A investment banking analyst at Evercore Partners.

Melody holds an MBA from the Harvard Business School and the University of Virginia.

In this episode. we discuss:(01:54) Why NextView strives to not be a pack of lone wolves(03:35) How the carry economics of the firm drives a deeper partnership(06:57) Building firm culture with so many locations(11:21) How NextView uses strategic in-person time to remain connected(13:42) The benefits to founders by being more strategic in their investments(16:33) How the NextView model performed in the different market conditions over the last few years(21:04) What the moving goalposts of the market has meant to founders and investors(25:27) The advice they are giving founders to get through this difficult funding cycle(29:18) Why NextView sees themselves as invited guests and why that translates to happy founders(34:31) How they think about the growth and evolution of NextView

I’d love to know what you took away from this conversation with Stephanie and Melody. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Podcast Production support provided by Agent Bee

Follow me @samirkaji for my thoughts on the venture market, with a focus on the continued evolution of the VC landscape.

We’re pleased to welcome Oren Zeev, Founding Partner at Zeev Ventures. 

Without a doubt, Oren is one of the titans in venture investing with nearly 30 years of experience and one of the most unique. Unlike traditional firms that have achieved scale, Oren remains a solo-GP, and has an authentic and refreshing view on venture investing. Today, he manages over $2B in Assets under management and has backed companies such as   Houzz, Audible, Chegg, TripActions, and Tipalti, among many others.

About Oren Zeev: Oren calls himself a “One Man Venture Capitalist,” and TechCrunch says he is a hybrid between an Angel Investor and a traditional VC. Prior to founding Zeev Ventures, Oren was a part of the founding team of Apax Israel in 1995. In 2002 moved to the US and co-headed, and later headed, the Technology Practice of Apax and the Silicon Valley office.

He began his career at IBM and got his Bachelors from the Israel Institute of Technology and his MBA from INSEAD.

In this episode we discuss:(02:21) The original thesis behind Zeev Ventures(09:44) Why Oren has avoided growing beyond a solo-GP(15:05) How Oren pushes himself to prevent biases and evolve his thinking over time(18:50) Why fund vintage doesn’t matter(21:24) The reason why Oren can be aggressive with follow-ons(23:59) What type of support can founders expect(27:50) Being relevant to founders as a VC(30:26) Working with other VCs on board(32:47) Advice to companies that had 2021 valuations that may need to raise soon(37:03) Thoughts on this downturn(41:47) Why Venture is still a good long-term investment

I’d love to know what you took away from this conversation with Oren. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Podcast Production support provided by Agent Bee

Follow me @samirkaji for my thoughts on the venture market, with a focus on the continued evolution of the VC landscape.

On this week’s show, I’m thrilled to be joined by Sunil Nagaraj, Founder of Ubiquity Ventures. Sunil started Ubiquity in 2017 to focus on backing technical founders at the pre-seed and seed stages around a thesis he calls “nerdy and early.” Before starting Ubiquity, Sunil spent just over 6 years at Bessemer Venture Partners, and began his career as a founder of a startup. 

With so many solo-GP firms emerging, Sunil took us through us his lens of a solo-GP, and how he has built and grown ubiquity over the last 7 years.

This was a very insightful conversation and I hope you’ll enjoy it. 

About Sunil Nagaraj:Sunil Nagaraj is the Founder and Managing Partner of Ubiquity Ventures, a seed-stage institutional venture capital firm with over $150 million under management and a focus on "software beyond the screen"® startups. This includes B2B technology companies that utilize smart hardware or machine learning to solve business problems outside the reach of computers and smartphones.

Prior to founding Ubiquity Ventures, Sunil spent the better part of a decade with Bessemer Venture Partners where his work included leading the seed rounds of Auth0 (acquired by Okta for $6.5 billion) and Zapier as well as investments in Rocket Lab (NASDAQ: RKLB), Spire (NASDAQ: SPIR), Velo3D (NYSE: VLD), Tile (acquired by Life360), and Twitch (acquired by Amazon for $1 billion). Before investing, Sunil was Founder and CEO of Triangulate, a VC-backed online dating startup using machine learning and behavioral data to improve matching accuracy. He has also worked at Bain & Company, Cisco, and Microsoft.

Sunil holds an MBA from Harvard Business School and a BS in Computer Science from the University of North Carolina at Chapel Hill.

In this episode we discuss:(01:45) Sunil’s journey into tech and investing(04:33) The decision to become a solo GP after spending his career in partnerships and team(09:56) How the first raise for Ubiquity went(13:23) LP segments(19:28) The types of founders that Sunil likes to back(22:25) Biggest lessons learned during his time in VC(24:54) Lessons from his anti-portfolio(28:37) Sizing your fund to be both small and nimble and large enough to write meaningful checks(31:33) The potential for AI(36:25) Navigating the hype cycles in VC(38:43) When to make exceptions in terms of ownership or check size(41:20) What the current VC market is like and how it might evolve(44:28) The advice he would give himself at the start of his career

I’d love to know what you took away from this conversation with Sunil. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Podcast Production support provided by Agent Bee

Follow me @samirkaji for my thoughts on the venture market, with a focus on the continued evolution of the VC landscape.

On this week’s show we’re excited to have Tomasz Tunguz, Founder of newly formed Theory Ventures. Tomasz spent nearly 15 years at Redpoint Ventures, before recently spinning out to start Theory Ventures. Earlier this year, Theory closed a $230MM fund to back early stage entrepreneurs.

Those who have followed Tomasz’s writing, know that he is incredibly analytical and thoughtful in his approach to business. This conversation was no different as we went deep into topics such as portfolio construction theory, business models in VC, and how to be strategic in raising a VC fund. 

About Tomas Tunguz:Tomasz Tunguz is a Founder and Managing Director at Theory Ventures. He is an active blogger at tomtunguz.com and is co-author of Winning with Data which explores the cultural changes big data brings to business and shows you how to adapt your organization to leverage data to maximum effect.Before founding Theory, Tomasz was Managing Director at Redpoint Ventures, where he backed many early-stage SaaS, data, and infrastructure founders in his 14-year tenure. He began his career as the product manager for Google’s AdSense social-media products and AdSense internationalization.Tomasz attended Dartmouth College and graduated with a BA in mechanical engineering, a BE in machine learning, and a master’s degree in engineering management.

In this episode we discuss:

(01:42) Why Tomasz joined Redpoint(03:01) The decision to start Theory Ventures (06:32) Raising his first fund during one of the most difficult raise environments in recent history(07:45) What his plan was with the raise(10:47) How Tomasz created and sustained momentum during his raise(16:12) Common objections from LPs and how he overcame them(19:49) What it means for a venture firm to have a business model(23:00) How Theory’s thesis addresses the problem of multiples in the venture market(24:59) Winning deals without paying premiums(26:13) Why the 3x net returns on venture needs to increase to be competitive(27:40) Getting comfortable with a smaller portfolio(31:29) Tomasz’s mental model of picking and diligence with a smaller portfolio(34:30) Qualitative signs he looks for in founders and companies(38:19) Why Tomasz embraces the emerging manager label(39:30) What the next decade of venture looks like(42:07) The best career advice he’s received

I’d love to know what you took away from this conversation with Tomasz. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Podcast Production support provided by Agent Bee

Follow me @samirkaji for my thoughts on the venture market, with a focus on the continued evolution of the VC landscape.

On this week’s show, we’re excited to have Hernan Kazah, Co-Founder and Managing Partner of Kaszek, one of the largest Latin American firms with nine funds under management. The firm launched in 2011 and over time they’ve made early-stage investments in companies such as Nubank, QuintoAndar, Kavak, Creditas, and Nuvemshop.

Before becoming an investor, Hernan Co-Founded MercadoLibre in 1999, an online auction and e-commerce platform that later went public in 2008. At a market cap today of over $60B, the company represents one of the great entrepreneurial successes in the region. 

During our conversation, we spoke about the growth of Latin America, making the shift from a company builder to a full-time investor, and how founders and investors should think about the capital-scarce market we are navigating today.

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About Hernan Kazah:Hernan Kazah is the Co-Founder and Managing Partner of Kaszek Ventures. Hernan has overseen Kaszek’s growth into the largest venture capital firm in Latin America. It has invested in more than 100 startups and is known for its ability to spot the next tech talent and hands-on approach.

Prior to investing, Hernan Co-Founded MercadoLibre, the most successful "from-garage-to-Nasdaq" startup story in Latin America to date, and one of the largest technology companies in the region.

He has a BA from the University of Buenos Aires and an MBA from Stanford.

In this episode we discuss:

(02:57) Hernan’s journey into tech and investing(04:39) Lessons from MercoadoLibre that he wanted to apply in building Kaszek(10:38) Why he decided to move to venture in 2011(14:11) The long process of building an LP base with an unproven theory(20:21) Advice and mentorship Hernan sought out prior to starting Kaszek(24:56) How Hernan manages his time to help his portfolio(28:57) Comparing the market of 1999/2000 with today’s market(36:04) What it means to support founders(42:33) Why Hernan is mostly handsoff in his portfolio companies(46:50) How to have tough conversations with founders(48:10) The best career advice he’s recieved

I’d love to know what you took away from this conversation with Hernan. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Podcast Production support provided by Agent Bee 

Follow me @samirkaji for my thoughts on the venture market, with a focus on the continued evolution of the VC landscape.

Today we’re excited to bring Mark Suster back on the pod. Mark is the managing partner of Upfront and also a frequent contributor of great content for the venture ecosystem through his blog, Both Sides of the Table, which I’d highly recommend you subscribe to. 

Mark and Samir were recently talking about venture funds raising in this market, and we thought it would be timely to record a session on what we are seeing, and how venture fund managers should think about navigating in this market. 

About Mark Suster:Mark Suster is a Partner at Upfront. He previously was the Founder and CEO of two successful enterprise software companies, the most recent of which was sold to Salesforce.com where Mark became VP, Products. Prior to being a founder, Mark was a software developer at Accenture where he lived and worked in Europe, Japan and the U.S.

Mark is a graduate of UCSD and has an MBA from the University of Chicago.

In this episode we discuss:

(01:51) With fundraising down from its high in 2021, what are GPs and LPs saying about the market(04:33) What institutional investors are saying about the market(09:19) How emerging managers can access larger global pools of capital(13:47) Building a sales pipeline for your fundraising process as an emerging manager(18:03) Moving deals through the mid-funnel death trap(21:55) Non-obvious things managers can do to improve their fundraising(25:29) Strategies to talk to Family Offices versus large institutional investors(30:49) How to stand out as a manager in a crowded field(34:17) Preparing for an LP meeting(38:45) The bull case for venture moving forward(41:44) How are LPs thinking about venture as an asset category and about the liquidity premiums across the entire market(45:49) Putting in the work to find good managers versus investing in a larger brand name fund(47:30) The importance of having a reserve as an emerging manager

I’d love to know what you took away from this conversation with Mark. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Podcast Production support provided by Agent Bee 

Follow me @samirkaji for my thoughts on the venture market, with a focus on the continued evolution of the VC landscape.

We're excited to be joined by Chris Farmer, Founder and CEO of SignalFire, a firm that was founded nearly a decade ago with the goal of disrupting the way Venture Capital is done.

Unlike traditional VC firms, SignalFire has been built more like a company than a traditional asset manager, as it leverages a robust purpose-built data platform to augment its unique service model to entrepreneurs.

During our conversation, we spent a lot of the time talking about his views on building a next-generation venture capital fund and the organizational design that goes behind it.

About Chris Farmer:Chris Farmer is the Founder and CEO of SignalFire. He was previously a Venture Partner at General Catalyst Partners, supporting notable companies such as Alation, Coinbase, Stripe, and Venmo. Prior to this, Chris served as a Vice President at Bessemer Venture Partners specializing in digital media and mobile investments.

In addition to his venture capital experience, Chris has demonstrated his entrepreneurial prowess by spearheading the turnaround of Skybitz, a wireless-enabled SaaS company.

His career began on Wall Street in the private equity group of Cowen & Company, and he holds a B.A. from Tufts University.

In this episode, we discuss:

(02:13) The inspiration to start SignalFire after stints at iconic firms like General Catalyst and Bessemer(04:42) Being a tech company that happens to also invest in other tech companies?(07:21) How Chris uses data to source and evaluate new deals(16:53) Balancing a founder’s past performance and their future potential(22:13) Thinking about OKRs and KPIs when starting a different sort of firm(26:28) Why hasn’t venture itself seen more innovation as an industry(30:00) How he recruited and found the right team for this new model(33:30) Why data was able to help the firm to avoid the pitfalls of the recent bullrun market(38:58) Balancing data and FOMO as a firm(43:30) What the market will look like over the next 12-18 months

I’d love to know what you took away from this conversation with Chris. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Podcast Production support provided by Agent Bee 

Follow me @samirkaji for my thoughts on the venture market, with a focus on the continued evolution of the VC landscape.

On this week’s show, we’re excited to have Ben Lerer and Graham Brown, Managing Partners at Lerer Hippeau. The firm was founded in New York in 2010 to back early-stage entrepreneurs. Today the firm manages $1.2B and has invested in over 400 companies including Oscar, Buzzfeed, Mirror, Warby Parker, and Casper. 

Ben’s background prior to investing was as Founder and CEO Thrillist, while Graham came over in 2015 from Softbank. 

During our chat, we covered everything from building and productizing a community to the evolution of the firm in maintaining its competitive advantage in the region. Hope you enjoy our conversation. 

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Serving clients globally, the client-first digital bank recently announced the launch of Accelerator Checking, a feature-packed operating account with powerful digital tools designed to serve a wide range of venture-backed startups. With its latest offering, startup clients also receive exclusive access to its newly established partner marketplace, as well as a curated community of investors for fundraising support. For more information about Accelerator Checking or how to leverage Grasshopper’s platform for your firm, visit the bank's website at www.grasshopper.bank or follow on LinkedIn and Twitter.

About Ben Lerer:Ben Lerer is a Managing Partner at Lerer Hippeau. He is the Co-Founder and former CEO of Thrillist, which was acquired by Vox Media in 2022. He chairs the Board of Directors for Urban Upbound and is an Associate Member of the International Academy of Digital Arts & Sciences (IADAS).

Lerer holds a BS from the University of Pennsylvania.

About Graham Brown:Graham is a Managing Partner at Lerer Hippeau. He joined Lerer Hippeau from SoftBank Capital, where he focused primarily on early stage investments in mobile and Internet, with a particular interest in marketplaces. Prior to SoftBank Capital, Graham was an Associate at Polaris Partners and then helped lead digital strategy at Life Line Screening, a direct-to-consumer preventive health company backed by Polaris Partners.

Graham is a graduate of Colby College and Columbia Business School.

In this episode, we discuss:

(02:48) Why start a company? (05:33) The gap they saw when founding the firm in 2010(09:59) What drew Graham to the firm in 2015(13:34) Why their investing thesis of early-stage NYC companies worked so well in retrospect(19:32) How the the firm invests in its community(26:32) The number of investments typically per fund at Lerer Hippeau(29:11) Maintaining operational discipline(34:24) Deciding when to make an exception on a deal(38:08) Why they launched a select fund to invest at Series A, B, and C(42:41) Learnings from investing in companies later stages after they passed the first time(48:36) The importance of empathy and being humane when passing on a company

I’d love to know what you took away from this conversation with Ben and Graham. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Podcast Production support provided by Agent Bee 

Follow me @samirkaji for my thoughts on the venture market, with a focus on the continued evolution of the VC landscape.

We're thrilled to bring back three experienced institutional venture LPs with Chris Douvos of Ahoy Capital, Beezer Clarkson of Sapphire Partners, and Guy Perelmuter of GRIDS Capital. 

When we last convened, it was almost exactly two years ago in October of 2021. We had an inkling of the changes to the market on the horizon, but what a two years it has been.

Given the dramatic shift in the market, we had a lot to cover, and we spoke about the impact of the downturn on emerging managers, what managers can do to navigate this market, and the role of secondaries.

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About Beezer Clarkson:Beezer Clarkson is Managing Director of Sapphire Partners, the LP arm of Sapphire Ventures. She began her career in financial services over 20 years ago at Morgan Stanley in its global infrastructure group. Since, she has held various direct and indirect venture investment roles, as well as operational roles in software business development at Hewlett Packard. Prior to joining Sapphire in 2012, Beezer managed the day-to-day operations of the Draper Fisher Jurvetson Global Network.

Additionally, she is a judge for 100&Change, a MacArthur Foundation competition that provides funding to solve critical challenges of our time. In 2014, she was named to the Forty Over 40 list of women to watch.

About Chris Douvos:Chris Douvos is the Founder of Ahoy Capital, a boutique Fund of Funds that focuses primarily on allocating into early-stage venture capital funds, while selectively co-investing directly into companies.

Chris started his career at Morgan Stanley while still at Yale earning his MBA. From there he worked at Princeton University’s endowment fund where he got his start in venture before moving on to The Investment Fund for Foundations (TIFF). At TIFF he decided that the right strategy was to make “heroic investments” and invest in very early-stage, and often unproven managers.

About Guy Perelmuter:Guy Perelmuter is the Co-Founder and CEO of GRIDS Capital. Guy began his career in Banking as Chief Risk Officer at Banco Pactual (acquired by UBS), one of the largest banks in Latin America. He went to Vinci Partners, an investing platform for alternative investments in 2009 as Chief Risk Officer. He and his partner, Isabelle, Co-Founded GRIDS Capital in 2016.

He received a BS in Computer Engineering and an MS in AI from Pontifícia Universidade Católica do Rio de Janeiro.

In this episode, we discuss:

(02:51) Venture is _______(06:46) Outlook for emerging managers(09:42) Why it’s so difficult to raise a fund two right now(13:01) Is new money and funders in venture a net positive(16:16) Why emerging managers are still important for LPs(21:46) What they look for in a fund one investment(22:48) The decision to stop investing in grownups and look to emerging managers(25:24) How GPs get mentored and how information flows to them(27:23) Peer pressure amongst GPs to grow their fund size(31:53) How managers are recalibrating their funds to the current market(35:12) The role of secondaries(39:49) Why Venture is an unsophisticated asset class(44:29) How do you get institutional investors

I’d love to know what you took away from this conversation with Guy, Chris, and Beezer. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Podcast Production support provided by Agent Bee 

Follow me @samirkaji for my thoughts on the venture market, with a focus on the continued evolution of the VC landscape.

We are excited to bring you our latest episode with Mamoon Hamid, Partner at Kleiner Perkins. As many know, Kleiner Perkins, founded over 50 years ago is one of the most storied franchises in the history of venture capital, having backed companies companies such as Genentech, Sun Microsystems, Amazon, Google, and Uber. 

After stints at USVP and Social Capital (which he co-founded), Mamoon joined Kleiner in 2017 as part of a generational succession process. As part of this, Mamoon has focused heavily on returning Kleiner to the roots of it’s history as a premier boutique venture capital fund focused on early-stage investing. Since then, they’ve backed companies such as Rippling and Figma. 

Mamoon and I spoke about how he and the team have executed the mission of bringing Kleiner to what they have coined as going back to the future. We covered a number of topics but dug deep into the importance of culture and focus.

About Mamoon Hamid:Mamoon Hamid is a Partner at Kleiner Perkins. He has been an early investor in and served on the boards of some of the most innovative software companies of recent times including Slack, Figma, Box and Rippling.

Prior to joining Kleiner Perkins, Mamoon was a co-founder of Social Capital. He started his venture career in 2005 at U.S. Venture Partners (USVP) where he eventually became Partner. Mamoon came to Silicon Valley in 1997 to join Xilinx, a Kleiner Perkins company, where he spent six years, initially as an engineer and later in product and marketing roles.

He has a B.S. in Electrical and Computer Engineering from Purdue University, an M.S. from Stanford University, and an MBA from Harvard Business School.

In this episode, we discuss:

(02:14) Mamoon’s journey to Kleiner Perkins(04:18) Jumping over from being an engineer to investor(09:26) What was interesting about joining Kleiner in 2017(14:18) What going back to the future meant to Mamoon(17:06) Balancing between the past and building for the future(21:26) Mapping core values to bringing on new team members to help execute(25:59) Traits he looks for when hiring(28:36) How he has picked so many breakout companies(31:35) OKRs that Kleiner Perkins tracks(37:15) What it means to be an entreprenuer’s first call(40:08) What does venture look like over the next ten years(44:07) Biggest learning in Mamoon’s career

I’d love to know what you took away from this conversation with Mamoon. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Podcast Production support provided by Agent Bee 

Follow me @samirkaji for my thoughts on the venture market, with a focus on the continued evolution of the VC landscape.

We're thrilled to bring on Brad Gerstner, Founder and CEO of Altimeter Capital. 

Altimeter was first founded in 2008 during the GFC with an initial fund of only $3 Million which Brad raised from friends and family. Today the firm employs both private and public strategies.

Altimeter takes an incredibly focused and high-conviction approach to investing and has backed companies such as Snowflake, Unity, Gusto, and Modern Treasury. And now manages a variety of venture and public funds, taking a hybrid and pragmatic approach to funding, using a variety of vehicles depending on stage and need to give companies and managers access to capital.

About Brad Gerstner:Brad Gerstner is the Founder and CEO of Altimeter Capital. Before Altimeter, Brad worked as a multiple-time entrepreneur, was a founding principal of General Catalyst, and worked at PAR Capital. He is also an active thought leader on all aspects of the innovation economy, including numerous media appearances and a recurring role on the popular All-In Podcast. And Brad is working to improve the future of the country through efforts such as Invest America.

He earned a bachelor’s from Wabash College, a JD from Indiana University, and an MBA from Harvard Business School.

In this episode, we discuss:

* (2:17) Brad discusses his early life in Indiana and the influence of his father's entrepreneurial journey​​.

* (3:23) Brad talks about his path to law school and subsequent shift towards technology and entrepreneurship​​.

* (4:10) His impulsive trip to Silicon Valley and his first experiences there​​.

* (7:18) Brad discusses his insights into public and private markets and the realization of the need to participate in the venture market​​.

* (11:24) He explains the motivation and founding principles behind Altimeter, focusing on competitive advantage​​.

* (12:28) Brad highlights Altimeter's unique approach, combining venture capital experience with public market sensibility​​.

* (14:02) He speaks about the importance of founders choosing partners that provide intellectual resources along with capital​​.

* (18:41) Brad reflects on Altimeter's investment strategy and acknowledges that they haven't always done everything perfectly​​.

* (20:44) He discusses the cyclical nature of the venture business and the importance of the price of entry in investments​​.

* (23:24) Brad talks about technology super cycles and how they improve lives and outcomes​​.

* (28:19) He elaborates on the role of cloud computing and AI in reshaping industries and improving consumer experiences​​.

* (30:09) Discussing the evolution of search engines, Brad talks about the transition from Google as a card catalog to an answer bot​​.

* (32:32) He shares insights on the power of AI in business and its impact on efficiency and profitability​​.

* (39:45) Brad explains Altimeter's disciplined approach to valuation and their investment decision-making process​​.

* (44:51) He emphasizes the fiduciary duties of board members to all shareholders and the importance of research-based decision-making​​.

* (47:11) Brad reflects on his work with Richard Lugar and his influence on Brad's view of the world​​.

* (50:59) He discusses the Invest America initiative and its goal to invest in the future of American children and democracy​​.

* (54:03) Brad talks about the need for job retraining and economic participation in the face of labor displacement caused by AI​​.

I’d love to know what you took away from this conversation with Brad. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Podcast Production support provided by Agent Bee 

Follow me @samirkaji for my thoughts on the venture market, with a focus on the continued evolution of the VC landscape.

We're thrilled to have Alex Pall, general partner at Mantis VC, a seed and an early stage fund based in LA.

Alex is a great example of someone who has made a significant crossover from another industry—he is one half of the award-winning duo of the Chainsmokers, a group that has found mainstream success by breaking boundaries between pop, indie, electronic, alternative, and rock.

We discuss how Alex and the team thought through joining the ranks of venture capital, their early learnings, and the importance of self-awareness in terms of `

About Alex Pall:Alex Pall is one half (Drew Taggart is the other half)of the GRAMMY® Award-winning, RIAA Diamond-certified duo The Chainsmokers. In 2020, alongside Drew Taggart, Jeffrey Evans, and Milan Koch, founded Mantis Venture Capital.

Other businesses under their purview include a stake in the popular JAJA Tequila and The Chainsmokers’ very own film, television, and podcast production company, Kick The Habit Productions—which boasts a full slate of projects in development.

In this episode, we discuss:

(01:51) Chainsmokers' Early Days and Entrepreneurial Goals​​

(02:48) Transition from Music Artists to Financially Savvy Investors​​

(03:37) Emphasis on Passion-Driven Investments​​

(04:50) Building a Network and Seeking Investment Opportunities​​

(06:43) Critical Decision-Making in Business Ventures​​

(07:00) Inspiration from Jimmy Buffett's Business Model​​

(08:14) Importance of Work Ethic and Assisting Founders​​

(12:31) Addressing skepticism about a celebrity fund

(13:50) Mentor's Advice on Investing with Experienced Partners​​

(16:51) Setting Realistic Goals in Initial Fundraising​​

(17:19) Fundraising Challenges During COVID-19's Onset​​

(19:01) Learning from the first fund

(20:11) Insights on Unpredictability in Venture Capital Investing​​

(22:15) Developing a Disciplined Investment Approach​​

(26:01) Adding Value to Portfolio Companies​​

(27:46) Storytelling as a Business Differentiator​​

(31:01) Trust as a Cornerstone in Investment Community​​

(31:32) Learning from past Investment Decision​​s

(32:45) Investing in Great Teams and People​​

(33:51) Holistic View in Investment Decisions​​

(36:04) Providing Honest Feedback to Founders​​

(37:52) Navigating a Challenging Investment Landscape​​

(39:25) Avoiding Overreliance on Large Capital Raises​​

(40:09) Differentiating Business Strategies​​

(41:32) Parallels Between Music and Venture Capital​​

(44:13) Success Beyond Prestigious Educational Backgrounds​​

(45:30) Passion and Commitment in Projects​

I’d love to know what you took away from this conversation with Alex. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Podcast Production support provided by Agent Bee 

Follow me @samirkaji for my thoughts on the venture market, with a focus on the continued evolution of the VC landscape.

We're excited to welcome Paul Kwan, Managing Director at General Catalyst (GC). Established in 2000, the firm currently has just under $25 billion in assets under management. GC has made a significant mark in the venture capital landscape, funding dynamic technology and life science startups including Stripe, Coinbase, Livongo, Samsara, and Gusto.

Paul is at the helm of GC's Global Resilience team, concentrating on upgrading key societal infrastructures in the defense, intelligence, and industrial sectors. Before his tenure at GC, Paul had an impressive 22-year career at Morgan Stanley, where his roles included leading the global internet and software business and the West Coast team.

Our conversation delves into the importance of mission-driven approaches and robust corporate cultures in building enduring enterprises, GC's internal strategies in these areas, and Paul's insights on the potential exit scenarios for private companies in the coming year. We hope you find this episode insightful. Let's dive in!

About Paul Kwan:Paul Kwan is Managing Director at General Catalyst (GC), where he leads the Global Resilience team, focusing on enhancing critical societal systems in areas like defense, intelligence, and energy. His investments include companies such as Anduril and Samsara.

Paul started on Wall Street during the early days of the internet, later moving to Morgan Stanley’s Menlo Park office. He spent 22 years there, gaining expertise in various roles including leading the bank’s global internet and software business and the West Coast team. He studied computer science at Stanford University.

In this episode, we discuss:

(02:05) Paul's tech journey(03:23) The value of working across multiple sectors and global experiences(05:19) Sustained value creation in tech and the evolving inputs to value creation, including technology, business models, and people(08:30) The importance of company culture in investment decisions and how it ties to performance(10:09) Establishing culture early in a company's journey(12:51) GC's mission of investing in powerful, positive change, and the concept of responsible innovation(14:54) How the changing geopolitical landscape affects investment strategies and the necessity for more resilient systems(18:18) The rise of private-to-private M&A and its potential impacts(22:21) Challenges of merging company cultures(26:50) Investment strategies and the IPO market(31:00) The trend of VCs holding public securities post-IPO and how it aligns with long-term value creation(34:41) Evolution of Venture Capital(36:53) The importance of building and maintaining long-term relationships in the tech industry

I’d love to know what you took away from this conversation with Paul. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Podcast Production support provided by Agent Bee 

Follow me @samirkaji for my thoughts on the venture market, with a focus on the continued evolution of the VC landscape.

This week we are thrilled to be joined by Pejman Nozad, Co-Founder and GP of Pear VC. Founded in 2013, Pear has scaled to over $800MM in AUM with a powerful engine to help early-stage companies. 

As many regular listeners of the show know, we often like to highlight managers who have different backgrounds and stories leading to their careers in VC. I think of all of our guests, Pejman epitomizes how someone can overcome many obstacles to be successful in the industry as he not only immigrated from Iran with little to his name, but the catalyst that got him into VC was working at a rug store. 

We explore Pejman's incredible journey, Pear VC's emphasis on early-stage investments, and the need for innovation in venture capital.

This is an inspiring story for anyone considering venture capital as a career path, and stresses the importance of resilience and overcoming challenges, as well as, the value of continuous learning.

About Pejman Nozad:Pejman Nozad is the Co-Founder of Pear VC and he has made a substantial impact in the tech sector with strategic investments in companies like DoorDash, Dropbox, and many others. His success is recognized through his consistent inclusion in the Forbes Midas List since 2021 and leading the Forbes Midas Seed List in 2023.

Pejman’s path into venture capital was unconventional, starting from humble beginnings as an Iranian immigrant working in a Palo Alto rug store. He was awarded the Ellis Island Medal of Honor in 2014.

In this episode, we discuss:

(2:55) Pejman shares his start in the US

(15:06) The importance of believing in entrepreneurs with diverse backgrounds

(20:37) Why the best seed funds consistently deliver high returns

(22:17) How PearVC has evolved and why it has been so long-lasting

(30:10) No job is beneath anyone at PearVC with its team-based approach

(33:46) Qualities of successful people that go beyond the obvious

(37:18) His transition from angel investor to venture capitalist and the challenges of portfolio construction

(41:09) PearVC's focus on finding talent and reaching product-market fit regardless of the fund's size or stage-focus

(44:59) His advice to new investors at PearVC

I’d love to know what you took away from this conversation with Pejman. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Podcast Production support provided by Agent Bee 

Follow me @samirkaji for my thoughts on the venture market, with a focus on the continued evolution of the VC landscape.

On this special meet the expert episode, we are discussing the venture debt market with Matt Trotter, a Managing director within Stifel Bank’s Venture division.

Stifel Bank was established in St. Louis, MO in 1890 and is an independent investment bank with the mission to help individuals pursue financial goals, businesses and organizations raise and protect capital, and communities offer a higher quality of life.

Given the dislocation of the regional banking market in early 2023, we discussed how venture investors and companies should think about the supply of venture debt, the proper uses, and what we should expect moving forward.

About Matt Trotter:Matt Trotter is a Managing Director and Member of the leadership team at Stifel Bank. He focuses on providing commercial banking and flexible lending solutions to high-growth technology companies in the U.S.

Prior to joining Stifel, Matt was a Senior Market Manager and Head of Frontier Technologies and Climate Technology and Sustainability at SVB. In this position, he focused on building products to support the evolving business models and capital-expenditure needs for companies creating disruptive technologies in the transportation, industrials, aerospace, energy, agriculture, food, and hardware infrastructure sectors.

In this episode, we discuss:

(01:15) Matt shares his background and discusses changes in venture banking and lending markets(01:57) Explanation of venture debt and its history within venture capital(03:11) Discussion on today's applications of venture debt, like runway extension and equipment purchases(03:59) Strategic uses of venture debt for various business needs(04:14) Overview of venture debt terms including non-formula loans, typical costs, and eligibility(05:10) Shift from equipment leasing to a more general-purpose financing model in venture debt(05:32) Challenges in underwriting venture debt for early-stage companies without revenue or product(06:26) Insights into the venture debt underwriting process and considerations(07:18) Role of warrants in balancing the risks and rewards of venture debt(08:15) Discussion on balancing loss rates and successful investments in venture debt(09:19) Ideal circumstances for a company to consider venture debt(10:24) Potential risks and considerations when opting for venture debt(11:43) Impact of market dynamics on companies with significant debt(12:05) How market shifts affect the demand and supply of venture debt(13:00) Importance of collaboration between equity investors and lenders during financial challenges(14:35) High demand for venture debt amid market uncertainties and banking disruptions(15:14) Underwriting challenges with companies having high valuation overhangs(16:53) Adjustments in underwriting approaches by banks and venture debt funds in current market(17:59) Use of debt tranching tied to company performance milestones(19:01) Differences between bank-provided venture debt and venture debt funds(20:21) Strategies, incentives, and focus of venture banks versus venture debt funds(22:57) Factors for companies to consider when choosing between bank loans and venture debt fund loans(24:22) Managing the balance between raising capital and working with banks in financial tight spots(26:07) Emphasis on trust and open communication between lenders and borrowers(27:27) When venture debt from banks or funds might be more suitable for a company(29:24) Assessing various debt products and understanding their true costs and conditions(30:14) Matching the debt product to a company's specific needs and circumstances(32:20) Need for reliable debt facilities for cashflow negative businesses(33:14) Reflections on the impact of changes at Silicon Valley Bank on the venture debt landscape(34:58) Outlook on the venture debt market's evolution post-SVB(36:58) Importance of lenders' long-term commitment in venture debt

I’d love to know what you took away from this conversation with Matt. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

About Meet the Experts:Meet the Experts is a sub-brand of Venture Unlocked and talks with vendors and other non-GP or LP members of the Venture Community. There may be business relationships in place and appearance fees paid to participate.

Podcast Production support provided by Agent Bee 

Follow me @samirkaji for my thoughts on the venture market, with a focus on the continued evolution of the VC landscape.

We are excited to bring on Brendan Wales and Kellan Carter, Co-Founders and GPs of FUSE. 

Founded in 2020 with a thesis centered around the growth of the Pacific Northwest ecosystem, a geography both of our guests know well. With its just-announced close of a $250MM Fund 2, FUSE has a total AUM of just over $420MM. 

During our conversation, we covered the strategic nature of LP composition and how venture funds should think about their servicing model to founders. It was a great conversation and I hope you enjoy it. 

About Brendan Wales:Brendan Wales is a Founding Partner at FUSE. Prior to FUSE, Brendan served as a Partner at e.ventures (now Headline) for nine years, where he collaborated with founders of high-impact startups like Shipt (acquired by Target), Fetch Rewards, and Shopmonkey. His earlier career also includes being an early employee at zozi, showcasing his hands-on experience in startup growth.

Brendan studied finance at the University of Georgia.

About Kellan Carter:Kellan Carter is a Founding Partner at FUSE. Previously, as a Partner at IGNITION PARTNERS, he focused on enterprise software investments, contributing significantly to the firm's strategy and growth. His earlier career includes roles in technology sector mergers and acquisitions at Mooreland Partners and structured finance at KPMG Advisory.

Kellan holds a Bachelor of Science in Business Administration with a Finance focus from The University of Montana.

In this episode, we discuss:

(01:22) Start of Fuse and Pacific Northwest Ecosystem

(03:00) Raising Fund During COVID and LP Composition

(06:34) Activating LPs for Strategic Advantage

(09:40) Learning from Raising Funds in Challenging Times

(17:00) Building a Cohesive Team and Operating Partners

(24:33) Defining the Product Offered to Founders

(26:10) Importance of Sourcing and Winning in Venture Capital

(31:42) Seattle's Unique Position in Technology and Startups

(38:25) Personal Advice for Venture Capital Careers

I’d love to know what you took away from this conversation with Brendan and Kellan. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Podcast Production support provided by Agent Bee 

Follow me @samirkaji for my thoughts on the venture market, with a focus on the continued evolution of the VC landscape.

As we continue to grow Venture Unlocked, we are now going to release short conversations highlighting a specific point of view of our guest. These points of views may come through a tweet, an article, or conversation, and our goal is to unpack these interesting views in short form. 

Our first guest in this format is Ed Suh Founder and Managing Partner of Alpine VC.

Ed recently penned a tweet that I thought was interesting around the evolution of venture and the parallels to the industry to other asset classes such as private equity and hedge. I wanted to go deeper into his tweet, which we did during our short conversation. Hope you enjoy!

About Ed Suh:Ed Suh is the Founder and Managing Partner of Alpine Ventures, a San Francisco based technology venture capital firm. Ed previously led seed, early stage, and growth stage investments in Silicon Valley for nearly a decade across two prominent multi-stage venture firms: Goodwater Capital, a spin-out of Kleiner Perkins and Maverick Capital with over $5B of AUM, and Redpoint Ventures, a leading Silicon Valley venture firm with a 20+ year track record of leading consumer and enterprise software investments. Ed has backed multiple unicorn startups including Monzo, Everlywell, Jasper, Greenlight, and Stash. Previously, Ed was Head of Business Operations at Stitcher, the leading independent podcasting app, acquired by SiriusXM for $325 million and backed by Benchmark, NEA, and New Atlantic Ventures, as well as an investment banker at Merrill Lynch focused on technology M&A. Ed was also a member of the original growth team at Facebook, and a software engineer at Plaxo and Citadel Investment Group.Ed earned MS and BS degrees in Computer Science from Stanford University, with a specialization in Artificial Intelligence.

In this episode, we discuss:

(01:26) Discussion on venture capital becoming mainstream and its comparison to other asset categories.

(03:01) Evolution of venture capital, industry scaling, and differentiation challenges.

(04:42) Venture capital's evolution in comparison to private equity and future implications.

(06:44) Fragmentation in venture capital and its impact on alpha and risk profiles.

(09:37) Dynamics between large venture capital funds and emerging managers.

(11:51) Further insights into venture capital evolution, manager selection, and fund roles.

(13:57) Venture capital's current stage in its evolutionary cycle and future themes.

I’d love to know what you took away from this conversation with Ed. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Podcast Production support provided by Agent Bee 

Follow me @samirkaji for my thoughts on the venture market, with a focus on the continued evolution of the VC landscape.

This is our second episode of Venture Unlocked Shorts where we highlight a specific point of view of our guest. These points of view may come through a tweet, an article, or an offline conversation, and our goal is to unpack these interesting views in a short conversation. 

In this week’s Venture Unlocked Shorts, we’re joined by Aileen Lee of Cowboy Ventures. Aileen wrote a now famous article in 2013 where she coined the term Unicorn to describe technology companies that reach a billion-dollar valuation within 10 years of founding.

Recently she and her team published a successor article looking at the last 10 years of these Unicorns, and what they believe will happen in the future.

It was fun to unpack the articles through this discussion, and I think you’ll enjoy hearing her findings and thoughts on what we may see in the future. 

About Aileen Lee:Aileen is the Founder and Managing Partner of Cowboy Ventures, a firm that invests in early-stage enterprise and consumer startups. With over two decades of experience in venture capital, she has a history of involvement from seed stage to beyond, including her time at Kleiner Perkins Caufield & Byers.

Before her venture capital career, Aileen held roles at Gap Inc. and started at Morgan Stanley. She holds degrees from MIT and HBS. Additionally, she co-founded All Raise and sits on the board of Castilleja School.

Aileen is known for introducing the term “unicorn” in the context of business. She has been recognized in Time 100's most influential people and has appeared on the Forbes Midas List.

In this episode, we discuss:

(02:30) Marking a decade of the term Unicorn and how many Unicorns have been created in the last ten years

(05:46) The impact of macroeconomic factors like zero interest rate policies on the venture capital industry

(06:37) Aileen describes the situation as a 'perfect storm' of factors leading to a surge of capital in the industry

(08:18) The future of unicorns in the venture capital landscape

(15:46) What happened in 2021?

(17:13) The importance of founders understanding the business model of the funds they are engaging with

(19:00): Aileen predicts a mix of outcomes for startups and whats ahead

I’d love to know what you took away from this conversation with Aileen. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Podcast Production support provided by Agent Bee 

Follow me @samirkaji for my thoughts on the venture market, with a focus on the continued evolution of the VC landscape.

We have a conversation with Samir Kaul from Khosla Ventures. 

Founded in 2004, Khosla is one of the largest and most well-known venture capital firms in the world and led by legendary investor and entrepreneur Vinod Khosla. The firm is known for investing in companies that are solving very large and complex problems. The firm currently has over $15B in AUM investing in companies such as Square, Doordash, Stripe, OpenAI, and Impossible Foods.

During the episode, we covered investing across cycles, the market insanity we saw pre-2022, and how they approach both building a firm and investing.

Note: We recorded this prior to the news that Keith Rabois was rejoining the firm, hence no mention of it during the discussion.

About Samir Kaul:Samir Kaul is a Founding Partner and Managing Director at Khosla Ventures, and he specializes in investments across health, sustainability, food, and advanced technology sectors. His notable investments leading to successful exits through IPOs or acquisitions include companies like Vicarious Surgical, View, Guardant Health, Nutanix, Oscar, Quantumscape, Granular, SLD, NanoH2O, Iora Health, and Raxium. Additionally, he has played a pivotal role in investments in transformative startups such as Impossible Foods, Mojo Vision, Primer, and many others, demonstrating a keen eye for identifying and nurturing groundbreaking technologies and business models.

Before joining Khosla Ventures, Samir's career was marked by significant achievements in biotechnology and venture capital at Flagship Ventures and the Institute for Genomic Research, where he contributed to pioneering efforts in genomics and biotech startups like Helicos BioSciences and Codon Devices. His work in sequencing the Arabidopsis genome set new standards for efficiency and impact in the field of genomics. Beyond his professional endeavors, Samir is deeply committed to philanthropy, serving on the boards of the Tipping Point Community, UCSF Benioff Children’s Hospital, and the US Ski and Snowboard Association, showcasing his dedication to societal betterment and healthcare.

In this episode, we discuss:

(01:45) Samir’s career path to venture

(05:15) Traits of Successful Entrepreneurs

(06:04) Building Long-term Companies

(08:49) Venture Capital's Role Beyond Funding

(12:13) Evolution of Venture Capital

(16:15) AI and Tech Super Cycles

(22:24) Learning from Past Mistakes

(28:03) Investing in High Conviction Trends

(32:33) Firm Culture and Decision Making

(37:17) Hiring and Building a VC Team

(39:12) Advice to Younger Self

I’d love to know what you took away from this conversation with Samir. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Podcast Production support provided by Agent Bee 

Follow me @samirkaji for my thoughts on the venture market, with a focus on the continued evolution of the VC landscape.

Today we have another version of Venture Unlocked shorts, and this time it will be focused on topics within the GP/LP world.

Joining me for this around-the-water-cooler recurring series is Meghan Reynolds, who leads capital formation at Altimeter Capital. 

Meghan recently attended iConnections in Miami, one of the biggest global capital intro summits in the world, which served as inspiration for this episode. We discussed what she observed during the summit, including how LPs are thinking about early-stage and late VC, and the place for venture overall in private portfolios.

Hope you enjoy our episode!

A word from our sponsor:

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Despite the enormous growth of the private markets and the rapid increase of retail demand for private alternatives, investing in the highest quality private assets within the innovation sector still remains limited to institutions and ultra-connected high net worth individuals.

With Allocate, wealth advisors, banks, family offices, and other qualified investors can have a streamlined way to responsibly invest with confidence.

Go to allocate.co to find out more and please sign up to the waitlist to learn more and get early access to the platform.

About Meghan Reynolds:Meghan Reynolds is Partner and Head of VC Capital Formation and Fundraising for Altimeter, a lifecycle technology investment firm. Prior to joining Altimeter, Meghan was Managing Partner and Co-head of Fundraising at TPG. She began her career and spent nearly a decade in the Investment Management Division of Goldman Sachs.

Meghan graduated from the University of Notre Dame.

In this episode, we discuss:

(02:11) Report from the iConnections summit in Miami and what it means for the VC industry

(06:38) The complex dynamics of fundraising in the current venture capital landscape

(09:49) The recalibrated expectations among LPs with a strategic emphasis on seed and Series A investments as a method to hedge against portfolio volatility

(17:01) Forecast for a tough adjustment period for Unicorns and the venture capital ecosystem, with some hope on the horizon

(19:00) Challenges posed by multiple compression rounds and the reality for companies looking for exits

(21:11) The long journey for VC-backed companies in navigating valuation adjustments and exit strategies, with an increased reliance on the secondary market for liquidity

(23:12) The extended impact of the substantial funding raised in 2021, adding complexity to the venture capital environment

I’d love to know what you took away from this conversation with Meghan. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Podcast Production support provided by Agent Bee

Follow me @samirkaji for my thoughts on the venture market, with a focus on the continued evolution of the VC landscape.

We have a conversation with Mitchell Green, Founder and Managing Partner at Lead Edge Capital. 

With offices in New York and Santa Barbara, the firm has over $5B in Assets under management and specializes in helping growth-stage companies scale.

The firm has an interesting model that combines elements of PE, growth, and an active network of over 700 LPs to build a very powerful moat.

I was really interested in several business components, especially the LP base's strategic nature and the programmatic way they evaluate companies. 

A word from our sponsor:

Invest in innovation. Allocate allows investors to access top-tier private funds and co-investment opportunities within the technology sector.

Despite the enormous growth of the private markets and the rapid increase of retail demand for private alternatives, investing in the highest quality private assets within the innovation sector still remains limited to institutions and ultra-connected high net worth individuals.

With Allocate, wealth advisors, banks, family offices, and other qualified investors can have a streamlined way to responsibly invest with confidence.

Go to allocate.co to find out more and please sign up to the waitlist to learn more and get early access to the platform.

About Mitchell Green:Mitchell Green is the Founder and Managing Partner at Lead Edge Capital, a $5B growth equity firm investing in software, internet, and tech-enabled services businesses globally. Mitchell oversees the fund’s global activities and has led several of the fund's largest investments, including Alibaba Group, Asana, Bumble, FIGS, Grafana, SignalSciences, Spotify, Toast, Uber, and Wise. His career began with roles on the investment teams at Bessemer Venture Partners and Eastern Advisors. Mitchell is a former nationally ranked alpine ski racer and currently serves on the boards of the U.S. Ski & Snowboard Foundation and the Laguna Blanca School in Santa Barbara, CA.Mitchell holds a B.A. in Economics from Williams College and an M.B.A. in Marketing from the Wharton School at the University of Pennsylvania.

In this episode, we discuss:

(01:38) Shares the origin story of Lead Edge Capital, reflecting on the early experiences before 2009, and the influence of Bessemer's deal-sourcing approach of cold calling and direct outreach.

(09:57) The value of being his own boss and learning from failures

(12:35) Building a team for outbound cold calling to find unique investment opportunities.

(15:27) Leveraging LPs in the due diligence process for valuable insights and validation of potential investments

(17:21) Creating a community among LPs where engagement and assistance are core expectations

(20:55) The resilience and opportunistic nature of high-net-worth individuals during market downturns

(21:59) The "moneyball" approach to investment criteria, prioritizing revenue, growth, gross margins, and capital efficiency

(26:00) A success story of investing in a rapidly growing, COVID-enabled electronic signatures company

(30:32) Many companies raising venture capital should not exist

(36:09) The need for persistence to get into the best companies

(38:57) Trusting your instincts and the strategic advantage of being contrarian in investment

I’d love to know what you took away from this conversation with Mitchell. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Podcast Production support provided by Agent Bee

Follow me @samirkaji for my thoughts on the venture market, with a focus on the continued evolution of the VC landscape.

This week we are pleased to be joined by Adam Bain of 01 Advisors, a San Francisco-based firm with nearly $1 billion under management.

Adam and his partners, including Dick Costolo, have taken a very different approach to the venture model, drawing from their experiences as operators. While Adam was COO and Dick was CEO at Twitter, they helped the company scale from zero to in revenue as fast as any consumer tech company in history. During this time, they spent a significant amount of time with the late Bill Campbell, the legendary CEO coach who helped inspire the foundation for 01 Advisors.

Since founding the firm in 2018, they have a uniquely focused approach to venture coaching and unlike other Series B and later VCs, they do not take board seats. We went through the why of this model. Along with topics such as the transition from operating to investing. And the future of potentially using models to determine founder archetypes.

If you’re a VC investor, then I’m sure you already know about Sydecar, the go-to platform for emerging VCs to manage their SPVs and funds. Sydecar is on a mission to make private markets more accessible, transparent, and liquid by standardizing how investment vehicles are created and executed. Their powerful software allows VCs to launch SPVs and funds instantaneously, track funding in real time, and offer hassle-free opportunities for early liquidity.

Whether you’re syndicating your first or fiftieth deal, Sydecar acts as your silent operating partner, handling all back-office functions in a single place. Sydecar always has your back, so that you never have to worry about chasing subscription docs, lost wires, or late K-1s.

With all the recent ups and downs in the private markets, the last thing you want to worry about is whether your back office is operating smoothly. Sydecar's responsive and proactive customer support team is there to assist, helping you build trust with your investors and tackle the challenges of building your firm.

Visit sydecar.io/ventureunlocked to learn more.

About Adam BainAdam is a Co-Founder and Managing Partner for 01 Advisors, a venture & advisory firm that helps founders go from building a product to building a company with operational expertise.He was previously the COO for Twitter and a Board Director for Opendoor.

In this episode, we discuss:

(03:01) Adam shares his journey from Twitter to founding 01 Advisors, focusing on the transition from advertising and social media to a venture model that combines investing and advising

(05:00) The unique backgrounds of 01 Advisors' partners in scaling companies from zero to significant revenues, showcasing a rare collective experience in tech leadership

(08:01) The venture coaching approach at 01 Advisors that was inspired by Bill Campbell

(14:35) Why 01 Advisors chooses not to take board seats, aiming to offer more effective and unrestricted guidance to CEOs

(18:14) Helping CEOs appoint seasoned operators to board positions, ensuring comprehensive support without direct board involvement

(22:08) 01 Advisors' focus on Series B investments, aligning their operational expertise with companies at a pivotal growth stage

(24:16) 01's strategy of a concentrated portfolio to deeply engage and support their investments, contrary to the broader trend towards more extensive portfolios.

(27:25) Diligence process for revenue streams and operational dynamics, aiming to identify areas where 01 can significantly impact growth.

(29:00) The use of cognitive psychology for deeper CEO assessments post-investment, aiming to tailor support strategies to each leader's unique strengths and challenges

(31:16) The early successes of this cognitive approach

(34:42) The transition from high level operator to investor

(39:58) Why he’s excited continuous intellectual growth and the diverse learning experiences venture capital offers

(43:14) The market in 2024 is the Super Bowl moment for 01

I’d love to know what you took away from this conversation with Adam. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Podcast Production support provided by Agent Bee

Follow me @samirkaji for my thoughts on the venture market, with a focus on the continued evolution of the VC landscape.

We are thrilled to bring you a conversation with David Sacks, Founder and Partner of Craft Ventures. Based in San Francisco, Craft was founded in 2017 and currently has over 3 billion in assets under management.

Across the last three decades, David has been incredibly influential as an investor, entrepreneur, and public thought leader. When starting Craft, he was able to draw from his deep operating background, having worked as an early leader at PayPal, and then later founding Yammer, which he sold to Microsoft for $1.2 Billion.

He is also one of the hosts of the All In Podcast, one of the most listened podcasts in the world.

We had a wide-ranging dialogue that took us through the evolution of Craft Ventures from its initial days to today, the strategic decision-making behind scaling fund sizes and team growth, and his overall views on the current outlook of venture capital.

If you’re a VC investor, then I’m sure you already know about Sydecar, the go-to platform for emerging VCs to manage their SPVs and funds. Sydecar is on a mission to make private markets more accessible, transparent, and liquid by standardizing how investment vehicles are created and executed. Their powerful software allows VCs to launch SPVs and funds instantaneously, track funding in real time, and offer hassle-free opportunities for early liquidity.

Whether you’re syndicating your first or fiftieth deal, Sydecar acts as your silent operating partner, handling all back-office functions in a single place. Sydecar always has your back, so that you never have to worry about chasing subscription docs, lost wires, or late K-1s.

With all the recent ups and downs in the private markets, the last thing you want to worry about is whether your back office is operating smoothly. Sydecar's responsive and proactive customer support team is there to assist, helping you build trust with your investors and tackle the challenges of building your firm.

Visit sydecar.io/ventureunlocked to learn more.

About David Sacks:David Sacks is Co-Founder and Partner at Craft. He has been a successful founder and investor for over two decades, building and investing in some of the most iconic companies in tech. David has invested in over 20 unicorns, including Affirm, AirBnB, Bird, ClickUp, Eventbrite, Facebook, Houzz, Lyft, OpenDoor, Palantir, Postmates, Reddit, Slack, SpaceX, Twitter, Uber, and Wish.David first got involved in the technology industry in 1999 when he joined early-stage startup Confinity, later renamed PayPal. Serving as the company’s first product leader and then as COO, David built and ran many of the company’s key teams, including product management and design, sales and marketing, business development, international, customer service, fraud operations, and HR. He pivoted the product from beaming money on Palm Pilots to emailing money on the web, and introduced the business model. When the company IPO’d on the Nasdaq in 2002, David was 29 — the median age of the “PayPal Mafia” executives listed on the S-1. PayPal was later acquired by eBay and eventually spun back out into a publicly traded company (under ticker symbol PYPL).David is well-known in Silicon Valley for his product acumen. AngelList’s Naval Ravikant has called David “the world’s best product strategist.” And has received acclaim as one of the Besties on the All In Podcast.

In this episode, we discuss:

(02:56) David Sacks discusses transitioning from being an entrepreneur with experiences at PayPal and Yammer to founding Craft Ventures, emphasizing the focus on SaaS and leveraging operational expertise to support startups.

(04:56) The growth of Craft Ventures from its initial fund to managing $3.5 billion, focusing on SaaS and marketplaces, and how fund size affects strategy

(08:15) Portfolio construction and the strategic shift towards reserving more for follow-ons to maintain company ownership and align fund size with venture focus

(10:10) The VC market's evolution shifting towards sustainable investment strategies following the 2020-2021 bubble and its correction.

(13:39) Advice for entrepreneurs to focus on capital efficiency and realistic growth expectations due to the changing investment landscape

(17:33) Predicting a continued reset in valuations and funding availability in 2024, and how startups can adjust their strategies accordingly

(34:05) Parallels and distinctions between running a venture firm and a startup, emphasizing the importance of creating a stable, transparent environment at Craft Ventures

(36:10) The significance of firm culture and talent acquisition, focusing on collective success and providing transparent, valuable support to portfolio companies

I’d love to know what you took away from this conversation with David. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Podcast Production support provided by Agent Bee

Follow me @samirkaji for my thoughts on the venture market, with a focus on the continued evolution of the VC landscape.

This week we're doing another special roundtable discussion with a focus on the seed stage market. Joining us are Jenny Fielding of Everywhere Ventures, Kirby Winfield of Ascend, and Nate Williams of UNION Labs.

This whole conversation was focused on seed stage investing. We spent most of our time discussing how the market reset affects seed-stage decision-making, fund sizing, and reserve strategies. We also touched on what they are seeing and hearing from LPs that invest in seed funds.

If you’re a VC investor, then I’m sure you already know about Sydecar, the go-to platform for emerging VCs to manage their SPVs and funds. Sydecar is on a mission to make private markets more accessible, transparent, and liquid by standardizing how investment vehicles are created and executed. Their powerful software allows VCs to launch SPVs and funds instantaneously, track funding in real time, and offer hassle-free opportunities for early liquidity.

Whether you’re syndicating your first or fiftieth deal, Sydecar acts as your silent operating partner, handling all back-office functions in a single place. Sydecar always has your back, so that you never have to worry about chasing subscription docs, lost wires, or late K-1s.

With all the recent ups and downs in the private markets, the last thing you want to worry about is whether your back office is operating smoothly. Sydecar's responsive and proactive customer support team is there to assist, helping you build trust with your investors and tackle the challenges of building your firm.

Visit sydecar.io/ventureunlocked to learn more.

About Jenny Fielding:Jenny Fielding is the Co-Founder and Managing Partner of Everywhere Ventures. She is one of the most active global pre-seed investors, having invested in 300+ companies as the first money in. Jenny has built a thriving community of 500+ founders and operators who help source, diligence, and invest in the next generation of startups across 3 core verticals: money, health, and work.

Prior to Everywhere, Jenny spent 7.5 years as the Managing Director of Techstars where she invested in a portfolio of companies with a current market cap over $10B. Jenny is a 2x founder, a lawyer by training, and an adjunct professor at Columbia University and Cornell Tech.

About Kirby Winfield:Kirby Winfield is the Founding General Partner at Ascend.vc, the most prolific pre-seed stage venture fund in the Pacific Northwest.

Kirby has been operating and investing in Artificial Intelligence and Machine Learning since the 1990s. His first startup pioneered the use of semantic AI for web search. He advised the Allen Institute of Artificial Intelligence on the launch and growth of its highly regarded Ai2 Incubator program, and has backed 30+ AI startups as a VC.

Early in his career, Kirby was a founding team member and operating executive at back-to-back tech IPOs, with Go2Net and Marchex. He is also a two-time venture capital-backed CEO, with AdXpose (DFJ, Ignition) acquired by comScore, and Dwellable (Maveron, VersionOne) acquired by HomeAway.

About Nate Williams:Nate Williams is the co-Founder and Managing Partner of DeepTech seed fund UNION Labs Ventures and formerly an Entrepreneur-in-Residence (EIR) at Kleiner Perkins focused on opportunities in Climate, PropTech, and Mobility. Nate's track record includes senior leadership experiences executing through startup, growth and turnaround stage culminating in successful exits for 4Home (to Motorola '10), Motorola Mobility (to Google '12), Motorola Home (to ARRIS '13) and August Home (to Assa Abloy '17).

Prior to Kleiner Perkins, Nate was CRO & Head of Platform PM at August Home, Inc. a leader in Smart Home Access where he secured August commercial growth with market leaders and integration partners including Airbnb, Wal-Mart, Amazon, Honeywell, Comcast, and Google/Nest. Nate was also Senior Director of Marketing & Business Development at Google subsidiary Motorola Mobility (following their acquisition of 4Home where he was CMO & Head of Business). Earlier in his career, he was an Analyst in the Digital Home Group of Intel Corp.

Nate earned an MBA from The UCLA-Anderson School of Management and a Bachelors in Communication Science from The University of Connecticut. He is named in several Communications Infrastructure patents, entrepreneurial, and comfortable building cross-functional teams introducing products under significant market uncertainty.

In this episode, we discuss:

(03:09): The challenges first-time founders face, especially in fundraising and navigating the current economic climate

(04:17): Trends in pre-seed and seed round sizes including the reasons behind increases and their impact on startups

(06:52): The importance of a founder's ability to fundraise in the current economic environment is stressed as critical for startup success

(08:21): Venture Capitalists' adjusted expectations for startups progressing from seed to Series A

(11:59): The need for founders to adapt their strategies in response to market changes, moving towards building sustainable businesses

(16:21): The effects of significant valuation step-ups during seed rounds on the investment ecosystem

(20:39): Current trends in seed valuations and round sizes and implications for the startup and investment community

(25:52): How seed investors are adapting their reserve strategies to better support startups through to Series A rounds and beyond

(27:09): The impact of the funding environment on LPs investment decisions and strategies

(34:43): The challenges GPs face in fundraising efforts are explored, including navigating expectations and market conditions

I’d love to know what you took away from this conversation with Jenny, Kirby, and Nate. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Podcast Production support provided by Agent Bee

Follow me @samirkaji for my thoughts on the venture market, with a focus on the continued evolution of the VC landscape.

Today we have another version of Venture Unlocked shorts, and this time it will be focused on topics within the GP/LP world.

Joining me again is Meghan Reynolds, who leads capital formation at Altimeter Capital. 

This time we discuss the significant liquidity challenges in the venture capital market, focusing on the concerns of LPs about funding future capital calls and the longer wait times for returns. With a decline in public offerings and exits, LPs and GPs are now turning to alternative strategies such as strip sales and GP-led secondaries. We highlight the need for GPs to establish clear liquidity management as the dynamics of the industry continue to change.

If you’re a VC investor, then I’m sure you already know about Sydecar, the go-to platform for emerging VCs to manage their SPVs and funds. Sydecar is on a mission to make private markets more accessible, transparent, and liquid by standardizing how investment vehicles are created and executed. Their powerful software allows VCs to launch SPVs and funds instantaneously, track funding in real time, and offer hassle-free opportunities for early liquidity.

Whether you’re syndicating your first or fiftieth deal, Sydecar acts as your silent operating partner, handling all back-office functions in a single place. Sydecar always has your back, so that you never have to worry about chasing subscription docs, lost wires, or late K-1s.

With all the recent ups and downs in the private markets, the last thing you want to worry about is whether your back office is operating smoothly. Sydecar's responsive and proactive customer support team is there to assist, helping you build trust with your investors and tackle the challenges of building your firm.

Visit sydecar.io/ventureunlocked to learn more.

About Meghan Reynolds:Meghan Reynolds is Partner and Head of VC Capital Formation and Fundraising for Altimeter, a lifecycle technology investment firm. Prior to joining Altimeter, Meghan was Managing Partner and Co-head of Fundraising at TPG. She began her career and spent nearly a decade in the Investment Management Division of Goldman Sachs.

Meghan graduated from the University of Notre Dame.

In this episode, we discuss:

(02:00) The current state of the venture capital market and LP perspectives on liquidity and the impact of market resets on traditional exit opportunities like IPOs and M&As

(04:00) Liquidity and the challenges for LPs in funding upcoming capital calls due to increased venture activity and the need to adjust liquidity timeline expectations

(09:00) The complexities of exit strategies and the necessity for alignment between GPs and LPs on exit timing

(12:57) Using “Strip sales” as a liquidity management strategy are detailed, where a portion of a fund’s assets are sold to secondary buyers, and practical examples of how this strategy has been effectively implemented

(21:56) The need for venture capital to adopt more institutional and LP-friendly practices akin to the private equity evolution post-2008, driven by current fundraising challenges that compel VC funds to innovate in liquidity management and LP relationships

I’d love to know what you took away from this conversation with Meghan. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Podcast Production support provided by Agent Bee

Follow me @samirkaji for my thoughts on the venture market, with a focus on the continued evolution of the VC landscape.

We are back with Amy Saper, partner at Uncork Capital. Amy shares her journey from Silicon Valley operator at Twitter and Stripe to venture capitalist. She talks about Uncork’s strategy, including its recent $200 million seed fund and $200 million opportunity fund, and how the firm balances growth with specialization.

Investors will find her perspective on non-consensus investing particularly compelling, as she outlines how she evaluates technical teams and market potential. Successful founders attract and develop talent. Finally, she reflects on her move to Uncork and shares her key learnings as an institutional investor.

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About Amy Saper:Amy Saper is a Partner at Uncork Capital, where she invests in seed-stage B2B SaaS, API-first, and fintech companies. Previously, she spent four years as an early-stage partner at Accel where she led seed and Series A investments in companies such as Gamma, Beam, Complete, and Sprinter Health.

Prior to her venture career, she worked at Stripe, Uber, and Twitter launching products, business lines and new markets, in product marketing, product management, business development and international expansion roles.

She received her BS and MBA from Stanford University.

In this episode, we discuss:

(02:27) Amy discusses her background, including her experience at Twitter, Stripe, and her transition to venture capital

(08:00) Joining Uncork Capital, the firm's history, and the recent funds they have raised

(09:14) Comparing the culture of a firm with that of a startup and discusses the importance of sticking to the core focus

(15:17) How Uncork Capital decided on its fund strategy and the balance they struck between fund size and being lead investors

(18:28) Product market fit in Venture firm and how she delivers value to founders

(24:27) How constraints can foster creativity and the importance of staying focused in a capital-constrained market

(28:49) The challenges startups face in raising Series A funding and the importance of balancing focus and growth.

(34:37) Non-Consensus investing and what she looks for in founders

(37:17) The importance of a founder's ability to attract and develop talent and shares her thoughts on whether this can be learned

(42:13) What attracted her to Uncork Capital and how the team dynamics influenced her decision

(45:40) The one thing she knows now that she wishes she knew when she started investing

I’d love to know what you took away from this conversation with Amy. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Podcast Production support provided by Agent Bee

Follow me @samirkaji for my thoughts on the venture market, with a focus on the continued evolution of the VC landscape.

We are back with another LP-focused episode with Michael Kim, Founder of Cendana Capital. Michael shares how he started Cendana around his thesis (at the time very early) of backing small, emerging managers. This led to early investments in firms such as IA ventures, Forerunner, and Lerer Hippeau.

During our discussion, we chatted about what qualities he’s seen in great emerging managers as well as his thoughts on portfolio construction.

We also get into the challenges of raising funds today and why the secondary market will a critical component of venture moving forward.

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About Michael Kim:Michael Kim is the Founder of Cendana Capital, a San Francisco-based firm that specializes in investing in very early-stage VC funds globally. Founded in 2010, Cendana Capital has over $2B in AUM.

Prior to Cendana, Michael served as a General Partner at Rustic Canyon Partners where he contributed to the firm's growth and investment strategies. He also was a Board Member of the San Francisco Employees' Retirement System (SFERS), and an Investment Banker at Morgan Stanley focusing on Technology M&A.

Michael holds an MBA in Finance from The Wharton School, an MSFS in International Economics from Georgetown University's Walsh School of Foreign Service, and an AB in International Relations from Cornell University. Michael is a founding board member of the Wikimedia endowment, which supports Wikipedia.

In this episode, we discuss:

(02:49) Michael’s time at Morgan Stanley's tech M&A group in the 90s

(04:11) Cendana’s launch and how it took two years to raise the first fund

(06:16) Seed stage investing has become like early stage venture.

(07:07) The importance of fund managers getting large ownership early

(09:50) Why grit, determination, and hustle are crucial and domain expertise and contrarian thinking are vital

(12:00) Pre-seed is the new seed and rounds have gotten bigger

(14:00) High integrity fund managers need 12-15% ownership

(16:12) Pre-seed managers work with potential entrepreneurs before they start a company

(18:00) Founders now raise more initially for a longer runway

(20:00) How fund size affects ownership and return potential

(23:00) Why smaller funds often outperform larger ones

(25:17) What changes when making the leap from small to large checks

(27:00) The importance of network strength for fund managers' success

(33:00) Fund managers need to explain their investment decisions well

(37:15) Fund managers need to be flexible but transparent

(39:00) The importance of trust and transparency for long-term relationships.

(42:00) Seed funds are best positioned for secondaries

(45:21) The potential rise in secondary market deals

(48:00) Tourist fund managers have mostly exited the market

(50:00) The next few years should be great for venture investments

I’d love to know what you took away from this conversation with Michael. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Podcast Production support provided by Agent Bee

Jon Sakoda is the Founding Partner at Decibel, a venture firm that was created in partnership with Cisco (but independent in nature) in 2018 to invest in early-stage companies.

Hear how Jon, who describes himself as a “recovering entrepreneur,” started his first company, Imlogic, Inc. which was eventually acquired by Symantec, and then joined New Enterprise Associates (NEA) in 2006 where he served as a partner for 12 years. During his time at NEA, NEA clearly established itself as the largest venture firm in the world and had raised a $2.5B fund well before the current mega-fund boom.

In this episode, Jon and I cover the following topics:

* Jon’s trajectory from being a technical operator to a VC.

* The bundling and unbundling of venture capital, and what we should see going forward.

* Do VC’s really add value? What leads to the belief by founders that they might not?

* The role of Cisco and how it helps them differentiate and punch above their weight in helping founders.

* How traditional economic LPs view corporate LPs and how GPs can navigate the discussions.

* What new GPs often underestimate when starting a fund

Mentioned in this episode:

* Decibel website, and their partnership with Cisco.

I’d love to know what you took away from my conversations with Jon Sakoda; Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Follow me @samirkaji for my thoughts on the venture market, with a focus on the continued evolution of the VC landscape.

In this episode, Sam Heshmati and Vince Timoney from Citizens Private Bank stop by to talk about all things venture banking and how the industry is recovering from the 2023 regional banking crisis.

Sam and Vince, both of whom have extensive experience in the banking sector, share their insights on the challenges faced during this period, including the impact on startups and venture funds. They also discuss the significant changes in the banking industry since the crisis, such as the increased cost of capital, the fragmentation of fund banking services, and the shift in how banks serve emerging managers and venture capital firms.

The conversation provides a detailed look at the current landscape of banking for the venture ecosystem and how Citizens Private Bank is positioning itself to help clients navigate these challenges.

About Sam Heshmati:Sam Heshmati is an Executive Managing Director at Citizens Private Bank, heading the emerging VC and innovation practice. Previously, he co-founded and led programs serving the VC and tech community, cultivating and managing relationships with some of the nation’s top emerging managers, accelerators and entrepreneurs at the former First Republic Bank. He has over 21 years of experience in the technology ecosystem, serving clients not only as a banker, but as trusted partner with the expertise needed to help navigate important decisions within this space. Over his career, he has worked with more than 1000 early-stage VC firms and several thousand venture-backed startups. Prior to joining First Republic Bank in 2012, he spent 10 years as a tech banker at Silicon Valley Bank and Square 1 Bank. He earned a bachelor’s degree from San Jose State University.

About Vincent Timoney:Vincent Timoney is a Senior Managing Director at Citizens Private Bank, serving the fund finance and innovation economy nationwide. He has more than 12 years of experience working with VCs in business development, sales, lending and relationship management roles within the venture capital and technology ecosystem.

In this episode, we discuss:

(01:34) The evolving importance of banking, especially after the events of 2023.

(02:16) Banking Crisis of 2023 triggered by the collapse of Silicon Valley Bank and First Republic Bank.

(04:00) The impact of Silicon Valley Bank on the venture ecosystem and the rapid sequence of events leading to its downfall.

(07:00) How the banking industry has changed post-crisis, focusing on client expectations and digital banking.

(08:30) The increase in players in fund banking and the rise in cost of capital.

(12:00) Sam and Vince explain their journey of joining Citizens Private Bank, focusing on safety, stability, and continuing their work in the sector.

(18:00) Challenges faced by emerging managers, including capital call lines and banking needs.

(22:12) The importance of a seamless digital experience.

(28:16) Explanation of management company lines and their use by emerging managers.

(31:00) Advice for emerging managers on managing financial challenges and understanding the economics of running a fund.

(34:00) How technology and APIs are used to enhance banking services and integrate with third-party providers.

(38:00) Importance of offering personalized banking experiences tailored to individual client needs.

(40:00) Value-added services and why banks offer advisory support and strategic guidance.

(45:10) The long-term commitment required to build a successful banking franchise in the venture ecosystem.

I’d love to know what you took away from this conversation with Sam and Vince. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Podcast Production support provided by Agent Bee

Follow me @samirkaji for my thoughts on the venture market, with a focus on the continued evolution of the VC landscape.

We're joined by TX Zhuo, Co-Founder and General Partner of Fika Ventures. His tech career began in college when he started an online textbook marketplace.

After working at McKinsey and as a CFO at an operating company, TX joined Innovation Endeavors. He then co-founded Karlin Ventures, which was backed by a single family office. In 2016, he co-founded Fika Ventures, which now has a 10-person team and has raised three funds.

During the pod, we discussed the culture needed to run a successful VC firm, how they've thought about innovation, LP fundraising as a first-time fund, and how they think about valuation methodology.

About TX Zhuo:TX Zhuo is a General Partner at Fika Ventures, a boutique seed fund in Los Angeles investing in data, AI, and automation technologies. He co-founded Fika Ventures in August 2016 and has been dedicated to solving systemic problems through innovative platforms ever since.

Prior to this, he was the Managing Partner at Karlin Ventures from 2012 to 2016, focusing on early-stage investments in various sectors including education technology, digital media, and healthcare. Before Karlin Ventures, TX worked at Innovation Endeavors from October 2010 to May 2012, managing deal screening and outreach initiatives. He also served as the CFO of Lit Motors, an electric vehicle startup, after his tenure at McKinsey & Company from August 2008 to August 2010, where he contributed to financial services and consumer goods projects. TX's entrepreneurial journey began in college when he founded and successfully sold an online textbook marketplace, EMT Alliance, which had significant sales and a cost-efficient distribution center in India.

He holds an MBA from Stanford Graduate School of Business and a Bachelor's degree in Mathematics and Economics from Wesleyan University.

In this episode we discuss:

(01:32) TX Zhuo’s Path to Venture Capital(03:04) Inspired by his own experiences and wanted to create a more institutional platform with Fika Ventures, focusing on supporting seed-stage entrepreneurs with a peer-like approach(05:12) The importance of being founder-first and not imposing advice, adopting a humble approach when communicating with founders(07:14) The difficulties raising the first fund, pitching to 700 investors to get 105 commitments, and learned the importance of storytelling and perseverance(12:49) Radical transparency and conservative financial prudence with LPs, focusing on over-communicating and being proactive about potential issues(16:14) The need to focus on high-impact areas like customer introductions, talent, and follow-on investors, emphasizing trust and being an extension of the management team(19:22) Why TX conducts an expectation-setting exercise early in the relationship with founders, focusing on under-promising and over-delivering to maintain trust and satisfaction(22:39) Navigating 2021's Rapid Fundraising Environment(25:09) How to handle tough conversations with Founders(27:56) Fika’s unique advisor model the uses 73 advisors to support functional and domain-specific needs, and created the Fika Fellows program to up-level senior hires within portfolio companies(34:15) How Fika uses a pod system for focused research and decision-making, requiring a high bar of consensus and a structured voting system for investment decisions(31:39) Why TX screens for a service mentality and resourcefulness in new hires, ensuring they align with Fika's values and ethos through practical evaluations and interactions with current founders(37:43) TX’s Advice for Aspiring VCs: the importance of consistency in approach and team cohesion, advocating for treating every entrepreneur consistently and building a strong, unified brand(39:13) The importance of a consistent experience for entrepreneurs interacting with Fika, valuing a strong apprenticeship model and internal trust among team members.

I’d love to know what you took away from this conversation with TX. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Podcast Production support provided by Agent Bee

Follow me @samirkaji for my thoughts on the venture market, with a focus on the continued evolution of the VC landscape.

We're re-joined by Mike Maples, Jr. of Floodgate, this time to discuss his just released new book "Pattern Breakers."

Mike was first on the pod in 2021 and it was great to catch up again, this time to discuss the importance of identifying founders who are true pattern breakers. We spoke about how his observations on the last 14 years at Floodgate inspired him to write the book.

We went through concepts such as founder-future fit, the winning formula of inflections and insights, and his experience that 80% of their returns have been from companies with some major insight or pivot.   

You can find Mike's book "Pattern Breakers" and additional insights on his substack at patternbreakers.substack.com.

About Mike Maples, Jr.:Mike Maples, Jr. is a co-founding Partner at Floodgate. He has been on the Forbes Midas List eight times in the last decade and was also named a “Rising Star” by FORTUNE and profiled by Harvard Business School for his lifetime contributions to entrepreneurship. 

Before becoming a full-time investor, Mike was involved as a founder and operating executive at back-to-back startup IPOs, including Tivoli Systems (IPO TIVS, acquired by IBM) and Motive (IPO MOTV, acquired by Alcatel-Lucent.)

Some of Mike’s investments include Twitter, Twitch.tv, Clover Health, Okta, Outreach, ngmoco, Chegg, Bazaarvoice, and Demandforce.

Mike is known for coining the term “Thunder Lizards,” which is a metaphor derived from Godzilla that describes the tiny number of truly exceptional companies that are wildly disruptive capitalist mutations. Mike likes to think of himself as a hunter of the “atomic eggs” that beget these companies.

Mike is the host of the Pattern Breakers podcast, which shares startup lessons from the super performers.

In this episode, we discuss:

(02:00) The story behind writing "Pattern Breakers" and the investment in Twitch and the importance of pivots

(04:07) Insights from returns on pivots and major insider pivots

(05:02) The concept of founder-future fit and initial skepticism

(07:04) The inflection point of Twitch pivoting from Justin.tv

(10:28) Authenticity and insights in startup founders

(14:32) The role of pattern recognition in startup success

(16:24) Creating movements and attracting early believers

(21:12) Importance of inflection points in startup success

(25:00) Non-obvious inflection points and backcasting

(29:52) The formula of inflection plus insight

(32:00) Non-consensus and right: key to venture success

(34:52) Venture capital and risk-taking

(38:00) Inflections and protecting unconventional ideas

(41:00) Patience as a form of arbitrage in venture investing

(45:00) Insights from Annie Duke on decision-making in venture capital

I’d love to know what you took away from this conversation with Mike. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Podcast Production support provided by Agent Bee

Follow me @samirkaji for my thoughts on the venture market, with a focus on the continued evolution of the VC landscape.

Tom Loverro, General Partner at IVP is our guest as part of our Venture Unlocked Shorts series intended to go deep on a single topic.

We revisit Tom’s Twitter post from early 2023, which spoke to the market shift that was in motion and the difficulties start-ups would face in a capital-constrained market. Specifically, he spoke about 2024 as being a time of reckoning for many companies that were built with growth at all costs mentality. 

We went through that original post, and what’s transpired since then, including why it’s time for well-positioned startups to go on offense again. 

Tom brought a lot of interesting insights for founders and VCs alike, so we hope you enjoy the episode. 

About Tom Loverro:Tom Loverro is a General Partner at IVP in Menlo Park, California, where he focuses on investing in enterprise software and fintech companies. Since joining IVP in 2015, he has served as a Board Director or Observer for several companies, including Attentive, NerdWallet, Paper, Podium, Skydio, and TaxBit. He has also co-led investments in Amplitude, Datadog, GitHub, IEX, OnDeck, and Tanium.

Prior to IVP, Tom was a Principal at RRE Ventures, focusing on early and mid-stage startups, and an Entrepreneur-in-Residence at Lightbank. He also served as Senior Director of Product Marketing at Drobo, Inc., and began his career as an Investment Banking Analyst at Goldman Sachs within the Technology, Media, and Telecommunications Group.

Tom holds an MBA from the Kellogg School of Management at Northwestern University, with concentrations in Finance, Marketing, and Entrepreneurship & Innovation. He earned a BA in Political Science and History from Stanford University.

In this episode, we discuss:

(01:37) - Discussion on Tom's Twitter post from January 2023 and its context

(02:09) - Tom's insights on the shift from a zero interest rate environment

(02:59) - The concept of a mass extinction event for startups in 2023-2024

(03:31) - Comparison with the Great Financial Crisis and its impact on startups

(04:01) - The role of venture excess in 2021 and its aftermath

(05:00) - Discussion on venture fund deployment and its impact on startups

(06:49) - Dry powder theory and its implications on startup funding

(07:49) - Insights on current market conditions and startup valuations

(09:14) - Strategies startups adopted in response to market conditions

(10:27) - The three archetypes of startups in the post-2021 era

(13:18) - Observations on fundraising challenges and potential outcomes for startups

(14:48) - Impact of LP capital dynamics on venture funding

(16:34) - The evolving role of private equity in acquiring tech startups

(18:09) - Comparison of venture fund impacts on early and late-stage investors

(21:30) - Discussion on the IPO market and its high bar for startups

(24:19) - The broader ecosystem of liquidity options for startups today

(25:41) - Tom's recent post on shifting from defensive to offensive strategies

(28:47) - Characteristics of startups that should consider going on offense

(30:00) - Importance of survival, product-market fit, and unit economics for startups

(31:50) - Potential exogenous events and their impact on market predictions

(34:00) - Tom's advice to founders on acting with conviction

I’d love to know what you took away from this conversation with Tom. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Podcast Production support provided by Agent Bee

Follow me @samirkaji for my thoughts on the venture market, with a focus on the continued evolution of the VC landscape.

This week I'm excited to sit down with Lindel Eakman from Foundry. Lindel has been an investor in funds and companies since the early 2000s when he started at UTIMCO.

In our conversation, Lindel talks about being one of the first investors in Union Square Ventures, his preference for smaller partnerships, and the art of conducting quality reference calls on GPs. Having known each other for a while, our chat felt like a fun and casual water cooler conversation about the venture capital world.

About Lindel Eakman:Lindel Eakman is a partner at Foundry, where he focuses on early-stage investing. Since joining in 2015, Lindel has been active across the portfolio, working closely with partner funds and leading new direct investments. He is known for his humble and supportive approach, valuing the hard work of founders.

Before Foundry, Lindel managed the private investment program at the University of Texas Investment Management Company (UTIMCO) from 2002 to 2015. At UTIMCO, he built the venture capital program and invested in firms like IA Ventures, True Ventures, Union Square Ventures, and Foundry.

Lindel began his career in finance at KPMG in the M&A Tax Practice from 1997 to 2001 and then worked as a Corporate Finance Associate at Stephens, Inc. in 2002. He holds an MBA from the University of Texas at Austin McCombs School of Business and a BBA in Accounting and Finance from Texas Christian University. He is a CPA and a CFA charter holder.

In this episode, we discuss:

(01:14) Early Career and Union Square Ventures and moving to Foundry

(03:00) Investment Philosophy and Strategy

(04:28) The value of partnering with emerging managers

(05:55) Selecting GPs and Making Investment Decisions

(10:30) The Current Venture Market Landscape in 2024.

(13:00) Challenges and Opportunities for New Managers

(17:00) Future of Venture Capital

(21:00) Importance of People in Venture

(25:00) Secondaries and Liquidity Opportunities

(29:00) The importance of evaluating partnership dynamics in emerging managers

(33:00) Best practices for conducting reference checks.

(37:00) How virtual interactions affect partnership assessments and fundraising

(42:00) Advice for new managers on constructing a venture portfolio, focusing on sectors and small funds

(47:00) Role of Large Funds in a Venture Portfolio

I’d love to know what you took away from this conversation with Lindel. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Podcast Production support provided by Agent Bee

Follow me @samirkaji for my thoughts on the venture market, with a focus on the continued evolution of the VC landscape.

In this episode, we are thrilled to be joined by Ben Sun, co-founder of Primary, a seed-stage fund based in New York. Ben shares his journey from investment banking to startup founder, and eventually to co-founding Primary, which has backed companies like Coupang and Jet.

Ben provides deep insights into venture math and the intricacies of completing a GP-led secondary. He discusses his background and the inspiration behind starting Primary in 2015. Ben talks about the challenges he faced as a founder and the importance of truly understanding the business as a VC. He explains Primary's hands-on approach, emphasizing the need for a high seed-to-A graduation rate and how their impact team supports portfolio companies.

The conversation covers the metrics used to measure success and the importance of waiting for the right investment opportunities. Ben explores the changing landscape of venture capital, strategies for finding alpha and generating returns, and the importance of sector specialization and deep sector expertise. He also touches on deal flow challenges at the seed stage and the role of incubations in lowering the cost basis.

So many great nuggets in this episode, enjoy!

About Ben Sun:Ben is a Co-Founder and General Partner at Primary. Forbes' Midas List ranks him as one of the top 100 tech investors in the world. His founder-first approach originates from having been one: His experiences cofounding Community Connect, one of the first social networking companies, and LaunchTime, an incubator, inform how he supports founders in the portfolio.

Ben focuses his investing activities on primarily consumer-facing companies. Ben has been active in the NYC tech community for over 20 years. Prior to becoming an entrepreneur and investor, Ben worked at Merrill Lynch in the Technology Investment Banking Group, but he really began his career at the age of eight when he worked in his parents’ Chinese restaurant.

In this episode, we discuss:

(01:21) Journey from investment banking to founding Primary Ventures.

(03:45) Starting Primary Ventures and focusing on seed-stage investments in New York.

(04:12) Emphasis on being hands-on and aligning with founders.

(06:34) Roles and functions of the impact team at Primary Ventures.

(10:00) Measuring success through surveys and key performance indicators

(13:23) The importance of choosing the right investment opportunities and achieving high graduation rates from seed to series A

(22:00) How partners wait for the right pitch using an internal rubric

(26:57) Benefits of sector specialization, with a focus on fintech expertise

(35:00) Strategies for maintaining a low-cost basis and navigating market fluctuations, including secondary sales

(41:00) GP-led secondaries and benefits of providing liquidity to limited partners

(49:00) Advice for new venture capitalists: support founders and develop a long-term strategy

I’d love to know what you took away from this conversation with Lindel. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Podcast Production support provided by Agent Bee

Follow me @samirkaji for my thoughts on the venture market, with a focus on the continued evolution of the VC landscape.

Today we're thrilled to be joined by Glenn Solomon, managing partner at Notable Capital. Along with Granite Asia, Notable Capital was one of two groups to emerge from GGV Capital, which recently split into two groups with Notable based in Silicon Valley, New York, and covering companies in the U. S., Israel, Europe, and Latin America.

Glenn brings nearly 30 years of venture experience to the table, and it was great to draw from his insights in investing, building firms, and working with high performing teams.

About Glenn Solomon:Glenn Solomon is the Managing Partner at Notable Capital. He focuses on investing in early to growth-stage companies across different sectors, including cloud infrastructure and business applications. He also serves on the boards of several companies, such as HashiCorp, Opendoor.com, and Orca Security.

Before joining Notable, Glenn was a General Partner at Partech International from 1997 to 2006, where he worked on technology investments. Earlier in his career, he was an associate at SPO Partners from 1993 to 1995 and started as a financial analyst at Goldman Sachs from 1991 to 1993.

Glenn Solomon earned his MBA and BA from Stanford University.

In this episode, we discuss:

(01:42) Glenn’s journey from playing tennis at Stanford to discovering a passion for technology and investing

(02:44) A pivotal moment when encountering the internet for the first time, which sparked a deeper interest in technology

(04:06) The transition from Partech International to joining Granite Global Ventures in the mid-2000s

(05:03) The appeal of GGV's global perspective and innovative approach in venture capital

(07:48) The early strategy at GGV, focusing on differentiation in the venture space

(09:01) The necessity of adapting to the evolving nature of the industry

(10:29) The rebranding to Notable Capital and the strategic decisions following the split from GGV’s Asia team

(12:39) The guiding principles at Notable Capital, emphasizing the importance of speed and maintaining a sector-focused strategy

(15:19) An example of a recent deal showcasing how the firm’s flat structure empowers all team members to contribute significantly

(17:33) Staying focused on specific sectors and building a strong support platform for portfolio companies

(23:25) Engaging with CSOs and CDOs to maintain an edge in cybersecurity and data sectors.

(27:00) Discusses the importance of resourcefulness in venture capital and how they assess this quality during interviews.

(36:31) Advice on being a successful VC, stressing the critical role of building strong, lasting relationships

(39:30) Success in venture capital fundamentally relies on working with exceptional people

I’d love to know what you took away from this conversation with Glenn. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Podcast Production support provided by Agent Bee

Follow me @samirkaji for my thoughts on the venture market, with a focus on the continued evolution of the VC landscape.

This week we welcome the three co-founders of Saga Ventures: Ben Braverman, Thomson Nguyen, and Max Altman. Saga Ventures is a seed-stage investment firm that recently closed its first fund of $125M.

The conversation dives into their experiences in raising their first fund, building a team, and navigating a competitive seed-stage market. The co-founders bring unique skill sets from their previous roles in operating and investing, and this episode sheds light on how they strategically combine those skills to differentiate themselves from other firms.

About Ben Braverman

Ben Braverman is a Co-Founder and Managing Partner at Saga Ventures, a $125M venture capital fund he co-launched in March 2024 alongside Max Altman and Thomson Nguyen. At Saga, Ben focuses on early-stage investments, working with pre-seed and seed-stage companies across various sectors. His background in scaling companies' go-to-market strategies provides valuable insight into helping startups grow efficiently and sustainably.

Before founding Saga Ventures, Ben spent nearly nine years at Flexport, a major player in the logistics space. Starting as Chief Revenue Officer in 2014, he was instrumental in building and scaling Flexport’s global sales and go-to-market teams. Later, as Chief Customer Officer, Ben oversaw customer relationships and corporate development, ensuring the company's growth aligned with customer needs. His final role at Flexport saw him leading Flexport Ventures and Corporate Development, where he focused on the company's strategic investments.

Earlier in his career, Ben held growth and sales leadership positions at startups like URX, which was acquired by Pinterest, and Heyzap, acquired by RNTS Media. He holds a degree from Vassar College and has spent his career helping innovative companies grow through a hands-on approach to business development and customer engagement.

About Thomson Nguyen

Thomson Nguyen is a Co-Founder and Managing Partner at Saga Ventures, where he has been since March 2024. At Saga, he focuses on early-stage investments in technology-driven companies, drawing on his extensive experience in data science, machine learning, and entrepreneurship. Thomson’s deep technical expertise helps him identify promising startups, especially those at the intersection of technology and business.

Prior to Saga, Thomson founded Nearside, a financial services platform for small businesses, which he led from 2019 until its acquisition by Plastiq in 2022. Before that, he was an Entrepreneur in Residence at Kleiner Perkins and the Head of Capital Data Science at Square, where he managed the data science team responsible for critical business areas like default risk, marketing optimization, and product innovation. His career in fintech is rooted in his work at Framed Data, a startup he founded and later sold to Square.

Thomson started his career as a data scientist at tech companies like Lookout and Causes, where he applied his expertise to user segmentation and predictive analytics. He also has a longstanding academic affiliation with New York University’s Courant Institute, where he continues to contribute to research in machine learning and cybersecurity. Thomson holds degrees in Applied Mathematics from the University of Cambridge and Mathematics from the University of California, Berkeley.

About Max Altman

Max Altman is a Co-Founder and Managing Partner at Saga Ventures, a venture capital fund he helped establish in March 2024. Max focuses on investing in pre-seed and seed-stage companies, working closely with his co-founders to identify and support high-potential startups. His experience as both an investor and operator allows him to bridge the gap between capital and company-building.

Before co-founding Saga Ventures, Max was a Partner at Alt Capital from 2021 to 2024, where he invested in early-stage companies. Prior to that, he held a similar role at Apollo Projects, another investment firm focused on startups. His career as an investor began at Hydrazine Capital, where he worked from 2016 to 2019. During his time there, Max honed his skills in evaluating high-growth tech companies and building meaningful relationships with founders.

Earlier in his career, Max gained operating experience at Zenefits, where he worked in product management, and at Allston Trading as a trader. He also spent time at Microsoft as a program manager. Max holds a degree in Computer Science from Duke University and has built his career by combining his technical background with a passion for early-stage investments.

In this episode, we discuss:

* (01:42) The origin story of Saga Ventures, and how the co-founders decided to join forces. Max Altman shares how the idea of starting a fund came about and why he didn't want to follow a solo GP model

* (03:31) The unique, complementary skill sets the team brings to the table—Ben’s expertise in go-to-market strategy, Thomson’s technical knowledge, and Max’s investor relationships—and how this combination is designed to support early-stage founders

* (04:58) Their hands-on, founder-first approach, focusing on critical areas like product development and initial hires, differentiates Saga from other early-stage firms.

* (06:11) The "reality meter" and the importance of being able to take hard hits as an entrepreneur or venture firm, emphasizing how all three co-founders share this mentality

* (07:50) The team reflects on the challenges of raising their first fund, including dealing with partnership risk, self-awareness, and the difficulties of convincing LPs early on without firm commitments

* (10:02) The careful consideration that went into deciding the fund size of $125M, balancing capital deployment with staying competitive in seed-stage deals.

* (12:00) Their fundraising process, the strategic decisions involved, and the importance of securing anchor investors before taking meetings with LPs.

* (15:19) What LPs are looking for in early-stage venture firms and the role of partnership risk in their decision-making process

* (17:33) Why their shared vision and complementary skill sets have aligned them for long-term success as a team, along with their commitment to focusing on specific sectors like fintech and infrastructure

* (19:22) The importance of having a clear value-add for founders beyond capital, and the importance of storytelling and salesmanship in early-stage companies

* (23:25) The internal decision-making process at Saga, how the partners determine which deals to pursue, and the dynamics of reaching consensus when choosing investments

* (26:45) Patience and long-term thinking are critical when evaluating deals, and how they ensure they don’t rush into investments just for fear of missing out

* (28:19) The importance of founder resilience and self-awareness, noting that the best founders are those who can attract talent and navigate through difficult times

* (30:00) Why salesmanship and charisma are critical qualities in founders, as startup leadership often requires convincing others to join and invest in challenging ventures

* (32:00) The team discusses their approach to sourcing and winning deals in a highly competitive market, focusing on the importance of building trust and delivering consistent value to founders.

* (34:05) Max talks about the significance of being the first firm to back companies and how they collaborate with other VCs to co-lead investments.

* (36:45) Being transparent and responsive to founders creates lasting relationships, even when they pass on deals

* (38:04) How they measure success internally at Saga Ventures, focusing on inputs such as responsiveness and the strength of founder relationships, while understanding that long-term results will take years to evaluate

* (41:00) Key lessons from the fundraising process, stressing the importance of clarity when positioning their fund to LPs and being patient in closing commitments

* (43:25) How the venture landscape has evolved over the past 18 years, highlighting the increasing competition and the need for VCs to be highly self-aware and strategic when entering deals

* (45:40) Building a venture firm requires a long-term mindset, much like running a successful company

I’d love to know what you took away from this conversation with Glenn. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Podcast Production support provided by Agent Bee

Follow me @samirkaji for my thoughts on the venture market, with a focus on the continued evolution of the VC landscape.

Today I’m excited to speak with the founding team of Chemistry, a new venture firm led by Kristina Shen, Ethan Kurzweil, and Mark Goldberg, who recently spun-out of blue chip firms Andreessen Horowitz, Bessemer, and Index Ventures, respectively. The firm just announced a significantly oversubscribed $350MM debut fund. 

As a new entrant to the market (in the toughest time to start a new firm in over a decade), I wanted to ask them about their blueprint for building a firm, including how they chose to partner up and the work they did beforehand, LP strategies and selection, and what they felt was their unique reason to exist in a highly competitive market.

About Kristina Shen

Kristina Shen is Co-Founder and Managing Partner at Chemistry Ventures, overseeing a $350M fund focused on early-stage software investments.

Formerly a General Partner at Andreessen Horowitz (2019-2024), she led significant investments in Mux, Pave, Wrapbook, and Rutter. Kristina specialized in high-growth startups.

She began her venture career as a Partner at Bessemer Venture Partners (2013-2019), working with companies such as Gainsight, Instructure, and ServiceTitan. Previously, she worked in investment banking at Goldman Sachs and Credit Suisse, focusing on technology sectors.

About Mark Goldberg

Mark Goldberg is Co-Founder and Managing Partner at Chemistry Ventures since, investing in seed and Series A software startups. Previously, a Partner at Index Ventures (2015-2023), he worked with companies such as Plaid, Pilot, Intercom, and Motive, establishing a strong fintech and software portfolio.

Prior to Index, Mark worked at Dropbox in Business Strategy & Operations and Strategic Finance (2013-2015), where he contributed to growth strategies during Dropbox’s scaling phase.

He started his career as an Analyst at Morgan Stanley (2007-2010) before joining Hudson Clean Energy as a Senior Associate. Mark holds an AB in International Relations from Brown University.

About Ethan Kurzweil

Ethan Kurzweil is Co-Founder and Managing Partner at Chemistry Ventures, leading investments at the seed stage for tech-driven startups. He also serves as a board member for companies like Intercom and LaunchDarkly.

Previously, Ethan was a Partner at Bessemer Venture Partners (2008-2024), where he worked with companies such as HashiCorp, Twilio, and Twitch. His focus on software and digital platforms spanned roles as board member and investor, contributing to significant IPOs and acquisitions.

Early in his career, Ethan worked in business development at Linden Lab (creators of Second Life) and served as a Senior Manager in the CEO’s Office at Dow Jones. He holds an MBA from Harvard Business School and an AB in Economics from Stanford University.

In this episode, we discuss:

* (01:43): Importance of Team Chemistry and Partnership Formation

* (03:27): Challenges of Building a Firm in the Current Environment

* (08:00): Unique Value Proposition for Early-Stage Founders

* (10:18): Early-Stage Focus and Differentiation from Large VC Firms

* (16:12): Fundraising Insights and LP Relationship Building

* (19:00): Choosing Aligned LPs and Targeting Long-Term Partnerships

* (27:23): Single-Trigger Investment Decision-Making Model

* (30:12): Balancing Conviction with Collaborative Feedback

* (35:23): Independent Decision-Making for Follow-On Investments

* (39:19): Personal Contrarian Beliefs about the Venture Industry

* (42:18): Closing Remarks on Building a New Venture Franchise

I’d love to know what you took away from this conversation with Kristina, Mark, and Ethan. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Podcast Production support provided by Agent Bee

On this episode, we speak with Ted Maidenberg, co-founding partner of Tribe Capital, which he launched with his partners Arjun Sethi and Jonathan Hsu. I’m especially excited to bring this episode to you as Ted draws from experiences working within a Corporate VC (Time Warner), a traditional VC (USVP), and now has co-founded two firms known for their innovative approaches to investing —- Social Capital in 2011 with Chamath Palihapitiya and Mamoon Hamid, and most recently Tribe.

Ted has also been part of investing teams that count investments such as Slack, Carta, and Survey Monkey.

In this episode, Ted and I discuss the following topics:

* Starting Social Capital after the global financial crisis

* Starting and fundraising for a new firm (Tribe) in a very noisy market.

* The importance of trust in venture teams, the role of partnership dynamics, and maintaining culture.

* Their use of a data driven quantitative framework to evaluate companies through Cohort behavior and how this gives them an edge relative to heuristic only methods.

* The importance of getting ownership of a company early, and how it impacts reserve strategy.

* Their productized use of SPV’s in driving portfolio construction strategy, adding value to companies, and providing a unique return model for SPV and Fund LP’s.

* Are there any other innovations that can/should happen in VC?

* Ted’s advice for those that are just launching firms today.

Mentioned in this episode:

* The Magic Eight Ball

* Social Capital and Tribe Capital

I’d love to know what you took away from my conversations with Ted Maidenberg; Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Leo Polovets is one of the Founding Partners of Susa Ventures, which launched in 2012. Over the last 8 years, Susa has established itself as one of the premier seed funds in the world, and have made more than 80 investments in companies like Robinhood, Flexport, Andela, and Expanse (recently purchased by Palo Alto Networks for $800MM). 

Leo began his career as a software engineer, first at LinkedIn when it was a start-up, and later at Google and Factual.

I always enjoy speaking with Leo as he’s always introspective, insightful and stays highly curious about all aspects of venture (check out his great blog, “Coding VC”).

In this episode, Leo and I discuss the following topics:

* Why Susa had 4 partners for a $25MM fund.

* Leo’s acronym for building a venture thesis: C.A.S.H. (Constraints, Actionable, Special, Helping).

* Can VC firms truly differentiate, and if so, how?

* The importance of being helpful to founders and building those relationships early.

* Portfolio construction: Going all-in on one investment vs. many small investments.

* When to grow fund sizes, and how to think about this.

* The role of opportunity funds and why they raised one alongside Fund III.

Mentioned in this episode:

* Susa Ventures

* Leo’s blog Coding VC

* Patrick O’Shaughnessy’s podcast, Invest Like the Best

I’d love to know what you took away from my conversation with Leo Polovets. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Please share Venture Unlocked with others who want to learn about venture capital:

This episode is a fun one as I had the pleasure to interview Sahil Lavingia, founder of Gumroad, an online platform that allows creators to sell directly to their consumers. The company has facilitated the sale of $356 million in products since its launch in 2011 and now helps over 70,000 creators.

Gumroad raised capital from legendary angels like Ron Conway, Chris Sacca, Naval Ravikant, and from distinguished venture firms such as First Round Capital, Accel Partners, and Kleiner Perkins. After a failed series B in 2015, Sahil was forced to lay off the majority of his staff and pivot his company building strategy to one atypical to the traditional venture model, but in the last year Gumroad doubled its ARR to $10MM.

Drawing on his experiences as an angel investor backing companies such as Hellosign, Figma Design, and Lambda School, Sahil decided to raise his own venture vehicle and using the nascent AngelList Rolling Fund product, quickly secured $1MM/quarter in LP funding. Today’s he’s the most prominent AngelList Rolling Fund Manager with nearly $10MM of annual commitments.

In this episode, Sahil and I discuss the following:

* Sahil’s start at Pinterest and how he applies his founder experiences in investing.

* His learnings from working with VC’s and his thoughts on what he believes makes for a great VC partner.

* Why he decided to go down the investment route, and what was it like raising LP capital through a Rolling Fund.

* Why founders may be more inclined to raise early capital from other founders rather than traditional institutional investors, and how Sequoia has created a savvy model to combat this trend.

* Thoughts on the early stage funding market moving forward.

* How he thinks about portfolio construction as a Rolling Fund investor.

* His hopes for innovation in the venture: Expansion of rolling funds, buyers and sellers being directly connected, and the breaking of the geographical privilege bubble.

Mentioned in this episode:

* Gumroad

* My blog post on rolling funds

I’d love to know what you took away from my conversation with Sahil Lavingia. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Also subscribe to Venture Unlocked on Itunes to ensure you’ll get each episode when it’s first released.

In just a few short years, Fifth Wall Ventures, which focuses on investing in companies in the “built world” economy, has quickly become one of LA’s largest venture firms with over $1.2B in committed LP capital.

I met Co-Founder Brendan Wallace when he and Brad Greiwe started Fifth Wall nearly five years ago and the trajectory of the firm has been nothing short of astounding.  

Brendan started his career at Goldman Sachs in real estate investment banking after graduating from Princeton. What’s always struck me over the years is Brendan’s unique vision on how he thinks about building a consistent alpha generating firm.

In this episode, Brendan and I cover:

* How to manage a LP based with both corporates and financial LPs.

* Providing value add and driving synergies between his LPs and portfolio companies.

* Why the conventional wisdom that large fund sizes are a direct line to weakening performance isn’t always the case if certain characteristics are present in the firm’s model.

* How he thinks about developing and managing a platform that includes advisory, operations and investing.

* Why he doesn’t think the traditional venture model is well constructed for outsized returns at scale.

* How different type of fund products under one roof can drive cross-over value and improve return profiles.

Mentioned in this episode:

* Fifth Wall

I’d love to know what you took away from my conversation with Brendan Wallace. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

In this episode, we speak to industry veteran Greg Sands, who founded Costanoa Ventures after spending 13 years at Sutter Hill Ventures. Prior to Sutter Hill, Greg serves as the first product manager of Netscape (where he wrote the initial product plan and coined the name “Netscape”).

He founded Costanoa Ventures as a boutique early stage firm to solve for a gap he saw between seed stage funds and larger lifecycle firms. The firm primarily invests in B2B seed stage companies in categories such as the Future of work, Fintech, Data/Machine learning, and security.

Although the firm employs a traditional craft approach to venture capital investing, their model is unique in many ways including the incubation/co-creation of companies and the use of in-house operating partners to add value to portfolio founders.

In this episode, Greg and I discuss:

* What was it like leaving Sutter Hill and raising a fund for the very first time as a solo-GP.

* The role of having mentors and champions around you when starting off.

* How he thinks about hiring team members.

* What it means to build and maintain a culture designed for durability.

* Why they take a relatively concentrated approach to investing, and how this translates to portfolio construction theory.

* Why venture is a service business.

Mentioned in this episode:

* Costanoa Ventures

I’d love to know what you took away from my conversation with Greg Sands. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

In this episode, we speak with Soraya Darabi, Co-Founder and General Partner of TMV.  The firm primarily focuses on investing at the seed stage through Series A and is active in areas such as the future of work, education tech, logistics and mobility, and sustainable solutions. While not specifically diversity-focused, the firm’s portfolio is nearly 2/3rd comprised of female or minority-led companies.

Earlier in her career, Soraya served as the Manager of Digital Partnerships & Social Media at The New York Times, where she spearheaded social media and digital partnerships. In 2009, she co-founded Foodspotting, named “App of the Year” by both Apple and Wired (later acquired by OpenTable, then Priceline). Over the years, she has been named one of Fast Company’s “100 Most Creative People in Business” for which she was featured on the cover of the magazine. Additionally, Soraya founded and manages Transact Global, a community for female investors to share ideas on firm building and investing.

Soraya founded TMV in 2016 with her business partner Marina Hadjipateras. Each utilized their unique backgrounds  -- Soraya in social media and entrepreneurship and Marina in working for her family’s global shipping business. 

TMV is committed to investing in diverse, purpose-driven founders serving large markets, and leverages a strong operating team to help drive value well beyond what typical seed firms might be able to provide.

In this episode, Soraya and I discuss the following:

07:46 - Soraya’s definition of a purpose-driven fund

10:49 - Key lessons she learned in raising her first, proof of concept fund

12:46 - Why TMV and venture is really a services business

13:56 - How they prepared themselves between fundraises for scale

17:03 - TMV’s deal structure and process for mentoring investments

20:35 - The benefits of the TMV’s Venture Partner program

27:43 - Why she thinks there will soon be diversity mandates from LPs

31:10 - The story of Transact Global

34:49 - The GP she most respects

Mentioned in this episode:

* TMV

* Soraya’s podcast Business Schooled

* The Venture Hacks Bible

* The Operator Collective

* All Raise

* Darshan Somashekar of TMV’s TechCrunch post on why he left ed tech to go into gaming

I’d love to know what you took away from my conversation with Soraya Darabi. Follow me@SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Podcast Production support provided by Agent Bee Agency

In this episode, we speak with Nate Williams, Co-founder and Managing Partner at UNION Labs. Nate Co-founded UNION Labs in 2018 with his partner, Chris Kim while an Entrepreneur in Residence (EIR) at Kleiner Perkins.

Nate is a seasoned Operator and angel investor including August Home, where he served as Chief Revenue Officer and Head of Business. Following their acquisition in 2017, he went on to join KPCB as EIR where he spent time helping entrepreneurs and sourcing investments including Proxy. While EIR, Nate formed a thesis on the opportunity in verticalized IoT which he published in TechCrunch and began to see a lane for a new type of fund.

UNION Labs is an early stage firm that both backs and builds companies. They deploy venture investments, as well as manage a structured EIR co-creation program to incubate companies. The core firm focus is on the commercial application of deep technology in artificial intelligence, machine learning, and robotics, that solve real-world problems in smart cities, intelligent homes, or connected transportation. Since its inception, UNION has made five investments, been the lead on three deals, and averages 11% ownership across its current investments.

In this episode, Nate and I discuss the following:

03:04 - What it was like being an EIR at Kleiner Perkins, and what he learned.

06:51 - The dramatic changes in the venture capital industry over the past decade.

13:16 - The venture studio concept and when and why it makes sense for a seed firm like theirs to co-create a company.

16:47 - Why growth in new corporate venture capital funds may signal a lack of alignment between Fortune 500 companies and Sand Hill Road.

17:47 - Nate’s three-pronged approach to raising funds, aka “The Sandwich Strategy.”

23:51 - Why transparency is so important both for both Limited Partners and General Partners

26:11 - A key observation UNION made early in fundraising from LPs.

33:18 - The structural advantages of being a small and specialized fund

35:40 - Why deep tech doesn’t automatically mean capital intensive and doesn’t have to include hardware

Mentioned in this episode:

·       UNION Labs

·       Nate’s thesis on the opportunity on verticalized IoT in TechCrunch

·       Elizabeth Yin on Venture Unlocked

·       OpenLP

·       Charles Hudson’s podcast

·       Laurence Toney’s post on Quora, “What Is An Entrepreneur in Residence? What Do They Do? How Does It Work?

Podcast Production support provided by Agent Bee Agency

For daily thoughts on the venture landscape, follow me @samirkaji on Twitter.

Chris Douvos is the Founder of Ahoy Capital, a boutique Fund of Funds that focuses primarily on allocating into early-stage venture capital funds, while selectively co-investing directly into companies.

Chris started his career at Morgan Stanley while still at Yale earning his MBA. From there he worked at Princeton University’s endowment fund where he got his start in venture before moving onto The Investment Fund for Foundations (TIFF). At TIFF he decided that the right strategy was to make “heroic investments” and invest in very early stage, and often unproven managers.

This method paid off as Chris was one of the first institutional Limited Partners to back First Round Capital (and remains so).

Chris then went on to Venture Investment Associates  (VIA) prior to spinning out to start Ahoy Capital in 2018.

Ever engaging, Chris covers a whole host of emerging VC topics and he and I discuss the following:

6:20 Why Chris started a fund that invests in emerging managers and how he’s arbitraging people’s inattention to get to true outsized returns.

9:00 The process for raising a FoF, and what his LP’s are looking for.

10:59  Ahoy’s portfolio model on managers, and why he thinks concentration is the right avenue for them.

11:54 Why looking at past performance shouldn’t always be the leading indicator in evaluating firms, and why he looks at other specific factors.

13:35 His thoughts on GP/Thesis fit

16:51 How he was introduced to Josh Kopelman of First Round Capital 

22:13 Why you need to be able to articulate a sustainable competitive advantage; funds that are good examples of this

25:21 Why Chris looks to invest in Venture business builders, not option seekers

28:18 The “return the fund” mental model managers should use.

33:00 Why there’s currently a need for liquidity in the ecosystem and why SPACs and direct listings are helpful

37:25 Why he’s excited about the diversity, equity, and inclusion GP investments

39:25 Thoughts on Rolling Funds

42:18 Chris’ missed investment opportunities

43:11 How to pitch Chris (and Fund of Funds in general).

Mentioned in this episode:

* Ahoy Capital

* David Swenson’s Pioneering Portfolio Management

* Chris’ blog post: “All About the Benjamins”

* Micro VC - Smaller is better, but the math is hard.

I’d love to know what you took away from my conversations with Chris Douvos; Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest.

Podcast Production support provided by Agent Bee Agency

Deena Shakir is a General Partner at Lux Capital, a firm founded in 2000 and has since raised $2.5 billion. Lux invests in emerging science and deep technology startups such as Auris Health, Cerulean, Zoox, and Bright Machines.

Deena graduated from Harvard undergrad and began her career as a presidential management fellow at the US Department of State, where she built partnerships with tech companies and helped launch President Obama’s global entrepreneurship summit in 2010.

She then joined Google, where she led business development and strategic partnerships for their global civic innovation portfolio before shifting to the investment side at Google Ventures (GV).

In 2019 Deena joined Lux Capital and focuses on companies that are seeking to provide solutions to improve human & environmental health, and productivity.

We covered several topics on the show, including: 

01:12- Deena’s background as the daughter of Iraqi immigrants in California and her early career in journalism and government

08:17 - What prompted her move to GV to Lux

12:35 - What is the behavior trait that drives Lux as a firm

16:39 - How Lux makes decisions as a partnership

18:30 - Why portfolio management is a team sport at Lux.

22:12 - Establishing a company culture and hiring employees that will fit within it.

25:46 - What growth in fund size means in dictating strategy and mindset.

31:12 - Data on diversity in venture is the first step in overcoming unconscious bias 

37:03 - Deena’s biggest career mistake and what she learned about it.

38:38 - Her advice for starting your own fund

40:29: Why Maha Ibrahim of Canaan Ventures is one of Deena’s role models

Mentioned in this episode:

* Lux Capital

* Deena’s article in Forbes, Unlocking a Post-COVID Start-Up “She-Covery”

I’d love to know what you took away from my conversation with Deena Shakir. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Podcast Production support provided by Agent Bee Agency

As we wrap up what’s been perhaps the most interesting and difficult year in modern history, the holidays still remain a time to to spend with family and reflect on the things we all still do have. I’m incredibly grateful for what I do have, and am looking forward to brighter days ahead for all of us as we move to 2021.

On our final episode of the year, I’m thrilled to share my conversation with Marlon Nichols, Managing General Partner at MaC Ventures. After graduating from Northeastern University, Marlon spend several years in various consultant and operational roles before joining Intel Capital in 2011.

After five years at Intel, Marlon co-founded Cross Culture Ventures along with Troy Carter, a successful media manager that managed the careers of artists such as Lady Gaga and John Legend, and made investments in startups such as Uber and Spotify.  Given the shared vision of Marlon and Troy, Cross Culture Ventures made a name for themselves with their cultural investing thesis that focused on companies centered in the convergence of global popular culture and technology.

In 2019, Cross Culture merged with M Ventures to create MaC Ventures, one of the few venture partnership “mergers” we’ve seen, where he and the team invest in “ technology companies that create infectious products that benefit from shifts in cultural trends and behaviors in an increasingly diverse global marketplace”.

In this episode, Marlon and I discuss the following topics:

00:54 - Marlon’s winding journey into venture

05:23 - The opportunity he saw to invest in diversity

07:40 - How he prepared to launch Cross Culture

8:07 - His unique point of view and value proposition in the venture industry

10:12 - What led to Marlon’s decision to merge Cross Culture with M Ventures

16:29 - How did his LPs react to the merger of the firms?

17:52 - What are the primary things he sees LPs care about the most?

23:02 - The MaC view toward adding values to portfolio founders.

28:11 - How to drive value to LP’s outside of just returns.

30:05 - Why firms struggle to invest in diversity

37:20- Marlon’s biggest career mistake in venture

Mentioned in this episode:

* Mac Ventures

* The tangible benefits of diversity in venture

* Study on women in leadership roles

I’d love to know what you took away from my conversations with Marlon Nichols. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Podcast Production support provided by Agent Bee Agency

Happy New Year! I’m thrilled to announce that Avidan Ross is our first guest of 2021 Avidan is the Founder and managing partner of Root Ventures and one of the most thoughtful newer seed stage managers in the market.

Like many that have appeared on the show, Avidan took a non-traditional path into venture. After graduating from Columbia, Avidan spent time in various engineering roles before becoming CTO at CIM Group, L.P., a private equity firm currently with $30B under management. After nearly 7 years at CIM, Avidan moved on to become a host a Food Network pilot and also co-write a book on the best coffee in the U.S.

In 2013 Avidan founded Root Ventures. Today, he and his partners Chrissy Meyer, Kane Hseih, and Lee Edwards each bring strong engineering backgrounds and a passion for taking a very hands-on roles with their portfolio companies which incline toward very technical in nature.

In this episode we discuss the following topics:

00:35    Avidan’s journey into venture capital

04:15   Getting comfortable with investing in early-stage deep tech companies out of a small fund

09:01   What is the most important thing they look to bring to founders

11:38    Portfolio construction and why they reserve more than most seed funds

16:44    Portfolio sizing

18:54    His thoughts on generalist funds vs. specialists

21:32    How they think about value-add.

25:54    The hiring model Root uses

30:06    The difference fundraising Fund I and Fund II, and building relationships with LP’s.

39:46    Avidan’s biggest career mistake.

41:02    His biggest investing miss.

42:30    The people in the industry he’s inspired by.

Mentioned in this episode:

* Root Ventures

I’d love to know what you took away from my conversations with Avidan Ross. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Podcast Production support provided by Agent Bee Agency

We’re excited to release our newest episode with another great guest, Jaclyn Freeman Hester, Partner at the Foundry Group.

Founded in 2007 by Brad Feld, Jason Mendelson, Ryan McIntyre, and Seth Levine The Foundry Group has $2.4B under management and has invested in startups such as FitBit, SendGrid, Beeswax, and Notion. Several years ago the firm, led by Jaclyn and Lindel Eakman, started investing in interesting emerging manager firms, and have acted as LP’s in firms such as Forerunner, K9 Ventures, Founder Collective, IA Ventures, Homebrew, and Ludlow.

Jaclyn got her MBA/JD from the University of Colorado and practiced corporate law advising startups and private equity firms as well as buyers and sellers in M&A transactions. She also worked closely with her husband and his family on their SaaS startup, FareHarbor, from the earliest stages through acquisition.

In this episode we discuss the following topics:

04:59   The catalyst for Foundry starting to invest in Emerging Managers

08:54    Her view on emerging manager trends and opportunities

11:42    What she looks for when evaluating new managers

20:59    Do competitive moats in venture exist?

24:51    What type of characteristics she’s sees a critical for successful VC’s and teams

31:06    How they evaluate managers that are going from proof of concept to raising the first institutional fund.

35:37    Common mistakes emerging managers make pitching

38:45    The best questions that GPs have asked her

41:08    Jaclyn’s biggest career mistake

43:26    Her best advice to new managers

Mentioned in this episode:

* Foundry Group

* TechStars

* Mucker

I’d love to know what you took away from my conversation with Jaclyn Freeman Hester. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Podcast Production support provided by Agent Bee Agency

Remember to subscribe here on substack, Spotify, or Itunes to get notified as soon as new pods are released. Also follow me @samirkaji on Twitter to get my ongoing thoughts on venture.

Welcome back to another episode of Venture Unlocked. This week we have Apurva Mehta, Managing Partner at Summit Peak Investments.

Apurva and his partner Patrick O’Connor founded Summit Peak in 2018 to invest both in emerging venture funds, and alongside them through direct co-investing. As you’ll hear on the interview, they are very comfortable and excited about backing solo-GP funds.

Summit Peak has backed such solo emerging managers such as Josh Buckley, Raymond Tonsing, and Lachy Groom while making direct investments in Airtable, Virta Health, and Sourcegraph.

Prior to starting Summit Peak, Apurva and Patrick led venture investments for the Cook’s Children Health System.

In this episode we discuss the following topics:

03:36    Why Summit Peak was created to investing in funds

05:52    What it’s like trying to raise a fund of funds.

07:04    Why they though investing in next-gen managers was the right approach.

09:01    The big risk they took at the start of their fund.

10:29    The framework they use to evaluate GPs to invest in.

14:07    Why they believe network can be a killer competitive edge.

16:41    What they view as the intangible factors GPs must have and how try and measure it.

19:20    How they think about founder reference calls.

22:42    The importance of speed in their diligence process.

24:34    How a podcast interview and LinkedIn led to one of their best deals.

29:08   Thoughts on the solo GP model.

34:07    What is an LPAC, and what does it do?

37:54    The pace of new emerging managers entering the market.

44:02    His biggest piece of advice for newer managers.

Mentioned in this episode:

Cook’s Children

I’d love to know what you took away from my conversations with Apurva Mehta. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Podcast Production support provided by Agent Bee Agency

We have a special treat of an episode this week with one of the top first generation seed investors in Mike Maples, Jr. of Floodgate. After leading two successful startups, Mike started Floodgate (formerly Maples Investment) in 2006, and has since invested on companies such as Twitter, Lyft, Twitch, and Okta. 

As is always the case when I speak to Mike, he provided many nuggets of investing, firm building, and went deep into his early days of Floodgate.

In this episode we discuss the following topics:

04:54    How Mike raised his first fund from Austin Ventures

07:27    Explaining seed investing to LPs in the early days

13:58    Why he decided to bring on Ann Miura-Ko as a partner early on

20:25    His view on what a “Thunder Lizard” is

23:45    Defining the mental models Floodgate uses for Seed Investing

24:40 Why great entrepreneurs are like time-travelers

31:18   How thinking about “Thunder Lizards” helps inform his portfolio construction.

37:38   How he’s changed his portfolio construction over time.

48:00   The lessons he learned from missing out on companies such as AirBnB.

52:15   Who Mike admires most in the VC world

Mentioned in this episode:

* Floodgate

* Austin Ventures

I’d love to know what you took away from my conversations with Mike Maples, Jr. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Podcast Production support provided by Agent Bee Agency

This episode was particularly a fun one to record in that we moved a bit away from our traditional interview format to more of a water-cooler format with Mac Conwell of RareBreed Ventures and Roy Bahat of Bloomberg Beta for a wide-ranging chat about the state of emerging venture capital. 

As many may now, Mac is using the seldom used 506C provision of Reg D to publicly solicit capital for his new fund (RareBreed VC). While many rolling fund managers use the 506C provision, Mac is not conducting his raise on the AngelList platform.

Previously to starting RareBreed, Mac was an investor at the Maryland Technology Development Corporation’s Minority Business Pre-seed Fund, a partnership between TEDCO and Harbor Bank Community Development Corporation to address the needs of minority entrepreneurs in Maryland, who often lack access to Friends and Family rounds. He also has operating experience from his time as co-founder and CEO at Redberry Mobile and of Given. 

Roy Bahat is the head of Bloomberg Beta, which invests in the main category of the future of work and has a portfolio that includes Slack, Kaggle (acq. By Google), and MasterClass. They occasionally also invest directly into emerging managers to help drive financial performance. Prior to his life as a VC, Bahat founded start-ups, served as a corporate executive at News Corp., and worked in government in the office of New York City mayor Michael Bloomberg. 

In this episode we discuss the following topics:

01:18    The unique structure of RareBreed Ventures

03:09    How a Twitter following and new venture software made it possible for Rarebreed to launch a 506(c) structured fund

07:00    Roy’s view on investing

16:18    Raising a fund versus raising capital for a company. Is it different?

18:45    How the fundraising process helped Mac find his own unique brand.

22:01    Using LP feedback to your advantage

23:32    Searching not selling when looking for LPs

25:25    Is LP capital really scarce?

26:48    Questions LPs often ask to first time managers

29:22    What makes an exceptional GP

33:45    Giving up economics to early investors

36:40    Is the notion of a GP commit outdated when assessing GP-LP alignment?

42:08    What post-COVID VC will look like

Mentioned in this episode:

* RareBreed.vc

* Bloomberg Beta

* Charles Hudson Interview

* Elizabeth Yin interview

* How LPs should really think about GP commits in Emerging Managers

I’d love to know what you took away from this conversation with Mac and Roy. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Podcast Production support provided by Agent Bee Agency

On today’s show we have Beezer Clarkson, Managing Director of Sapphire Partners, the LP arm of Sapphire Ventures. Not only does Beezer have tremendous depth and insight into the world of VC, but she catalyzed the #OpenLP movement, which looks to bring transparency within the LP world. She’s someone I’ve known for nearly a decade and one of the smartest minds in the LP world.

Beezer began her career in financial services over 20 years ago at Morgan Stanley in its global infrastructure group. Since, she has held various direct and indirect venture investment roles, as well as operational roles in software business development at Hewlett Packard. Prior to joining Sapphire in 2012, Beezer managed the day-to-day operations of the Draper Fisher Jurvetson Global Network.

Additionally, she is a judge for 100&Change, a MacArthur Foundation competition that provides funding to solve critical challenges of our time. In 2014, she was named to the Forty Over 40 list of women to watch.

Today's Venture Unlocked is brought to you by Aumni.

Aumni has helped well over 100 venture firms of all sizes unlock the truth of their portfolio holding. Using a combination of a team of expert lawyers and AI, Aumni’s platform extracts the key granular level detail contained in deal documents to give managers absolute visibility into their portfolio holdings.

As a manager using Aumni, you’ll be able to make portfolio management decisions quickly, accurately, and with more confidence.

In this episode we discuss the following topics:

01:51    Beezer’s journey into VC

03:50    Launch of Sapphire Partners as a fund for predominantly Series A funds

05:46    What’s changed (or not changed) in Venture over the last 15 years?

06:56    What “value-add” means in today’s marketplace

11:27    How she evaluates managers and performance.

14:40    Does past performance really act as an indicator for future fund success?

17:25    Her thought process in bringing on a new manager (or not following on an existing manager)

21:22    How to get Sapphire’s attention to invest

24:41    What is Minimum Viable Fund size and when to do a first close

27:33    Giving away economics to get early LP’s; the pros and cons

33:29    What is the diversity audit and OpenLP

35:35  Diversity in emerging manager firms vs. established.

39:03    Best career advice she heard as an LP.

40:45    Her biggest missed fund opportunity

42:15    The best advice for GPs pitching her for the first time

Mentioned in this episode:

Sapphire Partners

I’d love to know what you took away from this conversation with Beezer. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Podcast Production support provided by Agent Bee Agency

As the Emerging Manager world continues to grow, so does the importance of providing these managers with key education, resources, and community. Enter Oper8r, founded by Welly Sculley and Winter Mead, which is looking to become the “Y-Combinator for venture fund managers”.

Prior to launching Oper8r in 2020, Winter worked as a fund-of-funds manager at both Sapphire Capital and Hall Capital Partners, While Welly most recently worked at venture backed fintech Ripple.

Oper8r selects seasoned mentors to advise the cohorts and provides them with the knowledge, networks, and tools necessary for launching (or growing) a venture firm. They completed their first cohort in the fall (to which I had the pleasure of speaking at).

Listen in to hear their observations and tips for emerging funding managers!

Today's Venture Unlocked is brought to you by Aumni.

Aumni has helped well over 100 venture firms of all sizes unlock the truth of their portfolio holding. Using a combination of a team of expert lawyers and AI, Aumni’s platform extracts the key granular level detail contained in deal documents to give managers absolute visibility into their portfolio holdings.

As a manager using Aumni, you’ll be able to make portfolio management decisions quickly, accurately, and with more confidence.

In this episode we discuss the following topics:

02:07    What inspired creating “a YC for fund managers”

03:33    How the program works

05:30  The profile of emerging managers Oper8r is looking to attract

12:05    The criteria for successful first-time fund managers

16:42    How different types of LPs evaluate emerging managers

24:43    Ways to jump start a first fundraise.

31:47    Should you start with focusing on an anchor investor?

34:25    What’s Minimal Viable Fund size and what percentage you can first close on

41:42    Viable tactics for getting to a first close

43:43  LP communication and courtship process

Mentioned in this episode:

* Oper8r

* Y Combinator

I’d love to know what you took away from this conversation with Welly and Winter. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Podcast Production support provided by Agent Bee Agency

If you enjoy the show, please subscribe at Itunes or Spotify or if you already have, leave a rating or review, as it really helps us out!!

I’m excited to bring you another duo interview, this time with Renata Quintini and Roseanne Wincek, co-founders and managing partners of Renegade Partners. They are without a doubt two of my favorite people in the industry as despite their incredible backgrounds, they remain humble and committed to staying scrappy to help founders through what they consider the “super critical” stage of development.

Just prior founding to co-founding Renegade with Roseanne, Renata was a Partner at Emerging Science and Deep tech inclined Lux Capital. Prior to joining Lux in 2017, Renata was a General Partner at Felicis Ventures, which as many know is one of the most successful seed entrants in venture history. Before becoming a venture capitalist, Renata was an investment manager (LP) at Stanford University’s endowment.

Roseanne has deep roots in VC; she got her start at Canaan Partners and then became a Partner at historic late stage firm IVP. At IVP, she invested across enterprise and consumer in companies such as Glossier, Compass, MasterClass, TransferWise, Looker (Acquired by GOOG), and KeepTruckin. Roseanne holds an MBA from Stanford University, as well as a MA in Biophysics and a BS in Chemistry from the University of California, Berkeley. 

Today's Venture Unlocked is brought to you by Aumni.

Aumni has helped well over 100 venture firms of all sizes unlock the truth of their portfolio holding. Using a combination of a team of expert lawyers and AI, Aumni’s platform extracts the key granular level detail contained in deal documents to give managers absolute visibility into their portfolio holdings.

As a manager using Aumni, you’ll be able to make portfolio management decisions quickly, accurately, and with more confidence.

In this episode we discuss the following topics:

01:58    Renata’s journey into venture

05:24    Roseanne’s journey into venture

10:59    What’s in the name Renegade?

13:03    The opportunity to disrupt venture itself by using the startup incentive model

18:16    What they did to navigate and foster the right partnership dynamics

21:08    Thinking like a startup when building a venture team

24:08    Scaling portfolio companies with the right team

29:40    What venture outcomes need to be today

31:42 Renegade’s focus on the “supercritical stage”. What does it mean and why this was a thesis.

34:20    Can investment thesis act as a moat?

38:37    Successfully fundraising during COVID by finding your believers + investors who understand the long-term nature of venture

42:32    Building lasting relationships with your LPs

Mentioned In This Episode:

* Renegade Partners

I’d love to know what you took away from this conversation with Renata and Roseanne. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Podcast Production support provided by Agent Bee Agency

One of the key benefits of the shift in the venture landscape has been the ushering in of more diverse funding sources to entrepreneurs. In this week’s Venture Unlocked episode (available both on Spotify and Itunes) I’m excited to bring you Ryan Hoover, founding partner of Weekend Fund.

Ryan grew up in Oregon and worked in the gaming industry prior to launching technology product discovery platform Product Hunt in 2013. Backed by some incredible angel and institutional investors, the company built the largest platform for new products, and ultimately was acquired by AngelList a few years ago.

Ryan continued to act as CEO post acquisition and just recently stepped down to focus on Weekend Fund, which he manages with Vedika Jain. At Weekend they focus on co-investing in pre-seed and seed companies.  Weekend Fund’s LPs includes Marc Andreessen, Chris Dixon, Jana Messerschmidt, Chris and Crystal Sacca, Hunter Walk, Kevin Rose, and Garry Tan.

Today's Venture Unlocked is brought to you by Aumni.

Truly stand out to Institutional LPs with Aumni.  Before your next fundraise, get Aumni’s best-in-class fund analytics and reporting platform powered by our team of venture experts and AI. LPs are demanding better reporting which can be a significant challenge for smaller firms. Aumni can automate fund analytics to quickly answer the toughest questions from current and prospective investors.

In this episode we discuss the following topics:

01:49    Ryan’s journey into tech

03:49    The launch of Product Hunt and the sale to AngelList

07:48    Weekend Fund’s origin story

11:04    What growing from $3M in Fund I to $10M in Fund II has meant

14:40    How Weekend differentiates itself from other funds

19:30    Maintaining NPS for portfolio companies

22:10    Competitive landscape amongst funds creating experimentation in venture

24:01    Systemizing the fund’s deal flow operations 

28:35    Tactical considerations for raising Fund III 

31:38    LP composition and building relationships with Institutional investors

34:26    Ryan’s anti-portfolio

37:48    The best piece of investing advice he’s gotten

39:30    The investor that inspires him the most

Mentioned In This Episode:

* Product Hunt

* AngelList

* Weekend Fund

I’d love to know what you took away from this conversation with Ryan. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked.

If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Podcast Production support provided by Agent Bee Agency

Our guest today is Lindsay Lee, managing member of Authentic Ventures. Lindsay has over 20 years of investing experience in technology.

Prior to starting Authentic, he served as CIO for an investment management firm to which he helped grow to almost $1B in assets and also managed a family office where he focused on seed and early-stage investments. He brings a unique combination of operating experience, public market investing experience, and early stage investing experience.

Authentic Ventures was founded in 2015 and focuses on Seed and Early-stage companies.

One of their core differentiators is the “Authentic Network” which is a managed community of like-minded entrepreneurs, founders, investors and growth hackers. Indexed heavily toward diversity, the network is operationalized and focused on helping portfolio companies solve the most meaningful issues.

Today's Venture Unlocked is brought to you by Aduro Advisors.

Aduro Advisors is the premier fund administrator for venture capital and private equity firms. Led by a team of industry veterans and powered by proprietary software, FundPanel.io, Aduro pairs best-in-class service with the robust and flexible technology that the industry demands.

From emerging managers just starting out to seasoned firms looking to supplement an internal team, Aduro’s back-office solution rises to the challenge of supporting your firm’s specific needs.

Listeners of Venture Unlocked receive the first quarter of management company services free with promo code UNLOCKED.

To redeem, email dev@aduroadvisors.com.

In this episode we discuss the following topics:

02:09    After so many different experiences, why focus on seed investing?

03:23    How public market investing skills can translate to privates

06:50    The inspiration behind Authentic

11:57    What the Authentic Network, and how to operationalize it.

16:39    Their focus on indexing their network heavily toward women and People of Color.

18:14    Portfolio construction methodology

27:03    Differences between investing at various stages of investments

30:37    The markers LPs look for between fund I and fund II

33:46    Lindsay’s biggest career mistake

35:20    The investors he admires

37:00    His best piece of advice to new managers

Mentioned In This Episode:Authentic Ventures

I’d love to know what you took away from this conversation with Lindsay. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Podcast Production support provided by Agent Bee Agency

On this week’s show, we’re lucky to have on Clara Brenner, co-founder of the Urban Innovation Fund which provides seed capital and regulatory support to entrepreneurs shaping the future of our cities.

Along with her co-founder Julie Lein, their story is very compelling, from how they raised their first fund (from primarily strategic investors and special interest investors) to how they help founders unlock large businesses by helping them navigate regulatory hurdles.

Prior to starting Urban Innovation Fund, Clara was the co-founder and CEO of TUMML, an accelerator and startup hub focused on urban technology which invested in Chariot which was acquired by Ford and Hitch, which was acquired by Lyft.  In 2014, Forbes listed Clara as one of its “30 Under 30” for Social Entrepreneurship and her urban entrepreneurship work has been featured on MSNBC and TechCrunch. She serves on the Board of Tumml, as well as the Local Initiatives Support Corporation (LISC) Bay Area Local Advisory Committee. Clara earned her MBA from MIT Sloan and BA from NYU.

Today's Venture Unlocked is brought to you by Aduro Advisors.

Aduro Advisors is the premier fund administrator for venture capital and private equity firms. Led by a team of industry veterans and powered by proprietary software, FundPanel.io, Aduro pairs best-in-class service with the robust and flexible technology that the industry demands.

From emerging managers just starting out to seasoned firms looking to supplement an internal team, Aduro’s back-office solution rises to the challenge of supporting your firm’s specific needs.

Listeners of Venture Unlocked receive the first quarter of management company services free with promo code UNLOCKED.

To redeem, email dev@aduroadvisors.com.

In this episode we discuss the following topics:

01:53    Clara’s journey into venture

05:15    On their thesis, and thoughts on impact funds

07:01    Why their first fundraise was so different than most first time managers

09:15    Finding “impact curious” aligned LPs who typically don’t target first funds

10:00    Building a great institutional foundation early

12:11    Ways to stay in front of LPs between raises.

14:22    The value they drive in helping founders navigate regulatory hurdles

18:17    Staying close and adding value, regardless of investment size.

20:20    Why keeping things simple on portfolio construction and terms are the right way to go.

22:17    LPACs and best practices

24:24     How the Urban Outcomes report has helped them evangelize their story

25:01    Providing peer networking opportunities for their LPs via their LPAC

27:26    How Julie and Clara’s unique talents complement each other 

30:19    Best career advice she’s received

32:10    Biggest pre-seed deal they missed and later invested in after a lot of work

34:08    The investor that has inspired her the most

Mentioned In This Episode:

* Urban Innovation Fund

* TUMML

I’d love to know what you took away from this conversation with Clara. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Podcast Production support provided by Agent Bee Agency

The use of data is playing a bigger and bigger role in our everyday lives. Venture is no exception, but most of data use in VC is related to sourcing, picking, and helping founders.

My guest today, Kelsey Chase, co-founded a company called Aumni that uses granular level data contained in deal docs to help managers have a much better understanding of their portfolio positions and offer accurate, robust reporting for LPs. It was interesting to hear his perspectives on the problems that lie in reporting, and the rising bar LPs are expecting of emerging managers.

The company has raised $13MM to date, with their most recent round led by SVB.

Prior to Aumni, Kelsey was a venture lawyer at Wilson Sonsini and more recently DLA Piper.

In this episode we discuss the following topics:

02:55    What was the main problem they saw in deal reporting

04:53    New age of expectations for emerging managers

07:04    How data that can be used to drive all aspects of investing and fund management.

08:55    The rise of secondary markets, and the important of data.

11:18    Analytics for LPs

13:18    How role of automation in GP/LP relationships

15:31    The use of software to help managers focus on investing vs. other admin.

17:40   How managers need to think about accuracy of ownership position?

Mentioned in this episode:

* Aumni

I’d love to know what you took away from this conversation with Kelsey. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Podcast Production support provided by Agent Bee Agency

Today, we’re seeing major startup hubs emerge across the US (and globally). Up until fairly recently, LA was not considered a major US technology and venture hub. My guest on this week’s episode, Brian Garrett, has been in the LA venture ecosystem for two decades now. He also co-founded Crosscut Ventures, one of the very first seed funds in LA (if not the first). Today LA has claims companies such as Snap, TrueCar, Maker, Honey, Dollar Shave Club, Honest Company as examples of companies that reached scale in the now rapidly growing ecosystem.

Crosscut began as a very small vehicle of $6MM, but now has over 120 investments and is one of the largest seed fund platforms in LA with $300MM+ AUM. In our episode we discussed everything from the rise of LA and non SV tech hubs to fundraising during a recession to the importance of self-discovery and mental wellness.

Today's Venture Unlocked is brought to you by Aduro Advisors.

Aduro Advisors is the premier fund administrator for venture capital and private equity firms. Led by a team of industry veterans and powered by proprietary software, FundPanel.io, Aduro pairs best-in-class service with the robust and flexible technology that the industry demands.

From emerging managers just starting out to seasoned firms looking to supplement an internal team, Aduro’s back-office solution rises to the challenge of supporting your firm’s specific needs.

Listeners of Venture Unlocked receive the first quarter of management company services free with promo code UNLOCKED.

To redeem, email dev@aduroadvisors.com.

In this episode we discuss the following topics:

01:54    Brian’s journey into venture

03:48    Why they started Crosscut in 2008, initially as a part time project

06:31    Crosscut’s conviction on why LA would become a strong startup ecosystem

08:28    The strategy for Crosscut’s early funds

11:55    How they scaled to a true institutional sized fund in Fund III; did anything change?

14:30    Mental model for investing based around ownership

15:13 Why Fund IV is the best indication of Crosscut and what is happening in LA

17:22    Why big companies can be built outside SV

20:00    Thoughts on sector focused funds

22:36    Being local as an advantage

29:22    Brian’s journey into wellness

32:02    How being centered has made him a better VC, and how it’s shaped Crosscut’s culture

34:02    The best piece of career advice he’s received

35:53    His anti-portfolio

37:50    The investor he admires the most

Mentioned In This Episode:

* Crosscut

I’d love to know what you took away from this conversation with Brian. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Podcast Production support provided by Agent Bee Agency

In venture, many people speak about being contrarian, but very few investors truly are comfortable with consistently thinking outside of mainstream consensus. One exception is Daniel Leff, co-founder of Waverley Capital. Waverley was founded in 2019 with Edgar Bronfmann, Jr. and is focused on investing in media start-ups.

Prior to Waverley, Daniel founded Luminari Capital, a top-performing media fund. During his career Daniel invested in companies such as Roku, FuboTV The Athletic, Headspace, and Matterport. As he’s built his firms, he’s taken a very unique approach in portfolio construction and LP composition, both of which have been very successful.

Prior to founding Luminari, Daniel was a Partner with Globespan Capital Partners.  Earlier in his career, Daniel worked for Sevin Rosen Funds and Redpoint Ventures.  He also previously held engineering, marketing and strategic investment positions with Intel Corporation. 

Daniel earned a B.S. Chemistry from The University of California, Berkeley and a Ph.D. in Physical Chemistry from the University of California, Los Angeles. Daniel also earned an MBA from The UCLA Anderson Graduate School of Management, where he was an Anderson Venture Fellow and where he currently serves on the Board of Visitors.

Today's Venture Unlocked is brought to you by Aduro Advisors.

Aduro Advisors is the premier fund administrator for venture capital and private equity firms. Led by a team of industry veterans and powered by proprietary software, FundPanel.io, Aduro pairs best-in-class service with the robust and flexible technology that the industry demands.

From emerging managers just starting out to seasoned firms looking to supplement an internal team, Aduro’s back-office solution rises to the challenge of supporting your firm’s specific needs.

Listeners of Venture Unlocked receive the first quarter of management company services free with promo code UNLOCKED.

To redeem, email dev@aduroadvisors.com.

In this episode we discuss the following topics:

02:03    The opportunity Daniel saw when he started Luminari

05:57    Why media tech is such a hard thing for mainstream investors to understand

09:19    The inherent edge of a strategic LP base

11:51    How Daniel activates his LPs systematically and strategically

15:40    The decision to partner with Edgar Bronfmann, Jr. versus someone that was already deeply working within the startup or venture world.

21:10    Why media startups have trouble accessing capital, and how this can be mitigated.

27:16    His thoughts on reserves.

27:24   How relationships with strategic & high net worth investors has helped their portfolio companies raise rounds

30:33    How Daniel’s venture career helped him develop conviction in his investments 

35:51    Advice for emerging managers

36:48    Daniel’s anti-portfolio

39:33    The investors he admires the most 

Mentioned In This Episode:

* Waverley Capital

* Luminari Capital

I’d love to know what you took away from this conversation with Daniel. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Podcast Production support provided by Agent Bee Agency

Non-traditional paths into venture have been a common theme among many emerging managers, and our guest this week, Katie Jacobs Stanton, founder of Moxxie Ventures, is no exception. Katie started her career as a Banker at JP Morgan, but subsequently worked within the Obama White house as special advisor to the office of innovation, and she had operator roles at Twitter, Google, Yahoo, and Color Genomics. She was also named by Forbes as the #56 on the most powerful women in the world.

Prior to Moxxie, Katie also co-founded the #Angels investment collective along with other former Twitter executives, and invested in 40 early-stage companies including Airtable, Cameo, Carta, Coinbase, Literati, Modern Fertility, Shape Security and Threads.

Katie started her career as a Banker at JP Morgan and she had operator roles at Twitter, Google, Yahoo, and Color. In addition to her startup career, Katie worked in the Obama White House and State Department. She is also on the board of Vivendi.

In this episode we discuss the following topics:

01:24    Katie’s journey into investing

05:38    The decision to start her own fund rather than joining an established firm

07:49    Why she went the solo GP route

09:51    Adaptation process of not having a team around her

11:39    How she optimized her fundraising process

14:08    Learning to deal with LPs who ghost and how “no’s” can be helpful

15:54    Patterns she noticed in LPs the believed in her

18:04    The types of questions LPs ask off sheet contacts during their reference checks

19:39    Thinking about future fund sizes when raising your fund I

22:15    How Katie works to diversify her deal sourcing

25:35    The edge she believes Moxxie has in the marketplace

28:28    The need to keep evolving to maintain competitive edge

29:49    Breaking down the time commitments needed to run a fund

31:21    The advice she would give to a new manager

32:32    The big miss of her career

34:00    The experience that prepared her the most for being a manager 

Mentioned In This Episode:

* Moxxie Ventures

* #Angels

I’d love to know what you took away from this conversation with Katie. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Podcast Production support provided by Agent Bee Agency

On this week’s show, we are joined by Ashmeet Sidana, founder and chief engineer at Engineering Capital, a seed stage firm with $139.5M AUM.

Prior to founding Engineering Capital in 2015, Ashmeet spend nearly 10 years at Foundation Capital which he joined after various technical roles at companies such as VMware and Silicon Graphics.

His investments include Azure (NYSE: AZRE), Netsil (acquired by Nutanix), Palerra (acquired by Oracle), Freewheel (acquired by Comcast), InQuira (acquired by Oracle), Altor (acquired by Juniper), Appurify (acquired by Google), PrivateCore (acquired by Facebook) and StackStorm (acquired by Brocade).

Ashmeet received an MBA from Wharton, MS in Computer Science from Stanford University and a BS in Computer Science summa cum laude from USC. 

I’ve long considered Ashmeet to one of the most versatile and thoughtful GP’s in the market and his comments on this week’s show illustrate that.

In this episode we discuss the following topics:

01:14    Ashmeet’s accidental journey into VC

02:16    Learnings from the late-great Kathryn Gould when he was thinking about starting his own firm.

05:37    The goals he set forth to the type of firm he wanted to build

07:22    Choosing to be a solo GP versus another partnership

11:53    Managing time effectively as a solo GP

14:26    What he believes to be the trigger point to adding a partner

17:56    How fund size relates to strategy

20:11    Why Ashmeet chose to grow his fund size over time

21:22    Technical risk and how it relates to capital needs

24:01    What the rush of capital means to both founder and investors

27:03    Competition between specialist seed firms and multi-stage large firms

29:55    Trends coming out of the pandemic

34:04    Why data is the new oil, but also has asbestos type of properties

35:52    His biggest learning as a VC

36:54    Ashmeet’s biggest miss

38:24    The people he has learned from the most

Mentioned in this episode:

* Engineering Capital

* Foundation Capital

* Kathryn Gould

I’d love to know what you took away from this conversation with Ashmeet. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Podcast Production support provided by Agent Bee Agency

Contrarian based investing requires extreme conviction, and the ability to consistently invest in founders and businesses that don’t always have mainstream acceptance. Bullpen Capital has long been known as a firm that will not shy away from the overlooked companies, but instead seeks out the undiscovered gems to drive alpha for their investors and founders.

This week’s guest Paul Martino, one of the confounders of 2010 founded Bullpen Capital is one of favorite people to talk to given his unique insights and radical transparency.

Bullpen was founded in 2010 with Duncan Davidson and Richard Melmon, and was a pioneer in post-seed round funding—the gap between seed and A round. The fund has $383 AUM and invested in several success stories including Life360, FanDuel, and Ipsy, among many others.

Prior to Bullpen, Paul was an operator that founded eight companies and he holds over a dozen patents. He was an angel investor in companies like Zynga, TubeMogul, and uDemy. Paul is also a recognized expert on sports betting and gaming, appearing on CNBC and Fox Business regularly.

In this episode we discuss the following topics:

01:09    Paul’s journey from the operators side to venture

03:11    Seeing the post-seed gap in the market

05:06    Why fundraising for fund 3 was so tough

08:00    Being the only firm “dumb enough” to pursue post-seed

09:48    Looking for unloved and undiscovered companies

12:52    Getting LPs comfortable with their investing thesis

13:24    Why he loves backing underdog founders and why it’s been a successful strategy

14:25   How strong conviction gets deals done at Bullpen

16:33   Bullpen’s team approach in servicing companies

18:24    Keep a culture of contrarianism

20:21    The gap between boutique and larger funds

21:55    How Bullpen’s reserve model has evolved over time

23:42    SPACs have a certain parallel

27:29    Thoughts on emerging managers that will become institutional

29:57    The best advice he’s gotten as a VC

30:55    Paul’s anti portfolio

32:43 The investor he admires the most

Mentioned In This Episode:

* Bullpen Capital

* FanDuel

We’d love to know what you took away from this conversation with Paul! Follow @SamirKaji and give your insight and questions using the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop a direct message on Twitter.

Podcast Production support provided by Agent Bee Agency

Limited partners come in a few different varieties, one of the largest, but also most opaque groups is that of the Family Offices, and today’s guest Jamie Rhode, CFA, Vice President at Verdis Investment Management, gives us a glimpse into the large family office world.

Verdis uses a unique data-driven approach to fund allocating that allows them to optimize on their portfolio and ensure they find the outliers.

Prior to Verdis, Jamie was at Bloomberg serving in roles roles in both equity research and credit analysis where she created, managed and leveraged an extensive library of financial and market data for buy and sell-side clients.

In this episode we discuss the following topics:

01:46    Jamie’s journey to Verdis and VC

03:08    How family offices are different from other LPs

04:14    The use of data and decision science and why they invest in seed stage

07:08    Finding the outlier startups and funds using data

08:44    How Jamie ensures diversity of investments

12:32    Life Sciences as an investment sector focus

16:29    Targeting networks that provide consistent outlier production

18:52    Qualitative measures for managers

21:54    Thoughts on reserve ratios, and why she prefers lower reserves.

24:43    The emergence of solo GPs

27:27     The importance brand and of long term goals when talking with LPs

30:39    Making sure their managers hit their minimum viable fund size at first close

33:26    Trends in seed over the next five years

37:08    Biggest learning as an LP

40:10    The common theme amongst successful funds

We’d love to know what you took away from this conversation with Jamie! Follow @SamirKaji and give your insight and questions using the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop a direct message on Twitter.

Podcast Production support provided by Agent Bee Agency

Follow me @samirkaji for my ongoing thoughts on the private fund markets.

Over the last decade, we’ve seen a surge of VC firms formed by those that spent their entire lives as entrepreneurs. NFX is one of those firms, and in 2016, ex-Trulia founder Pete Flint joined the firm as fourth partner bringing the experience of starting a company, taking it public, before ultimately being acquired by Zillow for $2.5B.

This was a fun conversation, not only because of Pete’s insights and interesting background, but because of unique NFX is as a firm in the way they have built their firm, using operational experience, a community driven ethos, team composition, and software to help founders. The fund’s portfolio companies include Lyft, AngelList, and Doordash and has nearly $500MM in AUM.

In this episode we discuss the following topics:

01:29 Pete’s journey into venture capital

04:04 Why he chose to go with NFX instead of a more established firm

06:58 Execution vs. Ideas

10:38 The origin of NFX Guild

13:10 How NFX views venture fund differentiation

15:53 The way NFX uses software to help their firm and their portfolio companies

20:02 Scalingvalue as AUM and number of portfolio companies increase

22:24 Portfolio construction and founder engagement

24:32 What drove their increase in fund size

27:33 Where NFX fits in the ecosystem

28:13 Biotechnology and blockchain as a new areas of investment

30:58 The importance of ethos and culture at NFX

32:42 The biggest counter intuitive fact he’s learned as an investor

33:21 His biggest miss an investor

34:35 The main characteristic of a successful investor

Mentioned In This Episode:

* NFX Fund

* NFX Guild

We’d love to know what you took away from this conversation with Pete! Follow @SamirKaji and give your insight and questions using the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop a direct message on Twitter.

Podcast Production support provided by Agent Bee Agency

Amplify Partners has quickly become one of the true breakouts from the early emerging manager movement. Led by Sunil Dhaliwal, who started Amplify nearly a decade ago after a 14 year tenure at Battery Ventures, the firm has over $750MM in AUM and has invested in companies such as Datadog and Fastly.

This was a fun wide ranging discussion about the current state of VC and where we think the industry is headed now that there are so many new emerging managers and potential LPS.

Prior to Amplify, Sunil invested in early-stage IT infrastructure companies at Battery and was named to the Forbes Midas List for 2011, which ranks the top 100 venture capitalists around the world. He was also named to the AlwaysOn Top 100 list of VCs and Business Insider’s 15 Most Powerful Venture Capitalists on the East Coast.

In this episode we discuss:

1:37    What he learned at Battery and why start a new firm

06:54    Decisions around Amplify’s fund one raise

10:59    How fund stages and sizes changes competition for deals

16:29    Moving between weight classes and the challenges around that

19:08    Competing at seed stage against large firms

21:26    How both Samir and Sunil underestimated the size of the venture market

22:19    Market forces disrupting early stage venture in 2021

24:24    Why certain things may never go back to the way they were 

30:01    How fear will change the VC market

35:45    The luck of timing; downturns are difficult yet provide opportunities

37:19    How LPs look at emerging managers and how to differentiate

40:22    Institutions and retail players bringing new money into early stage funding

Mentioned In This Episode:

* Amplify Partners

* Battery Ventures

We’d love to know what you took away from this conversation with Sunil! Follow @SamirKaji and give your insight and questions using the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop a direct message on Twitter.

Podcast Production support provided by Agent Bee Agency

On this week’s show, we’re excited to bring you Satya Patel, co-founder of Homebrew, who he started with his partner Hunter Walk in 2013. Today, the firm is widely considered one of the top seed firms in the industry, counting companies such as Chime, Cruise, Eero, and Gusto as portfolio companies.

Satya brings a unique product background to the table as he worked on AdSense in the early days at Google, and later in various product roles at Twitter. He also spent time as an investor at Battery Ventures.

Satya and Hunter are incredibly thoughtful and detailed when they think about firm building, and during our conversation Satya and I discuss the hard conversations that potential partners need to have before starting a partnership, the unconventional way they raised their first fund, how Homebrew thinks about consistency with founder relationships, and fund sizing.

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Frank, Rimerman + Co.’s history is closely intertwined with that of Silicon Valley. With humble beginnings similar to so many start-ups, Frank, Rimerman was formed with a desire to serve the entrepreneurial and venture communities of the Valley and the determination to think outside-the-box.

Frank Rimerman works with almost 500 VC groups from over 20 states across the USA with 350 fund groups during their first year of existence, making them one of the leading providers in the country to emerging managers.

Frank, Rimerman + Co, Passion Works Here.

www.frankrimerman.com

In this episode we discuss the following topics:

01:13    How he and Hunter became friends and decided to work together again

03:12    Personal factors in deciding to start his own firm when there were so many other options for them.

06:50    How he and Hunter sorted through their strengths and weaknesses 

09:07    How were able to raise their first fund in 100 days by targeting institutional investors instead of relying on family offices like most Fund 1’s.

12:40    How they used scarcity and a hard close date to drive the process

19:11    The thought process behind moving up weight classes in investing

21:28    Different stages of investment require different skills

24:10    Number of investments vs. bigger ownership in a smaller portfolio

26:38    Interview questions for new hires + how they compensate the team

31:04 Homebrew to announce an effort to systematically further diversify VC

34:45 The best lesson he’s learned

37:08 Best advice for someone starting out in VC

38:29 The investors that has been most helpful to his career

Mentioned In This Episode:

* Homebrew

* All Raise

We’d love to know what you took away from this conversation with Satya! Follow @SamirKaji and give your insight and questions using the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop a direct message on Twitter.

Podcast Production support provided by Agent Bee Agency

I’m extremely excited to bring you this week’s episode of Stephen DeBerry from Bronze investments. In addition to being an experienced investor at previous stops at Kapor Capital, Omidyar, The California Endowment, Stephen also developed the “Eastside” thesis which spoke to the inequities that are often present in eastern communities. He presented this thesis in a now viral TED Talk and was a factor in why Stephen decided to invest in change through Venture Capital at Bronze VC.

Stephen did his undergrad at UCLA and his masters work at Oxford. He is a British Marshall Scholar and Henry Crown Fellow at the Aspen Institute. He was on the Board of the Dalai Lama Foundation and Ebony Magazine and The Root/Washington Post named one of the 100 most powerful African-Americans in the United States.

We had a great conversation on social impact investing, GP commits, and why he feels strongly about helping the next generation of under represented managers.

In this episode we discuss the following topics:

01:25    Stephen’s journey into VC

06:25    How the Eastside thesis came to be

13:00    Why venture capital can solve certain social inequities

17:35    The difficulty he faced in his first fundraise

21:43    Advice to other non-traditional venture managers

29:02    How investing in non-traditional companies affects portfolio construction

33:00    Addressing the structural problems with the VC system

38:15    The problem with anchoring on GP commit as a measure of alignment

Mentioned In This Episode:

* Stephen’s TED Talk

We’d love to know what you took away from this conversation with Stephen! Follow @SamirKaji and give your insight and questions using the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop a direct message on Twitter.

Podcast Production support provided by Agent Bee Agency

Using data to make better investment decisions is a common theme these days, but Nnamdi Okike, co-founder and managing partner of 645 Ventures, a firm that uses unique, data driven methodologies to improve sourcing while helping to eliminate the biases that often present themselves when assessing new opportunities. Using public data that to accompany their own automated systems, they’ve found an interesting way to consistently find undiscovered founders.

After leaving Insight Ventures, Nnamdi co-founded 645 Ventures in 2013 with Aaron Holiday, starting with a $8MM proof of concept fund. Since then, they raised a $40MM Fund 2, and most recently closed Fund III at $160M making them one of the largest underrepresented led managers in the United States. The fund focuses primarily on seed and series A and has a portfolio that includes companies such as Iterable, Goldbelly, Eden Health and Squire.

Prior to starting his career, Nnamdi got his bachelor’s, JD, and MBA from Harvard. 

Our wide ranging conversation covers: considerations when growing fund sizes dramatically, the power of using data driven approach to sourcing, and his lessons as a venture investor over the last decade.

In this episode we discuss the following topics:

01:12    Nnamdi’s journey into venture capital

03:37    The opportunity he saw to start 645

09:20    How and why they raised $8M for their first fund

12:27    Methodology around data that they use to decide on investing

16:32    How 645 Ventures weeds out bias in their methodology

20:58    The evolution of and growth of 645

26:27    Deciding to jumping up weight class in the ecosystem; the value they add

30:31    Using their connected network as a strategic advantage

32:48    The future of data in VC

34:06    His best advice to emerging managers

36:22    His biggest portfolio miss

40:31    What emerging managers should think about as they are starting

Mentioned In This Episode:

* 645 Ventures

* Insight Ventures

We’d love to know what you took away from this conversation with Nnamdi. Follow @SamirKaji and give your insight and questions using the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop a direct message on Twitter.

Podcast Production support provided by Agent Bee Agency

We’re thrilled to bring you my recent talk with Jeff Clavier of Uncork Capital, one of the early trailblazers of the emerging manager community.

Jeff started investing in seed full time all the way back in 2004 well before the Micro-VC moniker was even conceived (back then we called them Super Angels). Today the firm is one of the most active seed funds in the market with over $500MM in AUM and having invested in companies such as Poshmark, Fitbit, Eventbrite, and Molekule.

In this episode is a broad conversation covering the history of VC, raising in a downturn, his thoughts on the hardest things about building the firm, and trends that are influencing the future of venture.

A message from our sponsor

Frank, Rimerman + Co.’s history is closely intertwined with that of Silicon Valley. With humble beginnings similar to so many start-ups, Frank, Rimerman was formed with a desire to serve the entrepreneurial and venture communities of the Valley and the determination to think outside-the-box.

Frank Rimerman works with almost 500 VC groups from over 20 states across the USA with 350 fund groups during their first year of existence, making them one of the leading providers in the country to emerging managers.

Frank, Rimerman + Co, Passion Works Here.

www.frankrimerman.com

In this episode we discuss the following topics:

01:54    Jeff’s start as an investor with $250k of his own capital, and his first investment

03:01    The decision to start a fund with third party capital

06:10    Fundraising in the global financial crisis of 2008

09:01    The strategy shift in fund III and the questions it raised from LPs

12:10    Why Uncork has kept funds smaller thus far

16:45    Thoughts on the service provider model VC’s need to embrace

19:16    Building a multi-generational firm with brand recognition

21:36    How to attract high-quality talent

23:46    The day-to-day challenges of running a firm

25:56    Maintaining culture with remote work

30:56    The future of VC after the pandemic

34:48    The amount of firms and innovation in the market today and what it means

39:24    How the future is so hard to predict

40:38    The best advice he’s gotten as a VC

42:51    His biggest miss and the lesson he learned from it

46:19    The advice he would give to a new manager

Mentioned In This Episode:

* Uncork Capital

We’d love to know what you took away from this conversation with Jeff! Follow @SamirKaji and give your insight and questions using the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop a direct message on Twitter.

Podcast Production support provided by Agent Bee Agency

Follow me @samirkaji for my thoughts on the venture market, with a focus on the continued evolution of the VC landscape.

Today we’re excited to bring you my recent conversation with Mark Suster, managing partner at Upfront Ventures, a firm that was founded 25 years ago, originally as GRP partners.

Mark joined the firm in 2007 and became managing partner in 2011 and helped architect the new era of the firm while also actively evangelizing the now robust LA tech ecosystem. Upfront currently has $1.9B AUM and has invested in companies such as Overture,  Maker Studios, and Ring.

Prior to joining Upfront, Mark was a two-time operator, including selling the latter to Salesforce.com. He did his BA at UCSD, and got his MBA at the University of Chicago.

This was a fun one and we talked a lot about how they’ve rebranded and evolved as a firm, how raising funds is no different than enterprise sales, and the interesting paradox that faces every VC today.

A message from our sponsor

Frank, Rimerman + Co.’s history is closely intertwined with that of Silicon Valley. With humble beginnings similar to so many start-ups, Frank, Rimerman was formed with a desire to serve the entrepreneurial and venture communities of the Valley and the determination to think outside-the-box.

When it comes to venture funds, we work with almost 500 VC groups from over 20 states across the USA. We have worked with over 350 fund groups throughout their first year, making us one of the leading providers in the country to emerging managers.

No one wants to be bored at work. That’s why we chose to work with some of the most innovative and creative people – people who are changing the world around us every day. Their excitement fuels our passion and determination to grow and serve this special community.

Frank, Rimerman + Co, Passion Works Here.

www.frankrimerman.com

In this episode we discuss:

01:43    Mark’s journey into VC

04:16    Why he thought GRP was a good fit for him

08:22    How the firm transformed its investment focus

12:55    The process around the rebranding to Upfront Ventures

18:23    Human psychology of decisions

23:41    Why you need to be careful on when to share data rooms

27:41    How fundraising is like sales

33:05 Why creating scarcity is important

34:57    Talent retention and acquisition

42:26    The current state of the venture market 

Mentioned in this episode:

* The Righteous Mind: Why Good People Are Divided by Politics and Religion

* Why You Should Never Have A Data Room

We’d love to know what you took away from this conversation with Mark! Follow @SamirKaji and give your insight and questions using the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop a direct message on Twitter.

Podcast Production support provided by Agent Bee Agency

Follow me @samirkaji for my thoughts on the venture market, with a focus on the continued evolution of the VC landscape.

In today’s show, we have the pleasure of speaking to Braughm Ricke, who has worked closely with emerging managers throughout his career, first serving as CFO of True Ventures, and then starting Aduro Advisors, which started in 2012 originally to focus on the new era of VC. He was also a early Advisor and Investor in Carta and has been an active investor.

Thanks to working with over 350 venture fund clients, Braughm has unique insights on effective fundraising, what makes for a institutional back-office, and broad venture trends.

In this episode we discuss:

01:01    What Braughm saw in 2012 when he started Aduro Advisors to focus on Emerging VC’s

05:49    How the emerging manager space has grown and evolved

06:42    What is different today from the early days

08:49    The fundraising landscape for emerging managers

11:49    Tactics for breaking into family offices

13:51    What managers often need to do between rounds

16:19    The workload for solo GPs

18:12    The support systems GPs need so they can spend more time on core activities

22:56    Common traits amongst successful managers

25:22    The most common mistakes he sees managers make

26:45    What the future holds for venture

29:55    The speed of new firm creation

Mentioned in this episode:

* Aduro Advisors

We’d love to know what you took away from this conversation with Braughm! Follow @SamirKaji and give your insight and questions using the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop a direct message on Twitter.

Podcast Production support provided by Agent Bee Agency

Follow me @samirkaji for my thoughts on the venture market, with a focus on the continued evolution of the VC landscape.

Our guest today is Shauntel Garvey, co-founder and general partner of education tech focused Reach Capital. She has a long history investing in ed-tech companies stemming back from her time at NewSchools Venture Fund.

What I love about the Reach team is how thoughtfully they’ve constructed their firm and partnership which by far is one of the most diverse in all of venture. Currently Reach has $300 AUM and has invested in companies such as Mystery Science (acq by Discovery Education), Nearpod, Outschool, ClassDojo, and Epic.

Shauntel did her undergrad at MIT, and got a MA in Education and MBA from Stanford.

Listen to our conversation to learn more about how she’s seen the EdTech market evolve over the last few years and particularly since the pandemic, why they are active with portfolio companies after typical seed funds are, and how she thinks about investing thesis.

A message from our sponsor

Frank, Rimerman + Co.’s history is closely intertwined with that of Silicon Valley. With humble beginnings similar to so many start-ups, Frank, Rimerman was formed with a desire to serve the entrepreneurial and venture communities of the Valley and the determination to think outside-the-box.

When it comes to venture funds, we work with almost 500 VC groups from over 20 states across the USA. We have worked with over 350 fund groups throughout their first year, making us one of the leading providers in the country to emerging managers.

No one wants to be bored at work. That’s why we chose to work with some of the most innovative and creative people – people who are changing the world around us every day. Their excitement fuels our passion and determination to grow and serve this special community.

Frank, Rimerman + Co, Passion Works Here.

www.frankrimerman.com

In this episode we discuss:

01:29 Shauntel’s journey into VC

03:12 The decision to start Reach from NewSchools

04:39 Why they decided to go with a larger partnership in Fund 1

07:14 The challenges of raising a sector specific fund for a sector not well understood at the time

09:50 Pitching impact focused LPs vs return focused LPs

11:51 How sector-specific managers answer the question about being too narrow

16:18 Why despite being as seed fund, Reach stays with their companies throughout their lifecycle

20:06 How they think about hiring at Reach

21:51 How Reach looks at talent development as a part of its legacy

23:41 Things firms can do early to build a generational legacy

25:51 Developing and evolving an investment thesis

28:24 Creating systems to allow for proactive outreach and investment

30:03 Building strong a back office and operations

32:50 Shauntel’s greatest learning as an investor

33:55 What she’s learned from her misses

36:42 The investor she aspires to be more like

Mentioned in this episode:

* Reach Capital

We’d love to know what you took away from this conversation with Shauntel! Follow @SamirKaji and give your insight and questions using the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop a direct message on Twitter.

Podcast Production support provided by Agent Bee Agency

Follow me @samirkaji for my thoughts on the venture market, with a focus on the continued evolution of the VC landscape.

We’re so pleased to bring you my discussion with Monique Woodard of Cake Ventures, a seed-stage firm investing in demographic change. To date, Monique has invested in startups such as Blavity, Court Buddy, Mented Cosmetics, and Silvernest. 

Cake Ventures invests in a thesis that is based on a “three-layer” philosophy that the future of technology is being driven by certain major shifts:

* The aging Baby Boomer population

* The shift of minorities driving culture

* The increased spending power of women.

Monique herself has a diverse background in government, venture capital and inclusive entrepreneurship. She was previously venture partner at 500 Startups, an investment scout for Lightspeed Ventures, and she is also the co-founder of Black Founders. 

We chat about a wide-range of topics, from her work in Sub-Saharan Africa, why she chose to start her own fund vs joining a large fund, raising capital, and the importance of building community in venture.

A message from our sponsor

Standish is the largest provider of fund administration services to Venture Capital funds globally. Currently, we serve approximately 750 Venture Capital funds and have more than $150 billion in committed capital under administration.  

Standish has been designed by experienced Chief Financial Officers with a deep understanding of the service needs of both finance departments and General Partners at every stage of the product life cycle.  Standish can handle all of the needs of finance department so General Partners can focus on investing.

Standish is an employee owned company.

https://www.standishmanagement.com/

In this episode we discuss:

01:56    Monique’s journey into venture capital

04:26    Why she joined 500 Startups

06:51    Key insights on the globalization of startups from her time at 500 Startups

08:57    Transitioning from 500 Startups to Cake Ventures

11:10    The three layers of the Cake that form her thesis

13:39    Early days of Cake Ventures

17:30    Raising capital in a virtual environment

20:32    Institutionalizing yourself and your portfolio

22:52    Why Monique decided on being a solo GP

28:46    When you should think about bringing on additional partners

31:13    The future of diversity in the seed ecosystem

35:08    Monique’s biggest learning as an investor

37:00    Some missed opportunities

38:23    Inspirations in the investment community

Mentioned in this Episode

* Cake Ventures

* Gray New World - 2020 Report on Aging

* 500 Startups

I’d love to know what you took away from this conversation with Monique. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Podcast Production support provided by Agent Bee Agency

Today’s episode is with Lan Xuezhao, founding partner of Basis Set Ventures which has raised $301M across two funds. Lan has extensively studied AI, data science, and human psychology, and with Basis Set, she has combined those elements to bring a very unique approach to investing.

Lan’s background in corporate development at Dropbox and management at McKinsey has contributed to her data driven approach to sourcing and investing. She has a PhD in Psychology from the University of Michigan. 

We chat about Lan’s unique investment philosophy, how she found GP/LP fit for Fund 1 and then Fund 2, how her firm has many shared characteristics of a portfolio company, and what makes for a founder super power.

A message from our sponsor

Standish is the largest provider of fund administration services to Venture Capital funds globally. Currently, we serve approximately 750 Venture Capital funds and have more than $150 billion in committed capital under administration.  

Standish has been designed by experienced Chief Financial Officers with a deep understanding of the service needs of both finance departments and General Partners at every stage of the product life cycle.  Standish can handle all of the needs of finance department so General Partners can focus on investing.

Standish is an employee owned company.

https://www.standishmanagement.com/

In this episode we discuss:

02:18    Lan’s journey into venture capital

07:40   How did she go unconventional on fund size

10:06    Lan’s learning about GP/LP fit

13:57    Constructing a different LP base in Fund 2 vs. Fund 1

17:18    The structure of the fund’s tech and investment team

21:01    Eliminating bias

22:56    Founder psychology + super power thesis

26:00 Top two key traits of the best founders

28:31    How Lan sees BSV’s place in the market today

31:25    Future of firms in her size range

34:14    Her Anti-Portfolio

36:09    Inspirations from the investment world

Mentioned in this Episode

* Basis Set Ventures

* Thesis on What Makes a Successful Founder

I’d love to know what you took away from this conversation with Lan. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Podcast Production support provided by Agent Bee Agency

Follow me @samirkaji for my (usually) daily thoughts on the world of venture capital.

We’re pleased to provide this week’s episode with Ben Casnocha, founding partner of Village Global.

Prior to Village, Ben was an entrepreneur and also acted as Chief of Staff at LinkedIn and Greylock working directly with Reid Hoffman. Ben has also co-authored two New York Times bestselling management books, The Alliance: Managing Talent in the Networked Age (with LinkedIn chairman Reid Hoffman and entrepreneur Chris Yeh). and The Start-Up of You: Adapt to the Future, Invest in Yourself, and Transform Your Career (with Reid Hoffman).

Village ventures has $250M AUM and was co-founded with Erik Torenberg, Founder and current chairman of On Deck, and Product Hunt’s first employee. Together, they’ve invested in over 200 companies, and use a very unique community driven approach to serve their founders. The firm is based in Silicon Valley and backed by some of the world’s most successful entrepreneurs in Mark Zuckerberg, Jeff Bezos, Bill Gates, Reid Hoffman, and Sara Blakely.

We chat with Ben about the importance of curating networks, how they use an unique incentive model within the Village community, how they performed their portfolio construction model, and what venture trends are here to stay.

A message from our sponsor

Standish is the largest provider of fund administration services to Venture Capital funds globally. Currently, we serve approximately 750 Venture Capital funds and have more than $150 billion in committed capital under administration.  

Standish has been designed by experienced Chief Financial Officers with a deep understanding of the service needs of both finance departments and General Partners at every stage of the product life cycle.  Standish can handle all of the needs of finance department so General Partners can focus on investing.

Standish is an employee owned company.

https://www.standishmanagement.com/

In this episode we discuss:

02:10    Why Ben doubled down on venture capital

04:43    Ben’s learnings from working with Reid 

08:08    How the fund leverages its relationships with luminary LPs

11:27    Curating networks for scale

14:30    Monetary and access incentives for collaborators in the VC community

18:08    What characterizes a great founder/ learnings from luminaries

21:55    The firm’s feedback framework

25:08    How Ben and team constructed their portfolio

29:49    Village’s acquisition and exit models

32:39    How does Ben think about flexibility and rules when it comes to ownership

34:50    Trends driving the current venture ecosystem

38:26    Relationship between institutions and seed funds

40:45    Looking into the future: What does Fund 5 look like for Village

42:22    What Ben has learned so far

43:18    How his thinking has changed over his career

45:44    Ben’s biggest inspirations

Mentioned in this episode

* Village Global VC

* Ben’s blog

* Ben’s books

Disclaimer: This presentation does not constitute an offer to sell or the solicitation of an offer to buy any security. No representation is being made that any investor or portfolio will, or is likely to, achieve profits or losses similar to those discussed. Targets discussed have been established based on several assumptions that may vary depending on the type of investment.  There is no guarantee that the conditions on which such assumptions are based will materialize as anticipated and will be applicable to Village Global’s portfolio investments.

I’d love to know what you took away from this conversation with Ben. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Podcast Production support provided by Agent Bee Agency

Follow me @samirkaji for my thoughts on the venture market, with a focus on the continued evolution of the VC landscape.

Our guest today is Miriam Rivera, managing director and CEO of Ulu Ventures, an early seed stage venture fund in Silicon Valley focused on IT startups. Currently Ulu Ventures has an AUM of >$200MM and the team has invested in companies such as Palantir, BetterUp, SoFi, Guild, and Span [For full disclosure, Ulu Ventures is also an investor in my startup, Allocate).

Prior to Ulu, Miriam was deputy general counsel at Google, which she joined in 2001 as the second attorney.  She graduated from Stanford University, where she earned the AB, AM and JD/MBA degrees. Miriam is the co-founder, former co-president and on the board of Stanford Angels & Entrepreneurs, an open source network of Stanford alumni investors and entrepreneurs.

Listen to our conversation to hear Miriam’s thoughts on moving from angel investing to starting a firm, being a husband and wife team, the reasons behind Ulu’s large portfolio strategy, and why diversity is so important to her.  

A message from our sponsor

Standish is the largest provider of fund administration services to Venture Capital funds globally. Currently, we serve approximately 750 Venture Capital funds and have more than $150 billion in committed capital under administration.  

Standish has been designed by experienced Chief Financial Officers with a deep understanding of the service needs of both finance departments and General Partners at every stage of the product life cycle.  Standish can handle all of the needs of finance department so General Partners can focus on investing.

Standish is an employee owned company.

https://www.standishmanagement.com/

In this episode we discuss:

02:05 Miriam’s journey into the investment side

03:23 Why they started Ulu and raised outside capital

05:22 The challenges of starting a fund as a wife-husband duo

08:14 Navigating their working relationship

11:33 Their unique view on what portfolio construction should be

14:06 What the stats say on returns

16:53 Trade-offs between size of portfolio and ownership

20:20 Strategies for venture investing at the seed-stage

23:14 Ulu’s unique decision making framework

29:15 Benefits of investing in diverse teams

31:58 Changes that can be made in the LP/VC ecosystem

35:06 LPs with diverse managers

38:18 The social vs. financial impetus in making investments in diverse managers/ partners

40:39 Miriam’s most counterintuitive learning as an investor

42:00 Companies Ulu missed out on

43:36 Inspirations in the VC world

Mentioned in this episodeUlu Ventures

I’d love to know what you took away from this conversation with Miriam. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Podcast Production support provided by Agent Bee Agency

Follow me @samirkaji for my thoughts on the venture market, with a focus on the continued evolution of the VC landscape.

Today’s episode is with Jeff Morris, Jr., founder of Chapter One Ventures, an early stage product fund that has invested in Cameo, Pipe, Alt, and Roam. After a significant track record as an angel investor (including investing in Lyft) he started Chapter One in 2019 that featured tier one investors such as Lightspeed and Sequoia as LPs. 

Jeff was previously the VP of Product at Tinder, spearheading popular features like Boost and Tinder Gold. He graduated with an MBA from UCLA’s School of Management and is a frequent speaker on monetization, product, and growth.

We chat about finding your product market fit as an investor; thinking about scaling yourself, and the ever-changing relationship between entrepreneurs and VCs.

A message from our sponsor

Anduin is revolutionizing fund management with streamlined fund operations, digitized fund subscriptions, and real-time status updates. 

Traditional, paper-based subscriptions are costly, tedious and error-prone, with up to 80% of submitted documents being incorrect and considered not in good order.

Fund managers lack real-time visibility, facing manual processes, endless back-and-forth and a mountain of emails, documents and spreadsheets.

Anduin’s investor onboarding workflow improves the investor experience, bringing clarity, guidance, and efficiency to fund subscriptions which drastically reduces error rates.

The Anduin platform allows GPs to perform fund operations simply and efficiently with improved data accuracy, freeing up time so they can focus on what they do best... investing.

For more information, or to arrange a demo, visit fundsub.io/ventureunlocked

In this episode we discuss:

02:11 Jeff’s journey into investing

05:43 Jeff’s learnings as an angel investor to being a scout to starting a firm

08:38 The main differences between being an angel investor and a full-time venture capitalist

11:13 Adjusting to doing venture full time

13:51 How Jeff evolved along each step of the way in his investing career

16:22 How he constructed his LP base, and him taking on capital from Tier 1 VC’s

17:58 How Jeff thought about fund sizing and what he learnt from his first fundraising

22:14 Why bring a Chief of Staff onto a VC firm

24:47 The debate between optimizing for # of companies vs. ownership

27:27 Learnings from Sequoia about investing and entrepreneurship

30:23 Jeff’s decision-making model

34:39 The future of the VC

37:17 The pros and cons of having a brand on Twitter/ social media

39:52 The most counterintuitive lesson Jeff has learned

41:20 Lessons learned from companies that he missed

43:26 Inspirations in the VC world

Mentioned in this episode:Chapter One Ventures

I’d love to know what you took away from this conversation with Jeff. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Podcast Production support provided by Agent Bee Agency

Follow me @samirkaji for my thoughts on the venture market, with a focus on the continued evolution of the VC landscape.

Today we’re thrilled to bring you my conversation with Justin Fishner-Wolfson, co-founder and managing partner of 137 Ventures, a growth-stage venture firm that provides customized liquidity solutions to founders, investors, and early employees of high-growth private technology companies.

With a total AUM of $1.5B, 137 Ventures has backed some of the most impactful companies of the past decade, including Wish, Flexport, SpaceX, Uber, and Airbnb. 

Prior to launching 137 ventures in 2010, Justin worked on the investment team at Founders Fund.

A message from our sponsor

Anduin is revolutionizing fund management with streamlined fund operations, digitized fund subscriptions, and real-time status updates. 

Traditional, paper-based subscriptions are costly, tedious and error-prone, with up to 80% of submitted documents being incorrect and considered not in good order.

Fund managers lack real-time visibility, facing manual processes, endless back-and-forth and a mountain of emails, documents and spreadsheets.

Anduin’s investor onboarding workflow improves the investor experience, bringing clarity, guidance, and efficiency to fund subscriptions which drastically reduces error rates.

The Anduin platform allows GPs to perform fund operations simply and efficiently with improved data accuracy, freeing up time so they can focus on what they do best... investing.

For more information, or to arrange a demo, visit fundsub.io/ventureunlocked

In this episode we discuss:

02:10 Justin’s journey into venture capital

03:36 Learnings from Founders Fund

05:52 Differentiating yourself in tangible ways

07:45 How Justin thinks about the sales process

10:34 Fund sizing

14:59 Liquidity solutions for the future

17:42 How efficient are the secondary markets right now?

20:40 Justin’s philosophy on risk

26:00 The considerations of check size and ownership requirements

28:53 What are the toughest things to get right in building a firm?

31:01 Avoiding talent atrophy and ensuring generational succession

32:56 The hardest lesson learned in building a firm

39:47 The most counterintuitive lesson Justin learned in investing

42:19 Learnings from misses

43:47 Justin’s inspirations

Mentioned in this episode137 Ventures

I’d love to know what you took away from this conversation with Justin. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Podcast Production support provided by Agent Bee Agency

I’m excited to announce the imminent release of Venture Unlocked, the first podcast dedicated solely to helping emerging venture investors launch, operate, and scale successful venture capital firms. 

The trailer embedded here provides a bit of background on the podcast —- if you like what you hear please forward this email to your friends and colleagues and encourage them to sign-up for the Venture Unlocked podcast on substack.

On Tuesday September 29th, we are thrilled to release the first episode of Venture Unlocked featuring Elizabeth Yin of the Hustle Fund, who transparently spoke about her journey in raising fund 1 (and the # of LP’s they spoke to!), how they work together as a partnership, and the system Hustle Fund uses to add value to entrepreneurs.

Until now, mentorship in launching and building a venture firm has only been available in small doses. Our objective is to level the playing field by unlocking the best practices of building a great firm and driving better and more diverse capital to founders.

Elizabeth Yin is Co-Founder & General Partner at Hustle Fund, a pre-seed focused firm based in the Bay Area. Appropriately named, Elizabeth and her team truly epitomize the word hustle. She and her co-founder Eric raised $11.5MM Hustle Fund I in the fall of 2018 and more recently started investing out of a larger Fund II. The firm has a unique investment model that starts by investing $25K in each startups, and then by working closely with their entrepreneurs looks to upsize their commitments into select portfolio companies.

Previously, Elizabeth was a partner at 500 Startups where she invested in seed stage companies and ran the Mountain View accelerator. In a prior life, Elizabeth co-founded and ran an ad-tech company called LaunchBit (acq 2014). Elizabeth has a BSEE from Stanford and an MBA from MIT Sloan.

In this episode, Elizabeth covers the following:

* What their journey in raising their first fund together was like.

* How broad their LP outreach was, and how they managed hundreds of LP conversations.

* The continuous nature of raising capital.

* The role of brand in venture.

* The thinking behind their unique portfolio construction model, and how they serve such a large group of portfolio companies.

* How to efficiently manage a firm amidst all the competing priorities.

* What she wishes she knew before she started Hustle Fund.

Mentioned in this episode:

* The Hustle Fund

* Elizabeth’s post “How I Raised my $11.5m VC Fund”

* Here’s her post on “11 Things I’ve learned from running a micro VC in the last year”

* Elizabeth’s post “How Do VCs Make Money?”

Hope you enjoy the episode, feel free to tweet or DM me @samirkaji your further questions from the show or other guests you think I should invite to the show under the hashtag #ventureunlocked. 

Follow me @samirkaji for my thoughts on the venture market, with a focus on the continued evolution of the VC landscape.

Today’s episode is with Semil Shah, founder and general partner at Haystack, a pre-seed and seed-stage supporting outlier founders. Haystack’s portfolio includes DoorDash, Instacart, HashiCorp, Figma, Applied Intuition and many more.

Semil is also Venture Partner at Lightspeed Venture Partners, and in 2017, was selected to the Midas Brink List.  He previously was a venture partner at both GGV Capital and Bullpen Capital.

We covered topics like the challenges Semil faced when trying to get into VC, how he’s evolved his approach over the years and his current and future view of the industry. 

A message from our sponsor

Anduin is revolutionizing fund management with streamlined fund operations, digitized fund subscriptions, and real-time status updates. 

Traditional, paper-based subscriptions are costly, tedious and error-prone, with up to 80% of submitted documents being incorrect and considered not in good order.

Fund managers lack real-time visibility, facing manual processes, endless back-and-forth and a mountain of emails, documents and spreadsheets.

Anduin’s investor onboarding workflow improves the investor experience, bringing clarity, guidance, and efficiency to fund subscriptions which drastically reduces error rates.

The Anduin platform allows GPs to perform fund operations simply and efficiently with improved data accuracy, freeing up time so they can focus on what they do best... investing.

For more information, or to arrange a demo, visit fundsub.io/ventureunlocked

In this episode we discuss:

02:26 Semil’s path into VC and some of the challenges

06:00 Initiating relationships with LPs

12:54 Scaling as a venture firm

16:15 Semil’s portfolio construction methodology

20:30 Were there any transferable elements from LSVP and GGV to running a seed fund?

23:21 Semil’s take on differentiation

31:06 Do LPs push venture firms to be too big?

33:25 Redefining venture scale outcomes

40:08 What it means to be disciplined

41:15 Semil’s view of the venture landscape today

43:50 The most counterintuitive lesson he’s learned being a VC

46:07 Underrated characteristics of successful VCs

Mentioned in this episode

Haystack Ventures

I’d love to know what you took away from this conversation with Semil. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Podcast Production support provided by Agent Bee Agency

Follow me @samirkaji for my thoughts on the venture market, with a focus on the continued evolution of the VC landscape.

Today’s episode is with Sergio Monsalve, founding partner of Roble Ventures, a seed firm based in Silicon Valley that invests in solutions that help human progress. Their portfolio includes Kahoot, Mosaic, and Dragonboat, among others. 

Prior to Roble, Sergio spent 14 years at one of the longest standing VC firms in the world, Norwest Venture Partners, where he led investments in companies such as Udemy and Adaptive Insights. Before he started his investing career, he held various roles in high-growth technology companies like eBay and Portal Software. He currently teaches at his alma mater, Stanford, on education and entrepreneurship. 

We chatted with Sergio about equity and diversity in the VC world, adapting to a smaller GP model after so much time at a large partnership, and how he thinks about investing in human enablement technologies.

A message from our sponsor

Anduin is revolutionizing fund management with streamlined fund operations, digitized fund subscriptions, and real-time status updates. 

Traditional, paper-based subscriptions are costly, tedious and error-prone, with up to 80% of submitted documents being incorrect and considered not in good order.

Fund managers lack real-time visibility, facing manual processes, endless back-and-forth and a mountain of emails, documents and spreadsheets.

Anduin’s investor onboarding workflow improves the investor experience, bringing clarity, guidance, and efficiency to fund subscriptions which drastically reduces error rates.

The Anduin platform allows GPs to perform fund operations simply and efficiently with improved data accuracy, freeing up time so they can focus on what they do best... investing.

For more information, or to arrange a demo, visit fundsub.io/ventureunlocked

In this episode we discuss:

02:19 Why Sergio decided to get into venture and the unique challenges he faced

04:47 Sergio’s departure from a large shop in Norwest to starting Roble

07:45 Transitioning from a partnership-driven ethos to being a single operator

10:23 The meaning of ‘human-enablement’ investing

13:27 Post-pandemic predictions

16:46 Why you must bring diversity on a team

20:31 Diversifying the decision making process and identifying implicit bias

24:44 Investing in highly competitive markets with discipline

28:19 Sergio’s parameters for investing

32:01 Capitalizing founders in the appropriate way in today’s market

36:19 What did Roble Ventures look to accomplish in the early days

39:58 The most counterintuitive thing Sergio ever learnt

41:27 Dominant trends coming up in venture

43:22 Investors he is inspired by

Mentioned in this episode

Roble Ventures

I’d love to know what you took away from this conversation with Sergio. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Podcast Production support provided by Agent Bee Agency

Follow me @samirkaji for my thoughts on the venture market, with a focus on the continued evolution of the VC landscape.

Today’s episode is with Michael Silton and Alejandro Guerrero of Act One Ventures, a Los-Angeles based firm that invests in pre-seed and seed-stage .

Before becoming Managing Director of Act One, Michael was Executive Director of the UCLA VC Fund for three and half years. He was also CEO & Founder of RainMaker Systems(to which he took public) and co-founder of UniDirect Corp. Prior to being General Partner at Act One, Alejandro was Volunteer Associate at UCLA Ventures from 2013-2016,  Co-Founder & CEO of Uniq Apps and Co-Founder & President of the Live Entertainment Network.

We chatted with them about their unique partnership, how they tangibly drive real diversity into cap tables, and how they navigate in today’s white-hot market.

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For more information, or to arrange a demo, visit fundsub.io/ventureunlocked

In this episode we discuss:

02:15 How the team got into investing

05:22 Why Michael started an independent firm, after so many years as an operator

13:10 Key lessons learned from raising their first fund

15:11 Staying positive when fundraising is going slow

22:53 The Act One Ventures investment model

26:34 Why learning from failures is a superpower

29:18 How their unique differences as a partnership drive value to founders

38:35 The Diversity Rider; What it means and why is it critical for the future of underrepresented GPs and founders.

Mentioned in this episodeAct One Ventures

I’d love to know what you took away from this conversation with Michael and Alejandro. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Podcast Production support provided by Agent Bee Agency

Follow me @samirkaji for my thoughts on the venture market, with a focus on the continued evolution of the VC landscape.

Today we’re thrilled to bring you a very unique conversation with Michael Sidgmore, Co-Founder of Broadhaven Ventures and host of the Alt Goes mainstream podcast. Broadhaven Ventures is fintech focused and has invested in several platforms that make alternatives more accessible including, Republic, Party Round, iCapital, Alt, and of course our startup Allocate.

Additionally, Michael was an early employee at iCapital (currently valued at $4B), which enabled private wealth managers to offer top alternatives to their clients.

Michael is also a Venture Partner at Goodwater Capital, one of the top global consumer focused venture capital platforms in the world with over $2 Billion of assets under management. 

We covered the broad topics of retail influence within alternatives, the future democratization of venture capital, and why a larger supply of LPs is coming. 

A message from our sponsor:

Pacific Western Bank is a full service commercial bank with over $34 billion in assets. The venture banking team specializes in financial products and services for startups, venture-backed businesses, and their venture capital and private equity investors.

The experienced team is committed to the space and dedicated to delivering high-touch, tailored solutions, helping innovators take their business to the next level.

In the first half of the year, the venture banking team has booked over $800 million in new loan commitments to help support the community.  No matter the size or stage of your business, you can expect guidance, resources and flexibility, making them the perfect team to support your evolving needs.

Turn your vision into reality with PWB. For more information, visit www.pacwest.com/lending-solutions, or follow us on LinkedIn and Twitter.

*Equal Housing Lender & FDIC insured

*Total assets & loans booked are as of June 30, 2021.

In this episode we discuss:

01:06 Why Michael got into investing

08:02 The world of alternatives

12:55 How the demand for alternatives assets has changed over the years

18:31 Navigating the challenges for people to access alternatives

24:19 The long term progression of alternative investments

29:29 Important thematic trends in the next generation of investors

34:09 What adding value to investments means to Broadhaven

37:52 Balancing the relationship between founders and VCs

41:43 Successfully scaling for value

Mentioned in this episodeBroadhaven Ventures

I’d love to know what you took away from this conversation with Michael. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Podcast Production support provided by Agent Bee Agency

Follow me @samirkaji for my thoughts on the venture market, with a focus on the continued evolution of the VC landscape.

Today, I’m excited to bring you my conversation with Jason Shuman, a partner at NY based Primary Venture Partners. The firm leads seed rounds for companies in NY and has previously invested in companies such as Jet, Mirror, and Latch. The firm recently raised two funds totaling $200MM.

Prior to joining Primary, he spent time as Chief Of Staff for GLG founder Mark Gerson, was an associate at Corigin Venture, and founded and ran a company called Category Five from 2011-2015. 

We chatted with Jason about the importance of culture in building lasting teams, KPI’s for delivering founder success from their internal portfolio services team, and how he views both NY and the entire venture market today. 

A message from our sponsor:

Pacific Western Bank is a full service commercial bank with over $34 billion in assets. The venture banking team specializes in financial products and services for startups, venture-backed businesses, and their venture capital and private equity investors.

The experienced team is committed to the space and dedicated to delivering high-touch, tailored solutions, helping innovators take their business to the next level.

In the first half of the year, the venture banking team has booked over $800 million in new loan commitments to help support the community.  No matter the size or stage of your business, you can expect guidance, resources and flexibility, making them the perfect team to support your evolving needs.

Turn your vision into reality with PWB. For more information, visit www.pacwest.com/lending-solutions, or follow us on LinkedIn and Twitter.

*Equal Housing Lender & FDIC insured

*Total assets & loans booked are as of June 30, 2021.

In this episode we discuss:

01:44 Jason’s journey into the startup world

04:37 What he learned in working with GLG founder Mark Gerson

07:05 The decision to join Primary versus starting his own firm

11:42 How Primary was able to seamlessly integrate him into the partnership

14:37 Jason’s advice to someone who is joining a successful venture firm

17:42 Why being selective and keeping a smaller portfolio is important to Primary

21:23 Primary’s philosophy on building a team

24:31 The KPIs Primary uses to assess whether they are delivering value to founders

27:21 Why Primary has decided to remain geo-focused on New York instead of expand

29:41 How Jason views speed versus diligence when investing in today’s marketplace

33:41 Thoughts on the seed market in 2021

37:15 The most counterintuitive lesson he’s learned as an investor

38:03 The investment miss that he’s learned from

39:54 The investor that inspires him

Mentioned in this episodePrimary Partners

I’d love to know what you took away from this conversation with Jason. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Transcript:

Samir Kaji:

I am Samir Kaji, your host of Venture Unlocked, the podcast that takes a behind the scenes of the business of venture capital. On this week's episode, I'm thrilled to bring you my conversation with Jason Shuman, a Partner with New York based Primary Venture Partners. The firm leads seed rounds for companies in New York, and previously invested in companies such as Jet, Mirror and Latch. Earlier this year, the company raised two funds totaling $200 million. Before joining Primary in 2018, he spent time as Chief of Staff for GLG founder Mark Gerson, was an Associate at Corigin Ventures and founded and ran a company called Category Five from 2011 to 2015. I found Jason to be really thoughtful and we had a great conversation on things like finding alignment when you join a firm, the tangible KPIs they use to measure success and what type of value they're providing founders and his view of New York and the market as a whole. Now let's get into the episode to hear all of that and more.

Samir Kaji:

Jason, it's so great to have you on the show and thanks for joining us.

Jason Shuman:

Thanks for having me, man. Appreciate it.

Samir Kaji:

Let's go back a little bit. I know you're now investing out of fund three, but what led you into becoming a venture investor and getting interested in startups?

Jason Shuman:

Yeah, so I'm from Boston originally and I grew up in a family of entrepreneurs. My dad was running his own company, my aunts and uncles, my cousins, it felt like everybody was running their own thing. So I became obsessed with startups when I was pretty young, like literally in middle school, I was writing business plans for mobile payments on flip phones. And in high school I went to work at this identity theft protection company that was run by my aunt and uncle. And they had a former VC from SoftBank working over there at the time and I just learned a ton from them about A/B testing and customer acquisition and LTV. And I just became a total nerd around startups more broadly, which ended up taking me down to the University of Miami for college, where I studied entrepreneurship and marketing and launched my first company, which was direct-to-consumer footwear company back in 2011.

Jason Shuman:

It was good timing, but pretty bad execution if I could say so myself. So when you can't operate, go ahead and invest, is sometimes that I joke about, but literally about a year out of school we had gotten the thing around profitability, but co-founder breakups, cashflow issues with that company, I just decided to wind it down. I couldn't imagine myself really doing it for the next 10 years. And sitting there as a 23 year old in Boston at the time at home, I was like, "What do I want to do next?" And I didn't have the confidence to start a new company and I didn't know if I really wanted to go operate at a friend's company, but this thing called venture capital became super interesting. Really at the beginning, it was for four reasons. The first one was I could learn about different industries nonstop and I'm a huge nerd and so doing that was great.

Jason Shuman:

Number two, is I wanted to be able to fundraise easier and number three was really that I could meet a better team for the next time around. And you only know an A-player when you've seen it. And I felt like the VC would put me at the forefront of meeting some of the best operators really in the world. And lastly, venture really aligns with my why in life. And I'm sure we'll get more into this, but the idea of being able to go help others, give them the confidence, the skill set, the tools, the relationships to live a more successful fulfilling life, venture really aligns with that. So I drove for Uber at night and sourced deals during the day for free and eventually found myself getting a 90 day trial offer from the guys over at Corigin Ventures to be their first hire and the rest has been history.

Samir Kaji:

So you started at Corigin which at the time was the venture arm of the parent company. Ultimately did that for a while and worked then I think with Mark Gerson of GLG. You and I have talked about that offline. That was an interesting experience where you got exposure to a lot of different things. It wasn't just traditional venture. Tell us a little bit about the experience with Mark.

Jason Shuman:

Mark Gerson's an incredible guy. He did an incredible job building GLG to the behemoth that it is. I would say the quiet behemoth that it is actually in New York City being a billion dollar plus market place business. But he's also an incredible philanthropist and he has his hands in so many buckets. So when I came over there to really get the family office stood up, I was doing a slew of different activities. One, was venture capital investing, the second was we were working on incubating companies. The next was LP investing. We had some philanthropic efforts that I was involved in, in Israel and Africa. And then the last thing that I was supposed to be doing was spinning up a mentor network between ultrahigh net worths and pro athletes.

Jason Shuman:

So one of the first people that actually we onboarded was a guy by the name of Kevin Beacham who has gone above and beyond all expectations that I ever had in terms of his investing career now, and really become like a brother to me in many ways. But about six months into that gig, I actually got pulled into a portfolio company of Mark's to operate again. So at that point I was doing both operating, raising some capital for the company and also investing in startups. So it was a heck of a time and it really made me have a lot of empathy for founders, even more because of the fact that during my first startup, I didn't raise venture. But during that one, I was a big part of the process and going out and fundraising.

Samir Kaji:

It's such a unique experience to be able to run so many different things from investing directly in early stage startups to doing LP investments, to working with debt funds. And you probably learned a lot of how the investment world works and the fact that there are so many ways you can make money and there's so many ways to capitalize companies. At a certain point, you probably were deciding like, "What do I do with my life and on a go-forward basis?" And where you spend your time. You ultimately went to Primary Ventures. And my presumption is that there were a lot of things that you've learned during your time with Mark that really shaped your view on the type of firm you wanted to join. Walk us through exactly the decision model you had of "I'm going to join Primary, not another firm, not start my own." What was that like and take us inside your head at that point.

Jason Shuman:

Yeah. So I need to give credit to Ash Egan. He had actually just launched his own fund Acrylic, which is in the crypto space, but Ash and I were having a conversation when I kind of hit this point that I knew I wanted to move on. I knew I wanted to go back into venture full time. And I went through this exercise that was like, "what do I want out of my next gig and what do I want to optimize for?" And I went down to my notebook and I wrote down the different types of funds that fundamentally existed at seed. And on one side of the spectrum, you have these funds that are like, "Spray and pray, come over here, hustle your butt off, go and network nonstop, but write 250K checks and 30, 40 companies a year."

Jason Shuman:

And you're networking mainly with VCs because at the end of the day, that's where you're probably going to get a lot of your deal flow from. On the other side of the spectrum, I was like, "do I want to go to a multi-stage fund? These guys are starting to come down the stack and they're starting to get some seed practice going and do I want to start that for them?" Because I've always considered myself relatively entrepreneurial. But then in the middle of the spectrum was the absolute sweet spot and what I love. And honestly, life is too short for you to do something that isn't what you love. And that sweet spot for me was high conviction, hands-on investing at the seed stage and that meant leading deals, and it meant leading very few deals a year.

Jason Shuman:

And so when I drew each one of those buckets, I wrote the firms down below each one of those buckets that I knew, or that I had worked with. And in one day I had sent out about 35 emails to folks saying, "Hey, so-and-so, I've really enjoyed getting to know you. I'm thinking about my next move would love to have a conversation." Now that weekend, I got a phone call from Luke Schoenfelder at Latch. And he said to me, "Hey man, I think you really need to talk to Ben and Brad. They just announced their second fund, $100 million from an investment strategy perspective. You guys are super aligned and they're just great humans." And so I met up with Ben at Le Pain Quotidien on Broadway and 21st that morning and what was supposed to be like a 30 minute meeting turned into two hours.

Jason Shuman:

And what I realized was that from a strategy perspective, we were literally the most aligned that you could get. I mean, fundamentally we believe that at the earliest stages, there's many ways to make money, but startups are hard and founders deserve better. So if we're focused and we're pushing them to be focused, we need to be even more focused. So it's like we're New York only, we're seed only. We only lead and we're trying to bring a tank to a knife fight. Like we invest more in our portfolio impact team than anybody else. And when I was looking at funds in full transparency, there was a few that I was at the offer stage with.

Jason Shuman:

And some that were even giving me offers to make more money or have a better title from day one. But when you have two firms that have the exact same AUM and one firm has a team of 13 people, and out of that more than half are on portfolio impact. And the other firm is only a couple of GPs and a platform person. I said to myself, "which side of history do I want to be on?" And ultimately I am where I am today.

Samir Kaji:

Looking back then you sort of go through this decision model, which sounds very thoughtful, right? You've kind of forced rank what you cared about. You had this view that Primary in itself, and the partners were just incredibly aligned with the way you thought about it. But going into a new firm, especially a firm that's already established, you a couple partners with Ben and Brad that had worked together for a long time. And a lot of firms have struggled with integrating new senior investment professionals having a seat at the table and having a culture. How did you yourself think about those intangibles when joining? What has Primary done right to be able to integrate new people in a way that provides really long-term viability and the right culture?

Jason Shuman:

Ben and Brad get a ton of credit for this. I think it starts with trust. When they go out to find new people to bring on the team, the interview process is not just about getting to know you as a person, but it's getting to the place where they feel like they can really trust you. If I can give a piece of advice to young investors that are going into a firm with an established partnership, it's really that the skill of, "getting a deal done," is really about trying to help build consensus. And if you can't build consensus, it's about articulating your framework from an investment evaluation perspective and getting people to see your point of view and your perspective. At the end of the day, we have an investment framework internally where we write down a list of got to believe in any investment and it's like, if you believe in X, Y, and Z, then we should be doing this investment. And the thing is in a diligence process, maybe two out of the three gotta believes you can diligence and check that box and say, "that's obvious. Let's just say that's completely obvious." But the third one is the one that gets debated the most. And at the end you never know, one person could be right and the other person could be wrong, but this is the type of business where we're arguing about things that nobody really fundamentally knows the answer today.

Jason Shuman:

And so if you're working with people whose point of view you trust, and you think they're really smart and they worked their butt off and have learned through years of experience, then you're going to give them the leash. And to my credit, I think to Ben and Brad is that they've given me the leash to really go out and try to get deals done and to win the trust of entrepreneurs and to work super closely with them. I hope that I've proven them right in giving me that trust and I hope that continues.

Samir Kaji:

It's also a challenge on the other side of the coin. If you're entering into an established partnership to have, in some ways, the confidence to be able to have a voice at the table, imposter syndrome, I think, is a very real thing for a number of people. In fact, I would say the most, the majority of people in the industry have some level of imposter syndrome, regardless of how successful they've become. It's even tougher the longer a partnership has been around, the longer those people have worked together. What advice would you impart to somebody that's joining a successful firm with an established partnership in overcoming some of those things that relates to imposter syndrome and just integrating with a new set of family members?

Jason Shuman:

I think it requires two things. One, the education piece that I just brought up, I think is really important. Angus Davis at Foundation, I think did an incredible job at bringing his partnership up to speed on the challenger bank space. And he was able to essentially just show them the deep dive in the work that he put into really figuring out everything and anything he could about the space and showing them the framework that he had. And by being able to do that, he was able to build trust and I think their conviction in him. In terms of how to completely remove "imposter syndrome," I think imposter syndrome is one of those things that most seed stage investors can have it, but it probably is going to end up lasting your entire career.

Jason Shuman:

And the reason being is that when you look back on your best investments, good luck trying to connect all of the dots aside from the fact that the people were really, really good and the timing was really, really great and the market was really, really big. If I can get this one piece of advice across it's, you're being paid for your opinion. Ryan Freedman said that to me super early on when I was at Corigin and said, "I'm paying you for your opinion." And that was on day 15 of my job sitting in an office and I really didn't know anything. And ever since then, I've started to just continue to think and reframe imposter syndrome where it's like, "You know what, everybody's an impostor," because most people, especially at seed, yes, there is skill.

Jason Shuman:

And yes, you're putting yourself in the position to succeed and you're meeting the right founders and you're getting into the right circles. But if you look back at all of these investment theses or the investment memos on certain deals that worked out, maybe 50% of it's right. Maybe 80% of it's right. So you just don't know. And I think the more that you can get comfortable with the unknown, which I know we all like to control as much as possible because most of us are type A, but the unknown is real. So imposter syndrome will either continue to persist or you should believe it's fake.

Samir Kaji:

And it's probably something that all of us have to get comfortable with to a certain degree and understand why we're in a certain position to be able to provide those types of opinions, knowing that we're going to be wrong a lot and that's just the nature of the business. Speaking of the business itself, you mentioned something that I found really interesting, and I like it, which is bringing a tank to a knife fight. I would say the world has evolved so dramatically over the last 15 months or so that you could probably pack in multiple lifetimes. The game of venture has changed with so many different firms, company formations, valuations, and it feels like we're entering an environment where funds have to sort of adjust how they approach winning deals. You've taken at Primary, fewer companies per portfolio indexing heavily on a team that helps these entrepreneurs. Tell us why that matters so much today.

Jason Shuman:

Founders are getting married to venture firms for the next 10 years, right? If they're successful. And at the earliest stages, there are many things that a founder at the seed stage cannot afford. They're not going to be able to go out and hire a Chief People Officer who has scaled the company from 20 to 500 people. They're not going to be able to hire the Chief Revenue Officer from a company that's scaled to $200 million of ARR. They're not going to be able to hire the CFO from a company that got acquired for $400 million. These things just aren't resources that they can get on their own, but they are resources that we as Primary have and will continue to invest in and bring full-time onto our team so we can provide those resources to the companies that we're trying to work with.

Jason Shuman:

So when we meet with founders not only are we introducing them to Rebecca Price who came over from Capsule and Enigma, or Cassie Young, who came over from Sailthru and CM Group, but we're introducing them to the other three people on our market development team who are going out and helping you as sales and go to market and the two other recruiters and community people, and the person on the marketing side of things that can really help them think about things in a way that they probably wouldn't be able to, without the resources that we're providing them with.

Jason Shuman:

The other thing I will say is that as a young partner at a fund, who's trying to win deals, having these people by your side, who by the way, are 100 times better at the things that they do than I am. And I don't care which fund you go to who the partner is, unless they've done that job, specifically that job, not the CEO done that one job, they're not going to be better than their old CRO most likely in scaling up the function. So by applying these people from a value add perspective, it makes it easier for me to win deals. And then at the same time we fundamentally believe it's great to bring on board what's called board partners who are folks that can come into the boardroom alongside people like myself to provide that other support in the boardroom.

Jason Shuman:

And those are people like Scott Norton, who started Sir Kensington or Jason Harinstein, who is the CFO over at Flatiron Health. These are people that are going in alongside us and trying to provide even more pointed feedback because not only have they seen the earliest stages, but they've seen the latest stages and have been in the weeds and more recently. So if there's anything we can do to help a founder get 10X the value out of us and not just us as a one single person team that's exactly what we're going to optimize for.

Samir Kaji:

There's something embedded in there that speaks to being a service provider versus just a pure investment firm. And I've always said that as an investor you're selling a commodity, which is capital in markets that are like the ones today where founders have so many different options, you have to actually provide something above and beyond that consistently. And it has to actually be meaningful to founders. And I want to get into this a little bit more because there's a lot of skepticism because a lot of venture funds say, "We add value beyond the investment." You've built a team around certain capacities that drive value to these founders. The first question I have around that is, how did you think about which pain points you wanted to solve for in recruiting that team that you built? And you mentioned some of those, but tell us a little bit about what went into that team build.

Jason Shuman:

I can't take any credit for it because it happened long before me, but fundamentally from a framework perspective we asked ourselves the question of, "what are the resources that seed stage founders wish that they could have, but they can't afford today?" And that's how we came up with recruiting. So on the recruiting side, we save our companies nearly $3 million a year in recruiting fees. And time to placement is like 50% of time to placement for companies who are trying to hire on their own. I mean, you think about that and you think about a CEO's job and maybe 20, 25% of their time at the seed stage is going on LinkedIn and cold messaging people. And it's like, the unlock of time is incredible and speed with these companies is absolutely imperative. It's like a number one priority when we think about what makes a great founder.

Jason Shuman:

And if you can't get butts in seats in 45 days, and it takes 75, that's a huge gap. And so we can bring recruiters in to support you. And by the way, because we only focus on New York, we've built this massive database of 1,000s of people who we've also back channeled. So we're not sending you people that we don't know at all. We're sending you high quality candidates with higher conversion rates, with higher success rates. And by being able to do that, we feel better about the opportunity for you to succeed or the probability for you to succeed. And it's the same thing on the go-to-market side with relationships. So we can make all sorts of introductions there. We can coach a lot of your executive team on that side, we can coach the junior team on that side. And then on the finance side, I think a lot of seed stage investors don't love diving into the weeds on the financial modeling and projection side and the cohort analyses, and really cutting up all the data, so we've brought on folks that love doing that and have done it at a scale that a seed stage CFO just wouldn't.

Jason Shuman:

And most of these companies don't have CFOs. So we really try to package our companies from a financial perspective too, by the time that they go and get to an Andreessen or a Sequoia or a Bessemer or a GGV, they're like, "wow, this is the cleanest data room, the cleanest financial model I've ever seen." And the amount of times that I think I've heard that from my friends at those firms is I can count on by more than two hands and I haven't even been there that long.

Samir Kaji:

This is a question that was actually posed to me by another manager who's scaling and their AUM now allows them to start to hire a operations team that helps founders with a whole host of things, similar to what you guys are doing. The question though, that they posed was, "how should I think about KPIs?" And another firm that had chimed in and said, "well we actually look at founder NPS scores. So we do these founders surveys and we ultimately look to test, what is the overall benefit we're providing? How much value are we really driving and NPS is a great way to do it because it shows tactical." Are there certain KPIs that you guys use to really assess the quality of performance of this team that you've built?

Jason Shuman:

Giving you all of our secret sauce right now. Yeah, we have inputs and outputs on the portfolio impact side and really credit Cassie and Rebecca who have implemented an incredibly powerful system there. So on the people's side, there are KPIs around dollars saved, but there are some other KPIs that regard or surround smaller projects for instance. On the market development side, there are KPIs around the actual pipeline and the actual sales that they generate for the portfolio companies. And then what kind of sits on top of everything is in our CRM we track basically all the interactions between, or projects that we have with ourselves and our portfolio companies. And those are broken out into high, medium and low intensity. And there are KPIs around high intensity projects, medium intensity projects, low intensity projects.

Jason Shuman:

And then at the end of the year, really, I think it's actually twice a year, we do a founder CSAT or NPS score depending on how they are different. I mean, we do a CSAT, we didn't find that NPS was that helpful although we do ask the question, but the CSAT is an important, which is the customer satisfaction score. And that is basically getting input on every single person on the team and every single team. And then we now can overlay that data on the interaction side of things to figure out, "well, founders that have high intensity interactions are the happiest, but you know what actually low intensity ones are pretty happy too because of X, Y, and Z reasons and interactions with this team."

Samir Kaji:

That makes total sense. And it's very clear that what you guys actually built is working based on everything I've heard in the market. So congratulations on building such a great group. Going to the investment side for a second. You talked about this earlier, Primary's New York focus. So focusing on companies that are only New York, you're not looking at other geographies. And a lot of people have had the view that being single geo focused if it's not Silicon Valley is hard because how many massive companies are going to be built. And if you're going to provide those 3 to 5X returns fund after fund, you kind of have to be an every single great company that is in these smaller geos. Now New York part of me is like, it's not really a small geo, but at the same time, I think you understand just directionally the things that you probably have heard during your LP pitches. Tell us a little bit about why geo focus, what does it actually mean to win a single geography?

Jason Shuman:

New York is an incredible city that yes, 10 years ago, if we wanted to have this conversation, I would agree with you. But 2015, when Primary was started, Ben and Brad had a key insight. And I think they've been spot on. I mean, if you fundamentally believe that there will be 5, 10, 15 unicorns a year coming out of New York City, then you want to be an LP in Primary because we're going to go out and we're going to hunt down those companies and we're going to get into them. And even if we're only in half of them, our returns are still going to be extremely strong. And that's why I think from a focus perspective, it's incredibly powerful because it unlocks so much more on the portfolio impact side of things and kind of creates a network effect within our own city.

Jason Shuman:

And there's a reason why Andreessen just hired David Haber here in New York. And there's a reason why Lightspeed just announced that they have an office here in New York. And most of the seed funds are sending people out here. And most of the SF funds are sending people out here. So this city is going to get more and more and more competitive. Series A funds are coming in at faster paces than I've ever seen before. But if we can continue to own seed with focus, I feel like we're putting ourselves in a good position to succeed.

Samir Kaji:

So speaking about New York and you're right, New York is a massive market that's evolved so dramatically in the last decade. However, today it's more competitive, right? You see downstream investors coming and doing seed. You see more money flowing into the ecosystem. And in today's world, a lot of founders are indexing heavily toward investors that can work with speed. You you're writing big checks. You're not doing 250, you're doing $3 million checks, which means you have to have diligence, you have to have conviction, not only in the founder, but the business model. How do you manage speed versus diligence in today's world, such that you're not missing on the best opportunities because you can't move quickly enough?

Jason Shuman:

We're really doing it in two ways. And I want to give credit to Mark Gerson who taught me about sense of urgency and really having a sense of urgency with everything that you do, if you want it prioritize it. So when it comes to a diligence process, if I'm meeting with the founder and we like the deal, or we like the founder before the meeting's over, I'm literally going to open up my calendar and I'm going to schedule a meeting with that person for the next day. And we've now brought on an investment team of... Let's see, six people, five, six people since the beginning of last year to help us speed up the diligence process.

Jason Shuman:

And so folks like Lia Zhang who came over from Stripes Group or Tobias Citron who has been here last couple years as an intern and Paige from Insight and Sam from Nomad Health and Kai. They're here essentially not only to just source deals, but to create these deal pod structures that help us take a deal from day one, come up with the list of got to believes that we need to diligence, go out, track down the answers to those questions. "What does the market look like?" Have those customer calls, back channel the founder. And then once you've really gone through that process, which by having three people on a deal, instead of one, you're able to do it a lot quicker. And we're going to meet with that founder three times over the course of six days.

Jason Shuman:

And that helps us really start to get to know them. Now I do think this is a period of time that I'd say a lot of mistakes will be made by many other firms, and maybe there will be some made by us as well, because you sometimes just don't know what you're missing. Maybe not even in terms of the market, but the person. And it sucks because I don't want this to be transactional, I want this to be as genuine as possible. And I want to be able to go have dinner with you and get to know you a lot more. And so we're trying to make sure that we're checking all of the boxes that we were checking before, but in a little bit more of a condensed timeline and that's worked out pretty well for us.

Jason Shuman:

But that said I've talked to multi-stage firms that have led some of the seed deals that we've looked at and I'm like, "well, did you look into X and Y?" And they're like, "nope," because it's like, "why do they need to? This is a tiny check for us." So we really pushed founders to work with seed firms, whether they work with us or not, that are at least doing the work. The other thing though, that we've been doing is going earlier and earlier. Tobias and Brian here launched the New York City Founder Fellowship, which is our version of an equity free, fee free version of YC or kind of like an On Deck. And we've had some incredible talent coming in. And now we're getting to know them at the earliest stages. We're getting to see how the sausage is made, how the idea evolves, how they learn, the speed of learning, and then we can make bets on them even earlier. And it's the same thing on the pre-seed side of things, where we're getting to work with people that we really enjoy working with and we've gotten to know over the years.

Samir Kaji:

And that's a great framework in terms of how to manage all these different variables that are in play right now, which leads me into a more global question to you. So when you started investing, it was at a time where prices were low and actually it's coincided with a time where as those companies have matured, we're in a great capital market. Liquidity, the exit environments are great. So if you look at the performance of funds that were 2008 to 2015, amazing performance. It's not uncommon to see 5 to 10X seed funds, right? I mean, we've just seen so many of them. What do you think about the market today, right?

Samir Kaji:

The old adage is always, "buy low, sell high." Are we in a place where innovation just is in an area where it's just rapidly evolving and growing so quickly that even if you're buying higher relative to fundamentals that in spite six, seven years, you'll still be able to sell higher, or do you view this as, "yeah, valuations are high and the best companies will continue to do it, but there is going to be some deterioration and maybe some carnage that happens if there is a downturn in let's say a couple of years now that we are going on 12 or 13 years in a bull run?"

Jason Shuman:

I think we're at a period of time where the pace of innovation is shifting at such a rapid rate, that there really will be these massive companies that generate these really strong returns. Now that's not every company and that's not every market and not every company in every market has real moats and should be traded like a tech company. But there are many markets that are going to have a new champion crowned that can generate a significant amount of enterprise value and returns for LPs and ourselves. Looking broadly at the ecosystem today, and this is anecdotally from a Primary and a New York perspective, we have more high quality founders that have seen scaling from 10 to 100 or 1,000 now than we ever had before because the New York ecosystem is really starting to mature. Secondly, you're getting better ideas than you've ever had before, and why is that?

Jason Shuman:

I think one, there's been a shift and a why now in a lot of these industries, but also because there's a democratization of access to information on the internet today. And you think about the amount of healthcare companies that are getting started, that we see that are incredible. People are leaving Oscar and RO and Cedar and starting companies that have really strong moats and great tailwinds and massive markets and you back them. And then what's crazy is not only is this speed of innovation changing, but it's the speed at which these companies can scale. I mean, we have a company in our portfolio, that'll go from like zero last year when they just like pivoted to over 50 this year.

Jason Shuman:

And it's like, "whoa, that's recurring revenue." It's an incredibly powerful thing. And so, yeah, I mean, are people overpaying? Maybe, definitely in some deals they certainly are, but there are certainly a lot of other companies out there that will live into it but it is buyer beware and its founder beware because when you do end up taking on money at a ridiculously high evaluation and you don't actually have product market fit growing into that might give you a little bit of digestion.

Samir Kaji:

I think that is such an important point. And I've always talked to founders about that. "Don't take too much money at too high a valuation until you're ready." Now, yes there's money out there and you don't want to under capitalize yourself in this market, but it is founder and buyer beware for sure. I also agree with the point that the pace of innovation today is at breakneck speed and you can look no further than the vaccine roll out using RNA technology with Pfizer and Moderna, so the world has shifted. I'm personally very excited to see what the next couple of decades look like. I try to disassociate that with the financial aspect. It's too hard to know and I've been long around long enough to know that I'm not smart enough nor do I think many people are smart enough to actually project what the financial markets are going to look like for the next five years, let alone the next year.

Samir Kaji:

So let's go to our last segment, which is our heat check. I'm going to ask you three questions, rapid fire, the first being, what is the most counterintuitive lesson you've learned as a venture investor?

Jason Shuman:

People, I would say founder first, and I do agree, but you put a good founder in a bad market, the market will keep its reputation and the founder won't. So you need to make sure that you back a founder that will recognize when they're in a bad market and they'll move over to a different one.

Samir Kaji:

And we do see that quite often and having that awareness. Well, let's talk about founders and you've invested in companies like Latch at the early stages. You probably have spent enough time looking at companies where you're going to miss companies too. Looking back in your career, is there a company that you look back on that you missed that's turned out to be a great company, and you've learned a particular specific lesson from? If so, tell us who the company is or if you're comfortable with and what you actually learned from that miss?

Jason Shuman:

My entire portfolio has a good size to it, but I'll use LeafLink as the example here. Ryan Smith actually has become a great friend. And I was at Corigin Ventures at the time when we looked at Leaflink. And I remember asking a lot of questions about, "well, what's your engagement like? And your this and that on these features and are people really using it?" And he wasn't really tracking that much of the data in the early days. There wasn't the foundation laid and he had sold the company before. And I remember thinking, "how good is this guy?" And at the same time I knew his market timing was really good. And I knew he was really, really thoughtful, really thoughtful and learned super-fast and had done it before.

Jason Shuman:

But at the end of the day there is some extenuating circumstances that made it so we didn't win the deal. And then I ended up leaving Corigin but if there's a lesson that I learned there, it was definitely stay in touch with founders as much as possible that you really believe in. And then also there's a lot of things that founders just don't have the time for in the early days. And if they have a bias for action and they know how to sell, and they know how to build product tracking when you're like two people in a closet is not necessarily something that needs to happen.

Samir Kaji:

Playing the long game and keeping mind share is a really good lesson to learn for anybody. My final question, just because you have mentioned guys like Mark and Ryan and Brad and Ben, but is there an investor out there that particularly inspires you given the way they think about things? If so, who is that and what about them?

Jason Shuman:

My answer, I don't know if you're going to accept it is Bill Campbell. Bill Campbell was the executive coach to folks like Steve jobs and Eric Schmidt, the guys over at Google. And long-term, I really do see myself getting into the executive coaching world. My mom's a therapist, my dad's an entrepreneur and I feel like the best investors really are generous with their time and help not only the company at the company level and the metrics level and are thinking about strategy, but they are helping the psychology of the founder and they care deeply about all of the employees within the organization.

Jason Shuman:

And I'll tell you really quickly having back the guys at Latch and then Ben at the stock exchange when they were going public the other day, seeing the employees that were there since day one, it gave me the chills. It was awesome and I was so overcome with gratitude that I walked up to all of them that I remembered and I was giving them hugs and just saying, "thank you." And Bill Campbell is the type of person that more investors should really admire and try to be like.

Samir Kaji:

A lot of people who don't know Bill, just because he is a Silicon Valley legend and obviously coached some of the best founders, entrepreneurs and VCs. I don't think he started his career in tech until he's in his early 40s coming off as being a football coach, right? And there's a great book out there on bill that's called Trillion Dollar Coach, which is a great read. So I definitely will accept the answer because privately, a lot of people have told me the impact Bill has had on them. Jason, this has been a lot of fun. Congratulations on being promoted to Partner as part of fund three, excited for what you guys are doing in New York and look forward to... I'm going to continue to track the story.

Jason Shuman:

Thanks man. Appreciate you having me.

Podcast Production support provided by Agent Bee Agency

Follow me @samirkaji for my thoughts on the venture market, with a focus on the continued evolution of the VC landscape.

We’re thrilled to bring you my conversation with Turner Novak, founder of Banana Capital. While fairly new to venture, Turner continually brings some of the most interesting perspectives about technology, and is one of best venture follows on social media.  

Turner has an incredible backstory on how he broke into VC, and ultimately within a few years was able to found Banana Capital in January 2021, with $9.99M in commitments, including several institutional investors. Prior to having his own fund, he was General Partner at Gelt VC and also interned at a pre-seed firm Afore Capital. 

We talked with Turner about the value of social media in VC, how he thinks that successful investing can be stage agnostic, and his views on where the public and private markets are today, and where they may go in the future.

A message from our sponsor:

Pacific Western Bank is a full service commercial bank with over $34 billion in assets. The venture banking team specializes in financial products and services for startups, venture-backed businesses, and their venture capital and private equity investors.

The experienced team is committed to the space and dedicated to delivering high-touch, tailored solutions, helping innovators take their business to the next level.

In the first half of the year, the venture banking team has booked over $800 million in new loan commitments to help support the community. No matter the size or stage of your business, you can expect guidance, resources and flexibility, making them the perfect team to support your evolving needs.

Turn your vision into reality with PWB. For more information, visit www.pacwest.com/lending-solutions, or follow us on LinkedIn and Twitter.

*Equal Housing Lender & FDIC insured

*Total assets & loans booked are as of June 30, 2021.

In this episode we discuss:

02:00 Turner’s journey into Venture Capital

03:21 Getting his first internship in VC at Afore Capital

07:43 The early days as an investor and his first investments

11:25 How he built a strong deal flow channel despite being so new.

13:37 Choosing to raise his fund without a 506c provision and going the traditional way despite a huge social following.

15:42 The impetus behind raising $9.99M

18:55 Turner’s scaling plan

22:04 The role of speed in the capital environments today

25:26 Using social media to amplify his strategy and brand

30:51 How he strikes the right balance on social media to ensure he’s productively adding to the brand, but while staying authentic.

34:28 Turner’s investment criteria and how he evaluates deals and companies

38:06 What he believes the markets will look like in the next 2-3 years

43:18 The most counterintuitive thing he’s learned as an investor

45:10 The lesson he’s learned from an investing miss

46:51 The investor that most inspires him

Mentioned in this episodeBanana CapitalGelt VCAfore Capital

I’d love to know what you took away from this conversation with Turner. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Transcript:

Samir Kaji:

Hi, I'm Samir Kaji, host of Venture Unlocked, the podcast that takes you behind the scenes of the business of venture capital. Today, we're thrilled to bring you my conversation with Turner Novak, Founder of Banana Capital. While fairly new at venture, Turner continually brings some of the most interesting perspectives about technology and venture and also happens to be one of the best follows in social media.

Samir Kaji:

He's also got a great backstory on how he broke into this sea and ultimately within a few years was able to found Banana Capital in January 2021 with 9.99 million amendments, including several institutions participating. Before starting his own fund, he was a general partner at Gelt VC and also had interned at pre-seed from Afore Capital.

Samir Kaji:

We covered a lot of ground at this podcast, including the value of social media in VC, how he thinks being stage agnostic can be a successful strategy and his views on the public and private markets and where we're headed. Now, let's get into the episode to hear all of that and more.

Samir Kaji:

Today's episode is sponsored by Pacific Western Bank, a full-service commercial bank with over 34 billion in assets. The venture banking team at PacWest specializes in financial products and services for both startups and the venture and private equity funds that back them. I've worked with many of their team members over the last few decades. And I can attest to their commitment to bringing a high touch and personalized experience for every startup and fund manager client they have.

Samir Kaji:

So, whether you're a founder or a fund manager at any stage of development, and you want to find out more, check them out at www.pacwest.com.

Samir Kaji:

Hey, Turner, it's great to see you, man. Thanks for being on the show.

Turner Novak:

Hey. Awesome, thanks for having me.

Samir Kaji:

This will be a lot of fun given your backstory, which is really unique, and then all the great content that you put on Twitter and TikTok regarding venture and tech in general. But let's get back to how you got into this, why you became interested in being an investor. And then ultimately, how did you actually break in when you didn't have the traditional Silicon Valley networks that a lot of people that get into venture do.

Turner Novak:

The first time I really got interested in venture and knew it was possible to do it from Michigan, was I read a post from Blake Robbins at Ludlow saying, I forget the title, it was how I became a VC from Michigan. And it was always something I thought was fascinating because there's intersection of all these different things I wanted to do when I grew up and what I was interested in.

Turner Novak:

But yeah, I live in Michigan. I kind of thought I might have moved to a big city at some point, but ended up getting married right after school, met my girlfriend, now my partner during school. So, we never moved away.

Turner Novak:

And yeah, so I remember reading Blake's post was like, "Oh, cool. So, it's possible." And that was really the first thing that kind of got me. I mean, I had joined the investment club in college and was the president of the club for a couple of years.

Turner Novak:

And I just loved investing. And I was mostly investing in venture style things in the public markets anyways, kind of knew that's what I was going to do. But I never actually thought it was possible until that moment when I first read that.

Samir Kaji:

Yes. So, you read the post that inspires you. You're like, I think I can do venture from a place like Michigan. But it still requires you to find a landing spot, have somebody believe in you in the early days. And I know you interned at Afore, how did you go about actually getting in front of folks like that to even intern or even ultimately get a job?

Turner Novak:

Here's a long process. Initially, it started, I had just started tweeting, essentially. I'd use Twitter for, I don't know, a decade for fantasy football. I think that was initially what I use it for a lot. And I just noticed that it seems like a lot of people are on Twitter talking about this stuff. It's a way to kind of share your thoughts, build a brand, a kind of funny word to say but showing how you're thinking about things. And I kind of just slowly started to meet people that way.

Turner Novak:

And initially, I just kind of picked a niche or certain things to talk about with the end goal of eventually making the jump into VC. So, I kind of started, I think the first couple months I was on Twitter, all I talked about was Snapchat and just how I thought it was coming back. I mean, the consensus at the time was this is the next Myspace. And I was very firmly just thought that was just wrong. And if I just put my thoughts out there eventually over time. It might take a while, but I'd kind of show how I was thinking about things.

Turner Novak:

And then started tweeting a lot about TikTok when it first launched, just same thing. It was kind of crazy at the time, but I was just like, I mean, it's the best product I've ever used. I think this is going to be the most valuable company in the world one day. And again, crazy things to say, but that's what you have to do to be a good investor.

Turner Novak:

And then probably one of my big, I guess, the smarter things that I did that kind of accelerated things was I made this fantasy VC portfolio. So, it's fantasy football combined with investing. I had a fake million dollars, picked some startups, fake invested. Honestly, I had no idea how these companies were doing in most cases. It was going on Google, Reddit, Product Hunt, listening to a couple of the founders who go on a podcast.

Turner Novak:

And there's a 30, a 15-minute conversation, it was kind of like you talk to them, they talk about the business. Maybe they'd share some metrics and how they were doing. But it was basically just, essentially, what's the business model? Does it make sense? Does this seem like a good venture bet, to kind of hack together this fake portfolio.

Turner Novak:

And one of the founders actually found it and threw it up on his Twitter. And he had 100,000 followers at the time, and was just like, this is the best analysis my company I've ever seen. And I was like, "Whoa, did not expect that. That's pretty cool."

Samir Kaji:

What year was that? That was around what, 2018?

Turner Novak:

Yeah. It was the summer of 2018. I kind of just used that type of stuff over. It was like a two-year period, maybe a little under two years. But just DMing people pretty strategically, trying to line up meetings, San Francisco. And if enough people said, yes, I'd actually book a flight, take time off work to go.

Turner Novak:

And it was a very long process, probably had about five interviews all at once. We're kind of associate principal type roles moving to San Francisco and Afore was looking for someone to help out part time as an intern. But they're open to someone working remotely. And that was kind of insane a couple years ago. That was off the table at every firm. They weren't even open to discussing that because there's all these great candidates in San Francisco.

Turner Novak:

And so, I ended up taking that job. And it was interesting, because I remember having conversation with Anamitra, my old boss, and I told him, I'm just going to quit my job and I'll work for you full time. But you can treat me like I'm an intern. And it actually took me a couple days to convince him. I was just like, "Don't worry, I will drive for Uber. I'll do whatever I need to do to just make money."

Turner Novak:

And what I ended up doing was I couldn't afford my mortgage. So, we just sold the house we were living in. And then I had a rental property, too, that I bought. It was like a couple of years prior, my mom had got some money from her divorce. And I used that and my tax return or tax refund as a down payment on a rental, and then she lived with me. So, she prepaid me 12 months of rent and lived with me in this house. So, I had a ton of equity in the house. And I sold it also and then we used that to live off of for a while. So, that was the initial kind of how it happened.

Samir Kaji:

That's a great story and certainly epitomizes some of the sacrifices you made to get into venture. And I'm curious in terms of when you started actually putting money in the ground between the constructing that fantasy portfolio and then pre-Banana Capital, which we'll of course talk about later. What was that process like and what were the early days of your investment career?

Turner Novak:

It was a lot of fun. It was interesting story. So, I had met Keith Wasserman, my partner at Gelt, a couple of years prior on Twitter. He'd been following me. We'd met up a couple times when I had flown out to LA to interview, meet with people.

Turner Novak:

And he was dead set convinced on I was going to be a good VC. We were going to raise this venture fund from his real estate investors. And then I was going to invest the fund split everything three ways. And he kind of convinced me that ... He was more for this than I was, that I was going to team up with them, and we were going to do this fund.

Turner Novak:

So, kind of how it went, I joined, no, October 1st of 2019, we started investing their personal balance sheet and kind of built a deck around the portfolio companies that I had invested in. And our first close was set for March 31st of 2020, which, if you remember what it was like then, it was pretty crazy. It made it a little bit difficult to get everybody across the finish line.

Turner Novak:

It also the dynamics of running a $1.5 billion AUM real estate fund and then a $5 million was what we're shooting for venture fund, they were really focused on the real estate business. And I was trying to raise this fund that I honestly had no idea what I was doing to be completely honest with everybody listening, never raised a fund before. I thought I might do this in 10 years.

Turner Novak:

So, I was basically just forced to go try to fundraise and a lot of people I was talking to, they were saying like, "I would love to invest in your fund, but this doesn't really make sense. If you ever do your own thing, maybe we can talk about it." And so, when you talk about what it was like investing it, I remember looking March, I think I have a couple founders on a waitlist. Three things I've committed to, doing the first close at the end of the month, and I can send you the money.

Turner Novak:

And then, we don't exactly have a first close. There's a little bit of money that came in, but there's a global pandemic. The economy is essentially like the stock market is collapsing. These founders need money and even over the course of the summer, it was basically like, I'm in to give you the money. I just need eight weeks to raise it. And I've got a couple people that actually need it more than you. And I was basically raising 100K, I've wired to a founder, raised 50K, wired to a founder. It really affected the kind of companies that I was investing in.

Turner Novak:

And I basically just had a really, really good relationship with the founder. I mean, it's basically founders that didn't need my money at the end of the day. I was coming in at the tail end of an $8 million round or something or couple million dollar round and I wasn't making the difference.

Samir Kaji:

As you're doing that, you're right, trying to close during the beginning of the pandemic, you'd spent a lot of time looking at the public markets and March 18th, I think was a low point where we saw the markets really dipped to I think the Dow was something like 18,000. And everyone was really nervous. I mean, if you talk to VCs, everyone's thinking about triage, think about their existing portfolios. LPs, it completely stopped. But here you are, getting a new close, you started investing.

Samir Kaji:

But you were still pretty early. You did an internship at Afore, now you're investing out of a fairly small fund. Why were founders allowing you in into these, it seems like these rounds were oversubscribed? How much of it was related to the fact that you had been putting your thoughts out there? And I do want to get into this creator economy and what we're seeing right now is so many funds that are 10 million or under raising in different ways than the past. But tell us a little bit about what really helped you get into those deals in the early days?

Turner Novak:

It was usually people that I had an existing relationship with who, I remember one founder specifically said, "I could raise money from anyone, but I wanted to have you just because I know what you've done over the last couple years. And I just I want to work with Turner, not logo of some big fund." So, that was genuinely what it was. A couple of them are my fantasy companies, fantasy portfolios that I was following on to, quote unquote, like for real.

Turner Novak:

And typically those I had a good relationship. They were just pumped that, holy cow, some dude from the internet is excited about our company and they wanted to have me in. That's typically kind of how and why they're having me. And I mean, maybe I had interesting things to say or share. And then even as a writing publicly about certain things for a while, I mean, people start to see how you think and maybe you kind of have a track record where maybe people want to be a part of your track record, per se, is taking an early bet on them. So, that's mostly what it was.

Turner Novak:

And then other times, it wasn't like hot competitive rounds. It was just, I was just someone on the list of a couple other people they're raising money from and maybe they didn't even fill around, that kind of the thing. That's typically more with my style is I really don't try to do these hot rounds, I just think the lower the valuation, the better. You got to go earlier rather than later.

Samir Kaji:

So, you're doing this and then ultimately do decide to launch your own firm, which you raised. And I think it was 9.99 million for the first fund. What we've seen, of course, with things like rolling funds and AngelList is this new generation of investor that is raising in one or two ways. They raise typical, which is raise a small fund, you do it as a private placement.

Samir Kaji:

And then there's this new method that is actually been around for a while, the 506(c), which is you can go on and solicit. You decided not to go that route, which for me, it was a little surprising because you do have this major Twitter presence. And a lot of the folks that have large Twitter followings really weaponize it by getting in front of a lot of people through a public fundraise. Why did you decide to go the route you did and what are the pros and cons?

Turner Novak:

Yeah. I think for me, I am trying to get an institutional capital base as fast as possible. And so, a lot of conversations I had with institutional investors, there's a lot of questions around it. And me, I was an LP. I worked in endowment for three and a half years. I was also looking at maybe what the incentives look like for someone investing that fund. And it was a little bit different than I'm going to build an institutional investment firm.

Turner Novak:

They really feel like an evolution of scope programs. To me, that's how I think about them. I mean, I know so many people that instead of being a scout for a big fund, you launch a rolling fund. And you're essentially a scout for 10 or 20 firms then instead of just one. I probably could have done it and it may have made my life easier. But over the long term, I mean, I think it's important to have a more permanent institutional capital base. That's honestly what I'm going for.

Turner Novak:

So, I've just been trying to build those relationships and had a couple of those people in my fund. And I think just showing that I'm trying to do it a little bit more institutional from day one and just sets the messaging right. And so, that was really the main reason.

Turner Novak:

I also honestly didn't want to take oxygen away from other people who probably needed it. I didn't have to do it. So, I didn't want to take away from anybody else who actually maybe doing five or six, even actually really benefited down. I was lucky enough that just kind of all the people I've met over the last couple years, I didn't have to do it publicly.

Samir Kaji:

You look at that first funded, I was thinking about fund sizing, and there's a lot of discussion that, hey, $10 million and other funds are really interesting for a number of reasons, because your low friction checks to those founders. And generally speaking, it's easier to get in at 50,000 or 100,000 than it is at 1, 2 or 3 million. Was there anything intentional about why you raised 9.99? Because based on what you just said, it sounds like you had plenty of interest that you probably could have gone above that. Why effectively cap it at 9.99?

Turner Novak:

I knew that I was going to have more than 99 LPs just based on ... It was a lot of friends, people that were interested with smaller checks. I think the smallest check I took was $1,000, just from a founder that I back to a year prior. So, I had a bunch of founder, like seven founders that I've invested in the past, who gave me like, very immaterial amounts of money, but it's good signal. Also, friends who work at tech companies, maybe they're like a PM at Snapchat. They know all the people leaving Snap starting companies. Those people are writing me million-dollar checks.

Turner Novak:

And I knew that I would get way past that 99 LP threshold just based on how I was constructing it. I ended up having some institutional investors that came in at the end, who wrote really weird small checks to make it work, some of the smallest checks they'd ever written. And I wasn't planning on that. But it was nice to just get them on board. I got a couple commitments to the next fund kind of a thing, which it was awesome to just kind of already start building towards that.

Turner Novak:

Again, also, I didn't want to go out and raise a massive fund, because I think the different dynamics investing a $10 million fund and a 50 or $100 million fund, and those two numbers were both thrown out, and I just started thinking, no way, that's insane to think that I should go and do that right away.

Turner Novak:

So, they'll happen eventually. And I've been working on kind of synthetically through SPVs. You write a 200K check from the fund, but you put in a million dollars total, or you put in 500K total to just start showing that the economics on this fund, it still totally makes sense. But your kind of almost training and getting everything ready for when you do the next one.

Turner Novak:

I mean, it's just like, a VC will tell the founder, just start doing the things before you need to like, yeah, I think about the same way. What's my product? What's my distribution? I'm investing, my distributions, like founders taking my money, essentially, or how they know about me. So, I kind of think about it in the same way. So, as a founder of a company, I'm just a founder of an investment firm.

Samir Kaji:

Right. No, and I agree. A lot of times I do say that if you're raising a first time fund and you're starting a firm, you're basically an entrepreneur. You're writing checks versus writing code. But ultimately, you have to build. You have to build your brand and you have to execute, and you have a product that you deliver to founders and your LPs. So, what I heard is 10 million allowed you to take more than 100 because I think you're going to go up to 250 LPs if you wanted to under $10 million.

Samir Kaji:

The other thing though is a lot of people don't stay at that 10 million and under. And they level up to something bigger, 20, 30, 40 million in a fund two or maybe even a fund three. And oftentimes what happens is the investment model is dramatically different because you're writing bigger checks. Oftentimes, that means the value you had to provide these founders is more than just, hey, I want to get in, here's 50 or 100K.

Samir Kaji:

How do you think about scaling yourself up in terms of the product you're providing these founders as you invariably will grow your base given that you have institutional LPs, who I know want to see bigger funds in the future?

Turner Novak:

I think the most value investor can provide to a founder is just by default, just giving them money, having conviction and just not bugging them, getting out of the way, not ruining anything, 90% of it I really think. I think the best founders don't actually need help 99% of the time.

Turner Novak:

I think that's the biggest thing is just you basically find things that you have really high conviction in or you have a thesis in. And it's not about doing a ton of due diligence, dragging people along. It's just like I already know that this is what I want to invest in because I've just spent so much time thinking about it talk to or looked at so many companies, or going super fast.

Turner Novak:

I mean, this past weekend, I just made my biggest first initial check ever. I spent the entire weekend doing a bunch of research, wrote my model for it, actually sent it to the founder to read and show him my thoughts and everything. I just accelerated everything, just went super quickly. I mean, I think you have to be super fast.

Turner Novak:

Being through a bunch of portfolio companies raising a bunch of follow on rounds, the people that aren't moving fast and are just dragging their feet and don't have conviction, they're missing out. So, there's other dynamic of moving fast, it's easier to mess up. But I think you do have to just have a ton of conviction and you have to go fast.

Turner Novak:

And that's really the best thing you can give founders. And you can maybe have a couple things. I mean, I've helped founders, I'm sure you want to talk about this later. But with memes and marketing strategy, and just every VC, you can help with fundraising, you can help with recruiting. But for me, I really don't do anything unique that another VC can't do.

Turner Novak:

So, I never really pitched this value add because I just think it's kind of silly at the end of the day, if for me, it's just like, I really want to invest. Here's why. Here's the money. I can wire it to the next day. I'm ready to go. I don't care who else is investing.

Turner Novak:

And typically, for the founders I'm investing in, that's what they need the most. And yeah, I'm really not trying to sneak in any rounds and prove why I'm worth it. It's just I don't think that's the way I want to invest. So, it works for me so far.

Samir Kaji:

And what point does that actually matter? This conventional wisdom, and if you talk to LPs just say, all right, Turner you're going up from whatever your fund is, now you're writing bigger checks. I think that in order to win in a competitive market because there's so many seed funds out there, you have to have some kind of superpower. Something that you're providing these founders that's tangible that they're saying, hey, I want him on my cap table because of X, could be customer introductions, can be this.

Samir Kaji:

And everyone plays that up. In those VC, LP meetings, VCs always talk about that. It sounds like you say at the earliest stages, it's really over index on things like high conviction speed, kind of get out of the way and provide the capital that they need. But is that something that scales up if you're raising 100 or $200 million fund, and now writing 2 to $3 million checks, do you still think that would be your philosophy or do you think that at that point, yeah, you need to start to drive different type of value propositions?

Turner Novak:

In theory, yes. You probably should. But again, I really don't think the best founders really care. They just want people to give them money. I can't tell you how many times the founder, like yeah, the two-month fundraising process, and how many times we just take, wow, somebody just made me an offer after our first meeting, I'm just going to take it. That happens so much more than what is publicly discussed.

Turner Novak:

So, I'm really at the end of the day, I think it is just having conviction and speed. And we saw it with SoftBank, who maybe they had some good ideas. And now we're seeing it with all these crossover funds that are coming into private markets.

Turner Novak:

These are very solid investors. People put up 30 to 50% IRRs over long periods of time. I mean, I think even the big ones that we all know about, I mean, they're just sub 30% IRR. I mean, better than most VCs at the end of the day. These people are good investors, they come in prepared. I mean, they come in with prebuilt models and assumptions on these companies and ask them three questions. And then, they know if they're going to invest or not.

Turner Novak:

So, I think at the end of the day, yeah, it kind of is defensible in some senses. And I think there's also founders that do maybe want some help. But I've also seen too some founders actually get disenfranchised from that help. They're just like, I took this deal because there's all this value promised and it wasn't actually there. So, I'm never doing that again. And I think that's just becoming more and more prevalent. And part of that is a function of the capital markets and where we're at. And that could very easily change.

Turner Novak:

So, I don't have very hard set in stone rules on it right now. I think, for me, I am working on building out more sustainable distribution value add maybe in that sense and maybe it's more related to memes or helping get the word out about what you're doing. But I don't really think that's my, to my value.

Turner Novak:

I mean, I think my differentiation in an LP's eyes is that everything I'm doing is something they've never really seen or invested in before. So, that's typically why people are investing right now. And I have some ideas on longer term defensibility in the model, but still playing around a lot of stuff.

Samir Kaji:

You have a lot of latitude in terms of what you invest in when it comes to stage regions, valuations and all those things. And I think there is a unique model that I think it's really interesting, especially where you are right now. The other thing I was going to bring up is social media and the creator economy, which obviously, over the last 5 to 10 years has exploded.

Samir Kaji:

I remember you used to tweet about really serious things and you still do every now and then with some deep analysis, but at the same time, over the last couple of years, you've really created a brand around things like memes both on Twitter and TikTok.

Samir Kaji:

What a lot of people often ask me is that when people do that and they're building these big brands, how does it actually help the investing model? Is it a sourcing thing? Is it winning? Is it a combination of the both? How do you cut through the noise invariably that you get? I'm sure you have plenty of DMs on your Twitter of founders. Because I think it was very intentional, very strategic, in many ways, but tell us why did you start switching your style and what that's meant for you from an investor standpoint?

Turner Novak:

Like I mentioned earlier, I think about it as I'm a company, I'm a startup. Every VC will tell the startup founders, you're fighting against incumbents that have distribution. They have a bunch of existing things they do. You probably won't beat them head on. What kind of product can you build that's differentiated, and hopefully, over the long term differentiated where you also become an incumbent over time. I mean, that's ultimately what VCs are investing in.

Turner Novak:

So, that's really how I thought about it as an investor. It's like, "Okay, I'm competing against incumbent venture firms. There's thousands of them. A lot of them do the same thing." I basically just said, "How can I literally do the opposite and do things that are unique to what I'm kind of doing and building and just essentially build an investment firm or brand like VCs that are almost just completely the opposite of what everyone else is doing?"

Turner Novak:

And you don't quite inverse everything, but you do pick apart certain things that maybe you think, oh, I literally just do the opposite, this is actually better in this case. So, I'll just do that. And since you kind of find whitespace.

Turner Novak:

So, initially, it was more serious content. It was just trying to show how I was thinking about things, building a track record. And I think that worked over time. I kind of think of the content piece as there's all these different people that you're trying to hit. You want founders of companies of people who want to build $100 billion businesses, you want them coming to you and talking to you.

Turner Novak:

You all seen both the angel investors who might had some deal flow. You might think about the VCs who also might have some deal flow might want to follow on. You all think about the public market investors who are coming earlier, also, don't want them shorting your company when it goes public. You want them bringing the price up and supporting you in the public markets. And I mean, there's also LPs. You want to attract capital from LPs.

Turner Novak:

So, I kind of thought about what kind of stuff that I put out there. And it was really the more serious stuff. It was typically deep dives on companies that people weren't really talking about at the time, like Snap, ByteDance. Pinduoduo was a big one. That also really kind of overlap with my thesis as an investor. I'm doing mostly consumer stuff, which there's not as many people doing that. So, pitching into an LP and giving you a little bit of a different exposure.

Turner Novak:

And it was over time, I had started ghost tweeting for meme accounts on the tech Twitter and there's every tweet would do insanely well. And so, I got to a point where I was like, man, I should just start doing this for my own account because I'm leaving some stuff on the table.

Turner Novak:

It was risky, for sure, in the same sense, as a big established venture firm thinking we're going to start posting a bunch of crazy stuff online, instead of these serious blog posts about how to run a sales process. How to hire a board member or how to cold email us or make a pitch deck? You have something that no one else is doing. There's some VCs that kind of do it. I was just like screw it, entire thing.

Turner Novak:

And the more I was thinking about it, at the end of the day, the reason that venture firms do that stuff, it's just a top of funnel brand awareness, it's pretty insane how much top of funnel you get when you just constantly have things that you're doing, blowing up the founder group chats, making everybody laugh.

Turner Novak:

When you talk about inbound, so much stuff on some strain of hey, raising around, they don't really know very many VCs, don't like following them, but I really want to reach out to you because I think you get it and want to chat or around coming together, here's the people they're investing. I just wanted to talk to you before we close it out because I value your opinion want to have you on board.

Turner Novak:

It's so many times founders that are they're like Indonesia or something. And I asked him like, "How did you know to reach out to me?" He's like, "I saw your TikToks." Or, "My one friend, he loves your stuff. He thinks you're hilarious. So, I just wanted to talk to you." I'm not raising any money right now. But it's a lot of that kind of stuff.

Turner Novak:

And so, it was really dialing it back. I was just thinking about what products do I need to build to allow founders and LPs to give me money and take my money at the end of day. It was just building something different that I think will generate really good returns over the long term. And that was fun, too. That was another thing is I think too many people take themselves too seriously. I don't think you have to take yourself 100% serious. And you can dial it back just a little bit. So, that's another thing I kind of want to do.

Samir Kaji:

Yeah. I'll tell you, the content is great and it's memorable. And for a lot of founders, ultimately, they sort of feel like they know you before ever meeting you, and they kind of know your personality. And people do want to work with people they like. I do think that in today's world, especially in the early days, I've always seen this, the founder or the partner brand will far exceed the actual firm brand. And it's really about who am I working with.

Samir Kaji:

So, I think you've done a phenomenal job. But conventional wisdom, as you talk to these LPs, especially the institutional ones, they have their own boxes that they like to fill in. They talk about differentiation that if you're too differentiated, and everything's inverse, inverse, inverse, they get a little nervous, too. It is a high risk sort of maneuver in terms of some stuff you put out. How do you balance that and how did you get the institutional to be excited about such a different way of doing things?

Turner Novak:

I guess that it's working so far. That's probably, I guess, the short answer I mean, essentially, I'm trying to do a bottoms up crossover fund. So, I look at all these public market, hedge funds, creeping early and earlier. They're doing like Series B, Series A. I think it's really hard to be a good pre-seed and seed and even Series A investor.

Turner Novak:

So, my internship at Afore was a pre-seed. The Gelt Fund was mostly pre-seed and seed with a little bit of A. Banana is mostly pre-seed to seed with a little bit of B and C. And I've always been talking about public markets. I mean, I have a ton of theses out there of companies where if I would have invested, it would have looked really good. So, I'm kind of building the public markets component. And essentially, it's going to be a bottoms up crossover fund. I can be the first jack. I can write 200K in the company. I can do 2 million Series C, a 100 million in the public markets, different funds, obviously.

Turner Novak:

But essentially, you're just like these crossover funds, but you have the DNA to source and be the very first one in. And you're able to follow up over time. You can come in for the first time at the D, like you're super nimble. And it takes a little bit more consumer, but you can invest any sector stage, check size, geography. There's good founders building things everywhere. And my whole, I guess, the DNA of Banana has all been on the internet and not going on existing networks that already exist. And I'm building a bunch of those now.

Turner Novak:

But I just had to think about what were my advantages as an investor and just lean into those. And kind of walking LPs through it, showing them how it's working. I mean, I have a bunch of case studies of invested in the seed, was able to follow up all the way to it becoming a unicorn and potentially can keep investing over time when you just have a couple case studies of that. And it's even inbound, like the founder came to me and wanted to take my money.

Turner Novak:

So, just being able to kind of show those, it's been a fairly easy sell. I mean, I haven't got a whole lot 100% committed yet because obviously, it's a small fund. And it was more of a maybe like, let's just get to know each other. I also treated it as, no, I think a lot of emerging managers, they'll raise the fund and then they'll go invest it for a year or two. And then, they'll be like, oh, s**t have to fundraise again. And then they get back into it.

Turner Novak:

I probably have like one LP call a week, just staying up to date with people, I think know what I'm doing. I mean, it's just like, if you're a VC investing in companies, it's great to get to know these founders. And then, over the course of six months, you're like, "Wow, okay, let's just do this Series B right now. We don't have to really do a whole process, let's just do it, because we've gotten to know each other." So, it's kind of the same strategy, I guess, with LPs. And it's just I also love talking to people who like investing. It's just fun to hear what's going on. So, that's kind of been the strategy.

Samir Kaji:

Yeah. And speaking of inverse thinking, because one of the things that a lot of people say is, okay, venture or tech investing really has three categories. You have growth and crossover. You have lifecycle investors who put most of their capital the funds in A and B, and then you have the seed category. And they're pretty bifurcated because a lot of people say the muscles that you need to have or in skills really from a seed to a growth is completely different. But you're doing everything.

Samir Kaji:

What's your view on that? And are there things that are just really similar from an analysis standpoint that you sort of look at and say, "Well, it's really not that. You can actually invest across the stack and be successful within a sole GP or within one person looking at all those type of deals?"

Turner Novak:

Yeah. I think as an investor, it's ultimately especially like a tech investor it's is this a platform that has really high returns on invested capital probably the most granular way to put it. Will this have a competitive advantage, now at scale? So, I think that just thinking about it that way, it's basically every startup investment that I make, it's could this be a publicly traded company? A lot of different ways to answer that question, but then in terms of public market, it's really just if they triple quadruple revenue, how much of that is just incremental cash flow? And do you have a different view than other people?

Turner Novak:

I mean, I think that's really what you have to do to be a good investor is you have to have a different view on things, different opinion, maybe you have to be early, you have to be right over time. But you just have to see it before other people. And that's ultimately how you make money as an investor at the end of the day.

Turner Novak:

So, there's a lot of similarities or differences. I mean, to be a good public market investor, you listen to a lot of earnings calls, you're making fairly robust spreadsheets. And it's almost unnecessary, but it is important to sort of do that versus, I mean, some of the startups I invest in, I don't make a spreadsheet for invest. There's almost no need to. It's more about, can they build a product? What are they charging for it?

Turner Novak:

Okay, in theory, they could do a billion revenue, maybe. But that doesn't even matter at this point because nobody's a customer yet. The bigger question is just like, can they hire a team? Can they convince someone to sell it? How are they going to grow it? Can they grow really quickly? A lot of those kinds of questions. So, there's a lot of similarities. I think you also have some advantages, too. Like one of the companies I'm investing in, there's a bunch of publicly traded comps that are massive businesses, and these guys have a way better model, but I think they've unlocked.

Turner Novak:

And so, if you understand the publicly traded model, you're like, "Holy cow, if this actually works, this is going to be insane." And no other VC is thinking about it that way. They're just like, what's the TAM? What's the LTV, the CAC? All that comes up. Where do you go to school? So, it's a totally different way of kind of thinking about it, if you can kind of blend the two.

Samir Kaji:

Yeah. I agree with that. And since you have a lot of views that are not consensus, I want to maybe zoom out for a second and look at the market as a whole, particularly since you've spent so much time thinking about both private and public markets. It seems today that if anyone has invested in technology over the last 5 or 10 years, they've probably done pretty well as a function of this massive economic expansion coupled with the size and scale of these technology companies.

Samir Kaji:

And today, there's 750 unicorns, companies worth over a billion, which at one point in time, it was really rare for a company to hit a billion-dollar valuation in the private markets. I'm curious in how you look at the world today, because there are two views right now. One is everything's vastly overvalued as a function of the massive supply of capital out there chasing yields and it just can't continue.

Samir Kaji:

And then there's the other school of thought that, yeah, while valuations are perhaps ahead of themselves across the entire board, a lot of these companies eventually will grow to a point where some of these valuations will look like a bargain one day. And the scope of what a successful exit is, is going to be redefined forever. Where do you sit on the spectrum and what's your view of what the next two to three years might look like?

Turner Novak:

Yeah. I mean, I think we've probably had a lot of multiple expansion that people are painting on revenue, cash flow, users or height, however, you want to think about the thing you're paying on multiple on. I don't expect a lot of multiple expansion in the future, maybe even some contraction. I mean, I think it's just about finding businesses that are growing really fast that are actually economical. That's totally what I tried to do.

Turner Novak:

And if you company growing 100% month over month, if they can truly sustain that, I don't want to say the valuation doesn't matter, but it almost doesn't. It might seem high but then a year later, it might seem like, wow, we paid half of this month's revenue. It was the valuation that we paid.

Turner Novak:

So, it's really just about finding good businesses. And I do tend to skew away from things that are extremely insane. If it's a category, that's a thesis in the slide of another VCs LP deck, I'm probably not investing in it. That's kind of, I guess, how I think about it.

Turner Novak:

Basically, you just want to find those things before they become super hyped up. Invest in a company that's growing 20% month over month, but is going to be growing 100% in a year because of new products, new hires, changes in the market, timing, stuff like that, that's kind of more how I think about it. And then, I get a little more comfortable investing in those kind of hyper growth companies because you've been there and maybe you understand that a little bit better.

Turner Novak:

And I do think we're going to see the public and private markets just continuing to blend. I mean, essentially, it's the illiquidity premium that's in the private markets is kind of going away. And that's ultimately why all these funds are moving in. They're just like, why are we paying 40 times revenue and we could pay 20 in private or 30. And then that's where all the VCs get upset because they're throwing everything out whack in the public market investors like, wow, we're going to get 30% IRR, what a steal.

Turner Novak:

And so, I think that will keep happening. I think it's getting easier and easier to raise a small fund. I mean, as more capital if you just look at, if you're an LP doing analysis, you have a billion-dollar portfolio, you have to distribute some, you've got all your buckets, equities projecting 5% returns, real estate projecting whatever, fixed income projecting 5% returns, shoot, we got to earn 7% a year, where are we going to get the extra 20%. No, it's in venture capital, because historically, it's done it.

Turner Novak:

So, it just makes sense to put a bunch of money. And so, there's just going to be more money coming in from the top until LPs decide they don't want to do that anymore. And that flows down to the bottom where someone like me can pretty easily raise money from other downstream investors who essentially just want deal flow.

Turner Novak:

I mean a lot of these smaller farms are essentially scale funds for someone, whether it's a hedge fund and LP that wants to do direct another VC firm, GPs these funds, maybe friends or companies who want to invest in the SPVs when there's breakouts. That's ultimately what all these small funds are doing at the end of the day. So, I just think it's getting easier and easier to access that capital.

Turner Novak:

So, to your earlier kind of question of, yeah, just make sense. It's kind of fragmenting and I think networks are getting ripped apart, where it's more and more on the internet. We're seeing you can make a venture back business in Georgia, like in Russia, or in Tanzania and Africa. Instead of just San Francisco and maybe the San Francisco on that's a trillion dollar outcome. But maybe in Peru, it's like, yeah, it's like a $10 billion company. It's still an awesome outcome depending on the economics of who's doing it, who's investing.

Turner Novak:

So, yeah, I think is just going to keep opening up. But I do worry about a wipeout in terms of March 2020 happening again, markets not recovering, which is why I've been kind of really thinking a lot about institutional LP base. I just think it's really important to have those long-term partners. I want to be long-term partners to founders, to my investors. So, I think that's important to kind of get to and that's what LPs want to.

Samir Kaji:

Yeah. It's hard to make a case that there's never going to be some level of a recessionary environment, it's just cycles. Historically, it never lasted forever. This has been one of the longest economic expansion. So, you start to feel it. Although I will say, a lot of us are thinking back in 2015, we're like, okay, there's a bubble now. Now, 2016 is going to be a bad year. And then 2017, '18, '19. And of course, if you and I ran this conversation in March with like here it is, it's going to be a couple lean years, and that didn't happen.

Samir Kaji:

So, it's going to be an exciting time to see tech, obviously, and where innovations, it's a long-term effort that is not going to stop. And it's just a matter of how do you future proof yourself? We saw people that were really successful venture funds, not be able to raise in '08, '09, because they didn't have the right type of LPs.

Samir Kaji:

So, it certainly makes sense to get some of those institutions. I want to end with our heat check and I have three questions that I feel like the first one, we've kind of talked about a lot of this stuff, but what's the most counterintuitive thing you've learned as an investor in the time you've invested in startups?

Turner Novak:

I would say the most counterintuitive thing, if you look at some of the biggest outcomes, breakout companies, they weren't necessarily always backed by who you think of is the best VCs, which the narrative is that those are the best funds, and they are really good. But you can also build a great business if you don't raise capital from one of these brand name funds.

Turner Novak:

Eventually, the numbers will speak for themselves, and investors will back and support it. And if it's really good, I mean, you can build a 50 billion, $100 billion business and there's been so many cases of someone's struggled to raise a seed round a bunch of angels or it was maybe led by a fund that was not thought of as one of these tier one great firms. But eventually those other firms did fall one come in.

Turner Novak:

And so, I think we kind of get away from that a little bit too much. Everyone thinks you have to raise money from whatever the top funds. I don't think it's necessarily 100% true. They're good investors and they'll invest in really good companies. But don't let it dissuade you if you're a founder and you struggled to raise capital from certain names, certain brands.

Samir Kaji:

Yeah, especially in today's world where there's so many different options. I have seen some of the best companies in the world. If you look at their cap table particularly early on, they're not the traditional tier ones. And so, there's another guest in our shed that said the same thing. I know it's been early and you probably haven't missed on too many deals and probably don't have a big anti portfolio.

Samir Kaji:

But is there a deal that you missed on that you look back in the last couple of years and like, okay, well, I missed it, but not necessarily like that you just missed it. But did you learn something from that experience that you took away and will help you if this type of situation comes up again, what company was that and what did you learn from it?

Turner Novak:

I would say I'm not going to say the name of the company. But there's a company that was probably the biggest beneficiary of COVID, like startup, that I remember someone mentioned it to me in DM back in late 2019. I was like, oh, it looks cool. I just never really looked it up. And I remembered it when I was like, "Oh, wow, I probably should have at least tried to talk to the founder." I guess that's the big miss.

Turner Novak:

I mean, I think one of my other misses has been not sizing positions and doubling down into the winners fast enough or aggressively enough. And I mean, I think part of it's just a function of, it's been kind of, I've had weird capital situations.

Turner Novak:

And again, that's partially why I'm trying to get to a really permanent institutional LP base, where I look at hypothetically what it could have looked like because the cases where founders like, what do you want to invest in the next round? You can invest whatever you want. And I do like 100K check in to 2 million, but I probably would have liked to do.

Turner Novak:

So, that's been another really big lesson and almost a miss honestly. It's just not doubling down on the company with a lot of conviction. And almost thinking I needed to get more shots on goal to just kind of prove that I could do it. But I think now I'm at a point where I really just need to start all the best practices that all these seasoned VCs tell me about. I'm like, wow, I need to actually start doing that now.

Samir Kaji:

Well, speaking about seasoned VCs, is there an investor out there that you particularly aspire toward that inspires you? If so, who is it and what about them that resonates with you?

Turner Novak:

I would say Bill Gurley probably kind of a maybe that's a cop out answer. But I liked the way he publicly talks about what he's thinking about. And I just think he's very good investor. I mean, that's what I want to be. I want to be someone who people say, "Oh, Turner, yeah, he's a really good investor. He's like one of the best." And that's ultimately what I kind of aspire to.

Turner Novak:

So, probably the answer, that there's a lot of other people I like different things or what they do or different philosophies they have. Maybe I've never even met them before and maybe how I disagree with a lot of other things that they say or do. And I like, yeah, person is a pretty good investor, there's a lot of things you can learn from how they think.

Turner Novak:

So, yeah. And that's one of things I love about investing is, I mean, you can learn just as much. As a VC, you can learn just as much from other VCs as you can from public market investors, fixed income investors, real estate investors, all these different asset classes. You can really learn a lot from.

Turner Novak:

And whether it's just how to think about investing in your portfolio, but also thinking about, I mean, especially now, one of the big themes a lot of VCs are chasing is unlocking liquidity in different asset classes. It's like the stocks and people that specialize in similar asset classes and learn how they think about it. So, learning from other people is one of the things I like the most fun investing. So, there's a lot out there.

Samir Kaji:

When I do read a lot of stuff and I talked to a lot of guests on the show, I don't agree at first, with everything people say, and then you started thinking about and you apply your own beliefs on what makes sense and what doesn't, but it does make you think. And VC is this continuous learning game where you're always confronting your own biases and challenge your own assumptions. And I think people like Bill, Bill was a public analyst before he was a VC. And he's never been afraid of actually speaking against some of the craziness that happens where a lot of people buy into the hype factory.

Samir Kaji:

And so, I'm not surprised that you mentioned the name. There are people across many different asset categories I also look at that are just super interesting. This has been great, man. I have really enjoyed the conversation. Congrats on getting the first fund. Look forward to seeing both more memes, but also the growth of Banana Capital over the next few years.

Turner Novak:

Yeah. Well, thank you. Thanks for having me.

Samir Kaji:

Thanks so much for listening to another episode of Venture Unlocked. We really hope you enjoyed our conversation with Turner. To learn more about him and Banana Capital, be sure to go to ventureunlocked.substack.com for detailed notes in the show, as well as my ongoing commentary about the world of venture cap.

Samir Kaji:

Venture Unlocked is also available on iTunes or Spotify for download. And while you're there, please leave us a rating and a review as it really helps us out. And hit that subscribe button in order to get each and every Venture Unlocked episode as soon as it's released.

Podcast Production support provided by Agent Bee Agency

Follow me @samirkaji for my thoughts on the venture market, with a focus on the continued evolution of the VC landscape.

Today we’re thrilled to bring you my conversation with Delian Asparouhov of Founders Fund, a Silicon Valley and now Miami based firm that has long been known for backing some of the most category defining companies in the world including SpaceX, Palantir, Facebook, AirBnB, and Stripe. 

While at Founders Fund, Delian also co-founded Varda Space Industries, and previously worked at Khosla Ventures.

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The experienced team is committed to the space and dedicated to delivering high-touch, tailored solutions, helping innovators take their business to the next level.

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In this episode we discuss:

01:43 Delian’s journey to becoming an investor

05:24 Why he felt VC was a better path for him than operating roles

11:52 Why he chose to go from Khosla Ventures (& now Founders Fund) instead of starting his own firm

14:24 The decision to co-found Varda while being a full time investor

17:38 How Delian attracted co-founders for Varda.

21:31 Why there are a relative lack of investment dollars into areas like space.

25:22 How Founders Fund looks at the risk in investing in areas such as space.

28:07 The catalyzing events in tech that will help drive exponential innovation.

31:27 Ingredients Miami has that will help it build a significant presence in tech, and why is talent going there?

38:47 The most counterintuitive lesson Delian has learned as an investor

40:56 Delian’s prediction for the venture market for the next few years

43:47 The legendary investor that has most inspired him

Mentioned in this episode:Founders FundVarda Space IndustriesKhosla Ventures

I’d love to know what you took away from this conversation with Delian. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Transcript:

Samir Kaji:

Hi, I'm Samir Kaji, host of Venture Unlocked, the podcast that takes you behind the scenes of the business of venture capital. Today, I'm thrilled to bring you my conversation with Delian Asparouhov who's a Principal at Founders Fund. Based in Miami and Silicon Valley, the firm has long been known for backing some of the most category-defining companies in the world, including SpaceX, Palantir, Facebook, Airbnb, and Stripe. While at Founders Fund, Delian also co-founded Varda Space Industries and then previously worked at Khosla Ventures. I had a lot of fun in this week's show as we talked about a number of things, including incubations within larger firms, the arc of where he sees technology, and what's going to drive innovation in the coming years, and why regional hubs like Miami will be major forces and drivers of innovation. Now let's get into the episode to hear all of that and more.

Samir Kaji:

Today's episode is sponsored by Pacific Western Bank, a full service commercial bank with over 34 billion in assets. The venture banking team of PacWest specializes in financial products and services for both startups and the venture and private equity funds that back them. I've worked with many of their team members over the last few decades, and I can attest with their commitment to bringing a high touch and personalized experience for every startup and fund manager client they have. So whether you're a founder or a fund manager at any stage of development, and you want to find out more, check them out at www.pacwest.com.

Samir Kaji:

Delian, great to see you, and thanks for joining us.

Delian Asparouhov:

Thanks so much for having me. Excited to be on today.

Samir Kaji:

Well, this is going to be a really fun conversation given how multifaceted your background is. And actually going from a waffle boy to becoming an entrepreneur and getting into tech, to now being a full-time investor at Founders Fund. Tell us how you got interested in tech in the first place and what led you to investing.

Delian Asparouhov:

Yeah, I had always been a computer scientist. My dad studied computer science and statistics and was a software engineer for basically his entire career. And so I think my first website I put up, I think summer between eighth and ninth grade, I had my first paid software gig summer between ninth and 10th grade, and so, the waffle boy experience was actually like, "I can tell where this life is headed and it's unlikely to have a service job in its life unless I intentionally do it now, and I think it's an important skillset to have, because I can't wait of just get paid for just working with your hands."

Delian Asparouhov:

And so, I actually had a much higher paying job the prior summer, where again, I was a software engineer and then I was like, "I'm gonna be a waffle boy this summer. I'm not going to do any software engineering." I did a some of that and I was like, "This it for me. I'm not a very good waffle boy." I basically quit at the end of the summer to go back to high school, but I think I got fired too. I think they were at their wit's end with me of, I really just like overselling the waffles more so than I like making them.

Delian Asparouhov:

And so yeah, I basically had this software engineering background, thought that I was headed into the world of academia. I really liked software robotic space, and so the plan was, both of my parents are PhD academic types, my mom's a professor, my dad's basically a professor, and so I was like, "Okay, my path in life is going to be academic robotic space." That points me towards undergrad at MIT, grad school at Caltech and then basically working at JPL/NASA on robotic space missions.

Delian Asparouhov:

And basically in freshman year at MIT, I had a couple of chance encounters with the most maybe influential, being with this guy, Bilal Zuberi, who's actually now a partner at Lux Capital, basically met me on I think fourth or fifth day of undergrad, and just introduced me to the world of venture capital startups, just like a potentially alternative path that had a much near term and faster path, should we say, impact on the world.

Delian Asparouhov:

And so I got hooked on that. I started going to these weekly dinners at MIT. They were these entrepreneurship dinners hosted and funded by the entrepreneurship center. And then just very quickly got obsessed, started reading about all these things, reading Hacker News, and had this idea stuck in my head where I was like, "Man, Jack Dorsey, he seems like he's the best entrepreneur right now. I got to figure out how to go work for him." And so that basically spring of my freshman year, I hustled my way into getting a summer internship with Square.

Delian Asparouhov:

And so moved out to Silicon valley in whatever, late May of 2012, fell in love over the course of that summer, had a really awesome experience in the summer of 2012 working for Square. I think I interviewed when the company was a 100, 120 people. By the time I joined, it was 150 and then by the time I left, it was 300. So, I remember when I left the Android engineering team at the end of the summer, one of the other engineers was like, "Oh, f**k, you're an intern? You're not a full-time really? You've been here longer than the rest of us." And I was like, "Yeah, but I'm actually just an intern and I guess I'm going to head back to school/head back to school with the intention of figuring how to drop out and get back here as soon as possible." Because I was like Square is awesome, but I'm young enough that, the risk reward curve, I should probably go start my own thing rather than working at a bigger company.

Delian Asparouhov:

And so I was lucky enough to be roommates with a guy who was friends with a Thiel Fellow and I learned about that program, applied, and then managed to make it out full-time to Silicon Valley in May of 2013. So yeah, thank you Bilal for teaching me about startups and eventually leading me out to Silicon Valley.

Samir Kaji:

It's a really interesting story. You think about 2013. You drop out of MIT to pursue being a startup entrepreneur, which comes with a lot of risks. And then ultimately you did that for four years and then took on a jump eventually with Keith Rabois at Khosla Ventures. And I always think about, as you go through your career, you're always making decisions that have opportunity costs. Why did you decide to go into venture versus staying within the operating role, either running a startup or actually working for a startup in some of the spaces that you really enjoyed?

Delian Asparouhov:

Yeah, so the original role at Khosla Ventures was actually due to me wanting to actually start another startup. I had this idea around cybersecurity insurance that I've been towing around with Keith for a while, and didn't feel like I had the right founding team yet to pull the trigger, but I really did want to figure start working on it. I had actually been having dinner with Keith talking about this, but then also happened to be talking about a friend that had dropped out of Harvard, but had gone back and finished school, and was graduating that was looking for what his first gig was going to be.

Delian Asparouhov:

And Keith was like, "Hey, I really like your friend, maybe I should hire him as my chief of staff." And so we talked about what the chief of staff role would entail, how it would work, et cetera. And I remember calling my friend literally right after that dinner and being like, "Hey, Keith wants to me to pitch you on this role." I literally got halfway through the pitch and had this set of an aha moment where I was like, "Oh f**k, I think I want to do this. And then I'm going to work on the cybersecurity insurance idea on the side while doing it."

Delian Asparouhov:

And so literally I was doing this call outside Keith's house after this dinner, and I knocked on his door after I was done with the call. And he's like, "What the f**k are you still doing here? We finished dinner like an hour ago." And I was like, "I've been outside on this call, but by the way, I think I just want the job. What do you think about me being your chief of staff? And then I'm going to work on this cybersecurity insurance idea and just use Khosla Ventures and this role as the platform to find these potential ideal co-founders, and in parallel, just learn a lot from you."

Delian Asparouhov:

And he was like, "That sounds great." We came to an agreement that I would do it for at least minimum of a year. So even if I did find the exact team, I would still keep doing the chief of staff role for at least a year since he was going to have to train me up on it. And I was like, "Great, I'm happy to do it for a year, and then I'll go back and operate this company."

Delian Asparouhov:

About, let's say six or seven months in, I had a couple of different realizations that hit me all at once that convinced me that I should potentially take the idea of staying in venture capital for the longer term actually made sense. Because nowadays I think people think like venture is cool, blah, blah, blah, but how? When I was growing up in Silicon Valley, 2014, '15 and '16, venture capital is where you went to retire. Nobody cool was doing venture capital. All the cool people were starting companies. And I think that's still honestly mostly the case.

Delian Asparouhov:

But I had a sudden realization that hit me about six months in where two things, the first was that my personality and skillsets were much more likely to make me a highly effective venture capitalist than they were to make me a highly effective founding CEO. I am super ADD. I'm super intellectually curious. I like to speak my mind even when it's relatively controversial and out there takes, and I don't particularly love managing other people's emotion ends or acting as a therapist. All those things are huge cons to be a founder, right? The ideal founders are monomaniacal, very perfect in their storytelling and are careful not to step over any bounds, are very good at being a therapist and managing people underneath them, and if anything, dislike contact switching.

Delian Asparouhov:

I realized, I was like, "Huh, these things are all huge cons to the founder, and yet they're all huge pros as an investor, right?" The best investors are intellectually curious and context switching and don't necessarily need to manage people. And so I'd always given other friends the advice of, when considering various career paths, you should generally likely lean into your strengths rather than try to mitigate your weaknesses, because by leaning into your strengths, you're much more likely to be top 1% and top 0.1 top 0.01% of the people in that particular category.

Delian Asparouhov:

And so I was like, "I think if I really, really worked hard, I could make be a top 10 or top 5% CEO," but it would take like a lot of work. Or I could do the thing that clearly comes much more naturally to my skillset and personality and just do that. And I can probably work less "hard," and I'll actually be top 0.1 or 0.01%. And then I had this sudden aha moment where I can't describe to you, up until then I'd had this obsessive, since that day with Bilal and then reading about Silicon Valley, I was like, "Oh, okay. To be one of the greats, you have to be a founding CEO." And so like, "I'm going to be a CEO. I'm going to be a CEO." And it was literally obsessive in my mind. And every day I was like, "In some ways, I don't care about the idea, I don't care what I'm working on, but I have to be the CEO."

Delian Asparouhov:

And then it was just this first crack where I was like, "Hmm, seems like I can be one of the greats and have a really great impact on the world without necessarily being a CEO. And then who knows maybe one day I'll figure how to do the job half, half and co-found something again one day," which eventually does happen four years later. And so yeah, maybe a month, six or seven or so, realized that.

Delian Asparouhov:

And then the second thing was, I actually happened to basically stumble across and source an aerospace company that Khosla Ventures ended up investing into at roughly month six or seven. And so the second aha moment that I had was, I'd always really wanted to work in aerospace, but the only models that I had for how to do that were either you went and worked at SpaceX as an engineer, which I had friends that did that, and I didn't really love the day to day life of just being an engineer. And then I had the second type of model, which was the Chamath, Elon, et cetera, which is basically, "You got to get rich in normal tech and then you get to go do space tech."

Delian Asparouhov:

And so I was like, "Okay, I'm going to do path two. I'm going to try and get rich in normal tech, and then I'm going to go do space tech." And then instead, all of a sudden option three opened itself up to me where it was like, "Whoa, I get to do aerospace today as a broke 22-year-old, by basically 23-year-old, I think, by finding these companies that are really great space companies and then convincing investment firms to invest in them, and then I really actually get exposure to the world of the commercial space industry and operating within that."

Delian Asparouhov:

And so I had those two aha and I was like, "Oh s**t, I got to lean into this hard. And I'm going to show that I'm a very good normal investor, but I'm going to make sure that on the side I'm constantly building up this space expertise." And so very intentionally I started going to space conferences and meeting every space CEO, and thinking about what ideas would I want to fund? What opportunities were there out there? I started very proactively with my friends that were SpaceX engineers grabbing dinner with them and being like, "let me know anytime that you're interested in leaving and wanting to start a company. I want to work on something with you." And so those early bets were obviously what eventually led to what I'm working on today.

Samir Kaji:

Going back in a second, you were at Khosla making the determination that being a VC is probably better aligned with your skillset. You still have to do the normal tech, you have this affinity for space, and I think that goes back a long time, well before even being part of the tech world. But there's a couple options that people have when they're thinking about being an investor and starting off in the early days. In today's world, that means either joining a firm, like you ultimately went from Khosla to Founders with Keith, or actually start your own firm where you get a taste of actually running a company, but in the context of an investment firm. Why did you decide to go to Founders versus just start your own tech or space tech type of firm?

Delian Asparouhov:

I do think that fundamentally venture investing is an apprenticeship-based industry where I think it's far easier to learn from other really great people than try to re-engineer from scratch. And then honestly, most things in life are easiest learned being in apprenticeship. And that was incredibly clear to me if I looked at, let's say peers that started around the same timeframe that I did in venture four and a quarter years ago, those that had very type mentorships and apprenticeship opportunities, have definitely far outperformed the ones that were out on an island and expected to learn and operate entirely on their own.

Delian Asparouhov:

Founding a firm can make a lot more sense once you've had that apprenticeship experience. I think early on in a career, it's not like it's impossible to succeed that way, but you're really in it for the grind. And in some ways I would much prefer to spend ideally the majority or 99% of my time doing the things that I really love and things that I'm good at. I think I'm pretty good at, for having been a former founder, I'm pretty good at advising other founders, finding very interesting ideas to invest in, figuring out how to convince those founders to take our capital, those things I'm quite good at and enjoy doing.

Delian Asparouhov:

Do I love pitching to limited partners to invest into a fund? Not particularly, and so this was a have to. Yeah, maybe it constrains the upside or maybe you don't get as much ownership, et cetera, but I find that I didn't really want to apply my "entrepreneurial independent energies" towards actually making an investment firm. I was much more interested in, and this is definitely an explicit part of the conversation when I joined Founders Fund, I was interested in, at some point, incubating something and applying the entrepreneurial spirit towards that.

Delian Asparouhov:

And so yeah, I think there are plenty of investment firms in the world. Are you really going to create the next greatest hot new thing? Maybe. But I think that isn't bringing that much innovation and interesting things to the world versus applying that same entrepreneurial energy to company building. To me, it's much more exciting. But obviously, I've had friends and peers that have done phenomenally well taking this purely independent approach, but this wasn't something that I was super interested in.

Samir Kaji:

So given all that, let's talk about your work at Founders Fund. And one of the things that struck me as unique was, you starting a company or at least co-founding a company in Varda while you are a full-time investor. And we're starting to see those type of models emerge, and certainly in the past we've seen things like EIR models, incubations with firms like Sutter Hill and then now studio models. But maybe you can walk us through a little bit about how does that work for you? And within Founders Fund, what does it actually mean to co-found a company while you're a full-time investor?

Delian Asparouhov:

Yeah, there's definitely a couple different models, most of which I'm typically not very interested in. Let's call the first most common just being the EIR model. Typically, for sure there's some success with EIR models, but I don't typically love them because they tend to create a relatively artificial constraint on, you come in basically without an idea and the firm tells you, "you've got to start something within a year, either we'll fund it at the end of the year or you're out of here at the end of the year." And so it creates this artificial time constraint that I don't think is the healthiest way to start a company. I think you should start a company when you have an idea that's really itching at you and you just can't get out of your head, and need to build as opposed to try to force yourself into a company. And so I don't necessarily love the EIR model.

Delian Asparouhov:

The second model, which I'd call venture studio model, people that only focus on incubations. And so maybe the best example of this being Sutter Hill Ventures. They basically only do incubations. Snowflake obviously being their best example, but they have many more coming down the pipe that are quite, quite good. And that model not necessarily mean anything to me because it's only incubations typically. And those do tend to have more success, but you do need to do a lot of them. And so you can't spend as much time on any individual one. And so it feels like in some ways, you have all the downs of investing, your time is very split amongst all your companies. And yes, you're more involved at each individual one and you help kick it off the round, but there's no one that you can feel true, true ownership over. But without all the upsides investing, I can invest in any company and whatever any founding team builds. So, I wasn't super interested in the venture studio model.

Delian Asparouhov:

And then third model being the relatively unique model that so far, at least I think only, let's say Founders Fund and a very small handful of others have truly succeeded at and scale at, which is, you still keep investing in a variety of different external companies at an aggressive pace, but then you choose one, and exactly basically one company, to really focus as your external incubation. And so you get that real sense of ownership, control something that you're truly proud of, but while not being constrained to only investing in the ideas that you come up with, but being able to invest in, I do really like the process of, a founder comes and pitches me on something that maybe a lot of other investors think is crazy, wouldn't succeed unless we funded it, and then getting to fund those companies, those are in some ways the most emotionally rewarding investments, because you're getting to enable somebody else's dream.

Delian Asparouhov:

And that doesn't always happen right. For sure a lot of the companies that we fund, a million other people would have also may be funded, but there's this occasional exceptions where we're truly out on an island in comparison to all the other venture investors. That's kind of the model that Founders Fund takes, and so it's like, I'm definitely not starting any other incubations anytime soon, but I really like that model, both getting to aggressively invest at a top-tier level while also running one and exactly one incubation, which we've done with, first Trae Stephens doing Anduril and Peter back in 2004 doing Palantir.

Samir Kaji:

So you started Varda at I think it was mid last year, so 2020, and I think this was a few months before you ultimately recruited Will over to become CEO, and I know Will came over from SpaceX, but are there any challenges in terms of when you do start a company and incubate it to actually bring in talent when the person that you're bringing in wasn't part of the co-founding team?

Delian Asparouhov:

Yeah, I do think this is the trickiest part of incubations. And what I'd say is, the idea and the potential for Varda wasn't real until after I decided on Will and the founding team. It definitely felt like Will was there basically since day one, because there was just no way it was going to happen without Will. And then by the way, he has a lot of, this is not, unlike the venture studio model where they really do take a lot of the company up front, they get it up to a significant level and then they sometimes will recruit CEO, this was very different.

Delian Asparouhov:

And I'd say Anduril and Palantir were similar to this where it's just like their incubations didn't exist until after we had found the founding team. And so that was most of the focus was, I've been thinking about the idea that Varda's working on micro gravity factories or micro gravity manufacturing for almost a decade. I've been pondering it for quite some time, studying all the companies that were working on it. Earlier in 2020, I actually considered a variety of companies that were working on it as investments from Founders Fund, and for a variety of reasons, decided they weren't a fit. And so in late July or early August of last year, I was like, "Okay, well, I've got some time right now where we're not investing a ton, let me think about what would the ideal archetype for founding team be, and let's go and try and find those and convince them."

Delian Asparouhov:

And so I basically articulated and listed a set of things that basically Will Bruey perfectly has, which is I wanted somebody from the Dragon Project with entrepreneurial experience and ideally had done annual investing on the side. So I'm not teaching them about fundraising and safes all from scratch. And then ideally a chief scientist that has done micro gravity manufacturing before.

Delian Asparouhov:

And so, the early days of the idea, weren't like, for sure there's some amount of, I was starting to do really early exploration of business model and customers and things like that, but it was super light. 95% of my focus was, I need to find this co-founding team that makes it feel real such that, this is sort of day one. And yeah, I think it was like third week of August, I'd need to double check the Varda Twitter, but somewhere around third week of August or maybe first week of September, the three co-founders myself, Will and Daniel had dinner down in, I think Manhattan Beach or something like that in LA. And that was day one. And then I was like, "Okay, I think we're doing this. Let's start to go through the motions of, let's talk about equity splits and let's start to work on the pitch deck and things like that. And it took a couple more months until we were really ready to go out and fundraise.

Delian Asparouhov:

But yeah, it's definitely not like, I was working on it for months and months and months, and had all these things, and I recruited in Will, and it was artificially he was coming in to run something that wasn't really his idea. It was more like, "Yo Will, here's an idea that I've been towing for awhile, I think you would be a really great CEO for it. And then I think it's in your best interest to have it be in incubation with me rather than doing it on your own. Because this is a capital intense idea and I can just help speed this up, where on your own," I'm sure he would have been able to like raise a seed, and then an A blah, blah, "But I can help you skip a couple of steps. And then by the way, the net dilution impact is going to be roughly equivalent," where rather than selling a bunch of the equity to a bunch of external investors over the course of several rounds, just give me some equity and then we'll just skip basically to a nine million dollar seed." Basically a series A.

Samir Kaji:

Right. Okay, so that makes a ton of sense. And you look at the space and pun intended, I guess, that you ultimately started this company, and what we've seen at least, at least in my view, we've seen a lot of investors focus on traditional technologies, many of which are just incremental in nature. And you talked about Bilal being at Lux Capital, and Lux does a lot of stuff that I'd consider true moonshots that are looking at hard technical problems that are in things like, whether it's bio, space or other, why are we not seeing more funding going into companies that are within spaces like the space sector? Is it because there's not enough entrepreneurs that are looking to solve those problems, or is it something unique about the capital requirements for the companies that get VCs not comfortable with it?

Delian Asparouhov:

Yeah, a couple different subpoints within here. The first I'd say is, I actually do think if you study it across biotech, aerospace, et cetera, the number of venture dollars going to these ecosystems is actually increasing quite a bit. Could it be increasing even faster? Potentially. So I do think it's actually headed in a positive direction. On, let's say second point, what is the limiting factor here? I think one of the things that is actually counterintuitive, and I spun this out into a pithy tweet. And this is somebody else's idea so I apologize that I'm not crediting them here. But the idea that I heard at a dinner party that I really enjoyed that stuck with me is that, the best social media app founders are actually PhDs in mathematics and the best deep tech founders are actually party promoters.

Delian Asparouhov:

And it sounds like a little bit pithy, but the reason being that, social apps, they don't need any marketing. What they need is deep mathematics around how do you architect these viral loops and behaviors such that people will actually use it and cross to create a viral growth. You don't actually need a marketer. And then for deep tech things, the limiting reagent almost always actually being, can you convince investors that this could potentially return their capital over the course of much longer timeframes than what's simply necessary? And so what you actually need is the best storytellers.

Delian Asparouhov:

And so the other way that, Peter at least has drilled this into our heads at Founders Fund is that, the bar for ability to fundraise, actually for deep tech counterintuitively needs to be even higher than for traditional tech, because you're not going to be able to raise on metrics or customers or things like that, you're going to raise off of technical progress in a story. And so, you need to be able to tell that quite, quite well.

Delian Asparouhov:

In terms of big shot or big swing companies like Varda getting founded, the limiting reagent there, I would say is people like me, technical enough that you know where to take a big swing. I had been thinking about micro gravity manufacturing for a decade, but then once I started really digging into it, I realized like, "I've been thinking about it lightly for a decade." It is very different to be thinking it to now a year and having worked on the company on it, lordy lordy, did I not know what I was getting myself into. It is a very different beast than what I expected. But that's part of it. It's like, I'm technical enough to now figure out how to navigate all of the challenges that have come through this, and technical enough to figure out that, Will's a very good CEO for this. Am I a very good space engineer? No, but I'm technical enough to assess who is a good space engineer and who isn't, and Will is definitely a very good space engineer.

Delian Asparouhov:

And so the combination of that plus concise, succinct, and let's say compelling storytelling, that's probably the limiting reagent to starting companies this, because the limiting factor for starting a company like this is convincing investors to fund it, right? There are a variety of people that have thought, "I'm not the first person to think about space manufacturing. I can list a 100 or a 1,000 researchers that have thought about this. Hell, even people that have tried to go out and raise from the venture capital ecosystem before that have thought about this idea." But none of them were able to articulate it in a simple and compelling way that got investors on board, and this is a particular idea that it's like, it's tough to bootstrap this one. It requires capital markets to fund for the first couple years so you get over the hump of the R&D and unit economics curve.

Samir Kaji:

What type of DNA then do you need from an investing standpoint? Because we talk about Founders Fund trying even from the very beginning investing in companies that, and I think Fund One had a lot of capital in one single company that obviously now has done extremely well, but it was a big risk. And taking big swings or things that you think investors would do, but the counterintuitive lessons is, or people are actually doing risk mitigation, and so when they look at these actors, that involves because it could be three, four, or five years before there's something, and it could take hundreds of millions of dollars in certain cases. What type of DNA as an investor, do you need to get comfortable with those type of investments? How do you guys talk about it within Founders Fund?

Delian Asparouhov:

Yeah, I do think similar to what you're actually looking for in the founders in the companies, you do need the same thing as an investor. Take, Josh Wolfe, probably one of the best deep tech investors right now, he is an incredible storyteller. He's both technical enough to actually understand what is the background across both the biotech, space, hardware, et cetera, companies he's investing, but then most importantly, he can also help translate that story to the future investors. Because a lot of what you need to do in deep tech is convince future investors to also invest in it while the unit economics, et cetera, don't pencil out. And people need to be able to trust your judgment so that in the future, let's say, hedge funds are like, "Oh yes, Josh Wolfe of Lux is very good at choosing great deep tech companies. Therefore, if we fund this, it is likely to turn out well."

Delian Asparouhov:

And so there is that recursive positive signaling that takes some time to build up. But I think the necessary components of that are in deep tech investor signaling in some ways matters even more so than normal tech. If you're a killer growth SaaS company, nobody cares what your cap table is, anybody will invest. In deep tech, people definitely want Lux, Founders Fund, et cetera on the cap table, feeling comfortable that, "okay, these people have clearly assessed this, know that this is a viable technology, legitimate team," et cetera, and feel much more comfortable then investing more capital later on.

Delian Asparouhov:

And so yeah, I think similarly it's definitely a very limited set of people in the venture capital ecosystem that are technical enough to actually understand the underlying technologies. Because you also can't look like a buffoon and accidentally keep funding Theranoses where it's like, the technology clearly it doesn't work, or ultrasound wireless power. We can argue, is it a great company? Is it a great investment? Was it the right approach? At the end of the day, that is a fundamental law of physics that is quite difficult to overcome. Energy loss from ultrasound, speakers shooting towards one area in air, R3 is difficult to deal with. And you need to be able to assess that and not just fall for just great storytelling as well.

Samir Kaji:

It's exciting for me personally, to see some of these companies that are attacking really big issues, whether it be healthcare, or things like space, or climate. But as you look at history within tech and life sciences, there's usually been catalyzing events that have either been platforms or things that have really driven waves of innovation. That could be the internet, it could be things like AWS that made building a software company much cheaper. Within the type of companies that you're looking at, which often are a little bit different than your traditional enterprise software company, are there any catalyzing events or platforms that you believe will drive the next generation of innovation within that space?

Delian Asparouhov:

Yeah, I think just as AWS created the infrastructure that allowed for digital innovation to happen very quickly, I think you're seeing the same thing happening in physical innovation. The pithy one liner that I like to give is, in the 2010s returns were largely defined by the world of bits, and then in 2020s, the returns will largely defined by the world of atoms. And the reason being that just as AWS allowed us to control bits very cheaply and precisely and much more easily with outsourced companies, the same thing is happening with the world of atoms, whether it's in biotech, you can remotely run an experiment now without actually having to open your own wet lab to outsource metal 3D printing, where if you want a very complex metal park, you no longer need to build a manufacturing facility in house.

Delian Asparouhov:

Outsource analysis, design, et cetera, everything that you need to, let's take Varda as an example. A decade ago, Varda would have had to be 1,000 to 3,000 person company that raised on the order of two or three billion dollars, maybe at minimum, to actually get over the line and come to fruition. Instead, today, I can buy a rocket off the shelf from SpaceX, Rocket Lab, Relativity, on down. I can buy a satellite off the shelf from Blue Canyon, Tyvak, Rocket Lab, tons of companies that now offer that off the shelf and let alone all the other components, the radios, the batteries, the solar panels.

Delian Asparouhov:

And so, I think what has changed a lot in the world of atoms is, in order to have significant influence in the world of atoms, you no longer need to have nearly as many of the core competencies entirely in house, just as it happened in the world of bits, right? Uber no longer needed to have expertise in building data centers. The same thing is happening in the world of atoms across a multitude of industries. And so, I think it's a really exciting time. Is it going to be as clear like a single platform like AWS? I don't think so as much. There might be one for biotech and one for aerospace and one for materials manufacturing and things like that. But I think it would be much more interesting area where there's a lot more alpha over the next decade is definitely from this world atoms.

Samir Kaji:

This continues that trend of reducing the amount of friction and cost of starting companies within whatever sector. And we've seen that even in things like semiconductor. I remember, in the 2000s, how much time and cost it took to get a chip to tape out, and now you look at it's a completely different world. It's really interesting to think about where that goes.

Samir Kaji:

The other thing that I always think about is, the world has also changed from a regional standpoint. I remember 10, 15 years ago, Silicon Valley was the only place where you would start a company. And over the years, it changed to Silicon Valley to global places like Israel, within the US places like New York and LA, and now we're seeing more regional hubs be created. You're sitting in one right now in Miami, which I think you're going to be the mayor of Miami pretty soon.

Samir Kaji:

But tell us a little bit about why places like Miami? For example, when Keith moved from San Francisco to Miami, he could have gone to a place that was already built out a little bit more like Austin or somewhere else that had similar tax benefits. He decided Miami, you decided Miami, you spent a lot of time there. Tell us what's unique about Miami, what ingredients do you need to have in a regional hub for it to be durable?

Delian Asparouhov:

Yeah, the reason that I got excited about moving to San Francisco originally was, that was where I thought the really exciting ambitious misfits were, and that was why I wanted to go work for Jack Dorsey. That guy was f*****g weird. He's still f*****g weird, but he clearly was going to do some really great things and I wanted to make sure that I was along for that ride. And unfortunately, just as at the time when I was deciding when to move, South Bay felt like this fossil embedded inside of amber and frozen in time, it felt like the same thing happened to San Francisco over the course of the roughly decade that I was there. The city's local politics and liberalism was completely unwilling to grow, expand, build new buildings. And that simple fundamental constraint caused it to freeze into an amber like state, because unfortunately startups grow exponentially.

Delian Asparouhov:

And so as they expanded and as they competed they took up more and more of the commercial office space, more and more of the residential space for their employees to live in. And so at some point, it started to break at the seams where in 2012 as a college dropout, I could definitely afford to live in San Francisco. In 2019, '20, '21 in San Francisco, no way. The rent prices got totally insane. And so the reason that we decided Miami over anywhere else was, Austin feels like its starting to have those exact same problems. And it's extremely politically a homogeneous city. They're already starting to see signs of breakage and unwillingness to build. I fear that it's where San Francisco was in 2015 and '16, and it's also just not an international metropolis.

Delian Asparouhov:

The thing that I think has been really missing in the United States is, if you look at other countries, let's say like Japan, Hong Kong, Singapore, they all have capitals that are these just equatorial, international, true metropolises that have also been very pro-growth and very pro-tech and that's what allows them to thrive. And we haven't had that in the United States. New York, yes, very international and a metropolis, not very pro-tech, not super pro-growth. San Francisco, yes, extreme tech, but again, not an international metropolis.

Delian Asparouhov:

If you talk to people that have lived in Dubai or London or Hong Kong, they're interest in moving to San Francisco, quite limited. Versus it felt like Miami have this opportunity to one, be a very high quality of life, low cost of living, low taxes, but then two, also evolve over time into this, ideally, my goal is, I think we can make Miami the largest tech ecosystem, not only in the United States, but the entire world within a decade. Because it turns out exponential curves grow quite quickly and when the city doesn't try to artificially dampen those exponential curves, that can be quite attractive. And so I love that Miami has more cranes per block, per a three block radius here than all of San Francisco combined.

Delian Asparouhov:

And in terms of the ingredients that you need in some ways, Miami is just getting such a crazy kick-start. If you look at ecosystems like New York and Austin, it started off with like a onesie, twosie, one founder, maybe one investor, et cetera. And so you had to grow entirely organically and very slowly, versus here, you're just getting this sudden rush of incredible investors like Dan Sundheim, and Keith Rabois, Antonio Gracias from Valor, these are all three completely different architects.

Delian Asparouhov:

Antonio on the board of Tesla and SpaceX, one of the best deep tech investors over time. Keith, one of the best FinTech investors and broadly generalist investors of all time. Dan Sundheim, one of the best crossover hedge funds of all time. All completely different genres of investing, but all focused on technology. And what it allows is that Miami gets this jumpstart where maybe in New York it took a decade to go from scratch to having five, six, seven IPOs of multi-billion dollar companies. I think Miami can do it much more quickly because you're getting this jumpstart on day one. And the Keith's and the Antonio's and the Dan Sundheim's of the world are much more able to both import entire companies, but the top executive talent, the engineers, et cetera, that you need. And then it's a much heavier draw.

Delian Asparouhov:

And so if you look at that both where the exponential curve is starting, but then also the exponential rate of that curve, Miami's in a very great spot. Is it going to happen overnight? No, but I wouldn't be surprised that a decade from now, if you're looking at tech IPOs, the amount that Miami's producing is on the order of, or equivalent to San Francisco. Maybe it's not quite the majority because things will be so distributed, and then within 15 years Miami actually being the largest ecosystem, not only in the world, but in the United States as well.

Samir Kaji:

Yeah, and it's a pretty ambitious vision. And you think about some of the regions that have done well, and it's really a combination in my mind of culture and particularly a government that supports a pro-tech type of environment. The second is, there's local capital that is funding startups. And the third, there is talent. You spoke about the first two a little bit, but tell us a little bit about talent. Why is talent going to places like Miami? And where are we in the curve within the Miami ecosystem for founders?

Delian Asparouhov:

I don't have a perfect statistical data set, let's say on this, but we recently funded a Miami-based born and raised company series A. It's actually going to be announced tomorrow morning at 11:00 AM. So by the time it gets published this will probably be live, so I'll just say it, the company's called Lula, it's an insured tech company. 17 million dollar round co-led by Founders Fund and Khosla Ventures.

Delian Asparouhov:

A year and a half ago, no way could this company get the attention of Silicon Valley VCs and say that they're going to be building the company in Miami, and no way could it attract top tier talent to move there. Since COVID, and since this whole Francis Suarez thing, a 100% flipped. They're pulling directors of engineering from Twitch and from Google and et cetera, really great companies from ecosystems like San Francisco, Seattle, New York, that previously these candidates would have never considered Miami, but now are going through the exact same trade off that the rest of us are going through, which is like, "I paid a lot of money for my rent and a lot of money in my taxes, and I don't know if I get much benefit, and this Miami thing seem pretty damn interesting." And so, their ability to import raw local talent, raw talent from abroad has significantly improved due to all of these, let's say high-level changes and then investors now being here.

Delian Asparouhov:

And again, is this going to happen overnight? No, but I'm really excited for the metric that I've been watching is, I'd probably say that, today there's probably three Founders Fund portfolio companies that have more than 10 employees in Miami. I'd say by the end of the year, I think that number will be closer to 10 companies. A year from today, I think that number will be close to 20, 25. And that's where I get really excited because a lot of the top-tier founders, if you look at in San Francisco, they come from employees of other venture backed companies.

Delian Asparouhov:

And so right now, is there a thriving ecosystem of lots of lots of founders that are like "born and raised Miami?" Not yet, but as these companies start to scale and as these local talents are to work at these companies, see how these venture back companies operate, they will be the pool of the future talent that I'm really looking forward to funding in Miami. And so I think we'll have a much richer and deeper pool, let's say, two years from today as the OpenStore's, the Lulu's, et cetera of the world really starting to scale up.

Samir Kaji:

Yeah, and without a doubt, the growth rate has been tremendous. And I know Twitter is not a necessarily a very great proxy always for reality, but even the folks that I know that have gone there even for a week or so have seen the energy Miami has. And it is going to be exciting to see how it grows. So I want to end a little bit with our heat check segment where I ask you three questions. I'm going to switch one up actually. But the first question I have for you is, now you've been investing for a few years, what's the most counterintuitive lesson you've learned about being an investor?

Delian Asparouhov:

Maybe it sounds like somewhat I tried, one of the things that I feel like Keith taught me that's really nailed into my head is, when considering any investment, the first question that should be on your mind or one of the primary ones is, why am I the right investor for this company? From afar, I would've thought like, "Oh, there's clearly like hot assets and your job as an investor is to just invest in the hottest assets or the things that are most likely to generate the most returns. And that's what you should focus on."

Delian Asparouhov:

And I feel like it actually flipped it on its head and has been a very useful favorite for me where, it might a somewhat similar outcome of, yes, you're still generating the greatest returns, but the way to just generate the greatest returns isn't to start with, how do I generate the greatest returns? The question asked is what is my differentiated advantage approach and why am I the right investor for this particular company? And that is much more likely to lead you to the best possible returns. Otherwise you'll revert towards the mean of what everyone else is doing. And then it turns out the mean in venture capital is not quite good, not very good.

Delian Asparouhov:

And so, I guess that's one of those counterintuitive things is that, rather than analyzing why is this company a great company to invest in? It's actually more like analyze yourself and why are you a great investor that this company should want to have on the cap table? And then if you don't have a good answer for that question, it's not clear that you necessarily should be investing.

Samir Kaji:

Yeah, and I think the other side of the coin there, if you are aligning yourself to the type of companies and entrepreneurs that best fit you, you're also going to provide a better experience for those founders in helping them build their companies. And over the long term, all that really matters from a branded reputation standpoint is, what are you actually doing with founders and what did they say about you? And so, totally get that.

Samir Kaji:

You're always pretty open out there ether in terms of your opinions and what your vision of the future is, thinking about bold predictions. And if we love look at past 2021, we are in, I would say, an insane environment right now with so much capital flowing around, valuations have obviously gone way up there, exit values of companies are also way up there, what's your bold prediction for 2022?

Delian Asparouhov:

I think the train is only going to continue on. If you have this ecosystem where companies are figuring out how to allocate capital productively and actually generate incredible innovations, maybe an artificial government version of this being the Warp Speed Program, basically enabling like mRNA technologies to exist, the macro capital environment is effectively doing the same thing where we're just willing to throw far more capital at problems that previously felt impossible. And it's fine if a series of them fail. If you take the Tiger approach of, "Let's throw a hundred million at every single Silicon Valley company," it's like, two or three years ago people would've critiqued that approach and be like, "Actually that doesn't work."You know SoftBank’s returns actually don't look that bad now that you've got DoorDash and a couple of other companies going public. And I think that's endemic of the ecosystem as a whole, which is like, I think it will only continue where the number of net new venture capital firms, the number of unicorns being produced, the number of really core innovations that are progressing is only going to continue to accelerate.

Delian Asparouhov:

I think humans are just really bad at predicting and understanding exponential curves. I've been watching the space industry now for a decade and I think because of that, I can understand the exponential curve that space has been on, and is perfectly tracking towards, when I started paying attention to it in 2012, this exponential pace that leads me to say statements that other people say is particularly crazy, but it's like, "I believe that 2030, we will not only 100, but 100s of people living in low earth orbit and operating there for not just research reasons, but there for actual commercial reasons being up there." And I'm sure people that are more sophisticated in the world of either Bio materials, et cetera, can also make just as wild predictions about these other areas.

Delian Asparouhov:

And so that's maybe obviously a further out prediction, but it is the best time to be starting deep tech companies, especially if you have a clear swing and story to tell. And I think it's only going to get better and better and better, and that the pace of innovation is only going to continue to increase. And so when people complain about is progress slowing down or speeding up? I'm definitely on the side of, I love your progress, studies institute, but progress is definitely speeding up.

Samir Kaji:

And it ties to everything you've been talking about how we've reduced the cost of infrastructure to allow these things to happen. And so it sounds like your prediction in 2022, the train continues to go. We continue to see funding at a high level, we continue to see these outcomes, but we also see these companies that will build multi, multi-billion dollar outcomes that are focused on things that are really hard, things like space.

Samir Kaji:

And I don't want to be presumptive in this last question, but you've worked with a lot of different investors, both at Founders and Khosla and probably even before that as an entrepreneur. But is there an investor out there that particularly inspires you, that you study and you believe has the type of framework that best resonates with you? Who is that and what is it about them that really resonates with you?

Delian Asparouhov:

Yeah, I obviously work with a variety of investors and there's a ton of things that inspire me about all of them. But if there were one investor that could point to of, this is the archetype that I would like to aim for and what I really aspire to in my career, it probably is actually Vinod Khosla. I think he does an incredible job of being extremely deep across so many different types of technologies, everything from semiconductors, to biotechnology, to space, all these different types of things, and is willing to invest in the very early stages and back up the truck into companies. Hell, take a look at QuantumScape. Khosla just funded that company, I think originally like 2011 or something like that, and they've continually backed the truck over the course of a decade now leading to this spec.

Delian Asparouhov:

I think there are very few investors that have that level of conviction in these types of deep technology companies that can also marry it with both a philanthropic side and a sort of story telling side, that I think Vinod is actually quite good at. And so yeah, I definitely admire his breath and I think I've done a great job of learning a lot about material science, about fiber optics, about space, about home construction. And I've got some core areas of expertise that I feel like I'm at the tip of the field of, and I hope to be able to expand that over time. And I think that definitely takes decades of reading various research papers, but it's impressive. Vinod literally wakes up every day and he's got like, whatever five nature articles on his desk every day that he chows through and make sure to stay up to speed. And I aspire to be able to do that as well.

Samir Kaji:

Do you agree with his statement that 90% of VCs actually destroy value?

Delian Asparouhov:

I don't know if it's quite that extreme, but definitely, most are not super helpful. The one code of his that I really believe in the most and think about all the time is, "The team you build is the company you build." And so, definitely, take that to heart across both with the investments that I consider, a lot of the time, it's mostly just analyzing the broader team more so than studying the strategy or the metrics. And then similarly with Varda, we probably spend in our exec team meetings, 80 or 90% of the time just talking about recruiting, team building, who are we bringing on? That's almost where we put all of our efforts.

Samir Kaji:

Well, this has been a lot of fun, man. I really appreciate you being on, look forward to seeing you in person, and again, congrats on getting Varda off the ground and doing all the great stuff you're doing at Founders.

Delian Asparouhov:

Sweet. Well, thanks so much for having me on.

Samir Kaji:

Thanks so much for listening to another episode of Venture Unlocked. We really hope you enjoyed our conversation with Delian. To learn more about him and Founders Fund, be sure to get at ventureunlocked.substack.com for detailed notes on the show and my ongoing commentary about the world of venture capital. Venture Unlocked is also available on iTunes or Spotify for download. And while you're there, please leave us a rating and a review as it really helps us out, and hit the subscribe button in order to get each and every Venture Unlocked episode as soon as it's released.

Podcast Production support provided by Agent Bee Agency

Follow me @samirkaji for my thoughts on the venture market, with a focus on the continued evolution of the VC landscape.

On this week’s Venture Unlocked episode, we had the pleasure of hosting Donald Stalter, Partner at Global Founders Capital, a global multi-stage venture firm that has raised $1.6B across two funds and has backed companies such as Kalshi (led by Don), Deel, Headway, Slack, Away, Hellofresh, and Brex. The firm has a very unique model that employs capital across geographies, stages, and industry sectors, and Don provided insight on how the firm executes on this strategy so effectively.

Previously Donald co-founded CityDeal, which he later sold to Groupon where he built Groupon's international offices in Europe and Asia. He subsequently led BD at Airbnb global.

A word from our sponsor:

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 http://www.vouch.us/ventureunlocked

In this episode we discuss:

01:36 Don’s journey into Venture Capital

03:18 How being an operator influenced Don’s path as an investor

06:30 What is Global Founders Capital mission and focus?

09:08 The fund construction model for Global Founders Capital

10:27 How they balance growth vs. early stage and how location factors into their investments

12:50 How Don and his team add value at scale across his portfolio

14:45 How their operations team and investments team work together

17:20 The risk/return Global Founders Capital underwrites to and their return targets

20:32 How the frothiness of the market in growth-stage investments affects how they approach growth investing.

22:52 The non-obvious opportunities for global investments

25:03 How the firm manages global investing out of a single fund

26:20 The benefit of bringing a strong operations background to global investing

28:30 Global Founders Capital’s pitch to LP

30:13 Differences between US LPs and international LPs

31:28 Recapping the recent market conditions and what the future looks like

33:38 What is the most counterintuitive lesson he’s learned as an investor

34:37 The investor he admires

35:32 The firm he feels is the best in the world

Mentioned in this episode:Global Founders CapitalFelicis Ventures

I’d love to know what you took away from this conversation with Donald. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Podcast Production support provided by Agent Bee Agency

Follow me @samirkaji for my thoughts on the venture market, with a focus on the continued evolution of the VC landscape.

My guest today is Heather Hartnett, CEO and founder of Human Ventures, an NYC-based venture firm founded in 2015 that leverages a very unique model that combines traditional fund investing with business creation and startup studio model in order to back and assist exceptional founders. Human Ventures has over $50M AUM, and has four exits including Reserve, Girlboss, and Clark.

Prior to founding Human Ventures, Heather’s career spanned across roles at firms including CityLight Capital, and Claremont Creek Venture, and the David Lynch Foundation, where she worked with some of the country's largest family offices and investment institutions. Heather is a member of the Kauffman Fellows program and a frequent contributor to Forbes on the topic of venture capital. 

A word from our sponsor:

Vouch Insurance is a new kind of insurance platform for startups. Built by founders for founders, Vouch’s fully digital coverage takes minutes to activate. Vouch is trusted by the biggest names in the startup economy — such as Y Combinator and Silicon Valley Bank — who partner with Vouch because everything from onboarding to claims is designed for startups by experienced founders. Because Vouch is an insurance platform, and not a broker, it works with its clients to manage, mitigate, and avoid risks.

 http://www.vouch.us/ventureunlocked

In this episode we discuss:

01:31 The hypothesis behind Human Ventures

04:20 Why it was so important for Heather to build a larger platform to provide value to founders

06:35 The challenge of raising capital with an unconventional fund

09:22 How did they narrate the vision to LPs to be able to close a $50M fund in 2019?

12:42 The power of conviction when fundraising

14:33 How Human Venture uses a venture studio model in unique ways to fund and create companies

18:21 The process of co-creating companies in their incubator and why it’s been successful

24:25 How their three pillars—the venture studio, “humans in the wild”, and the fund franchise—work together

26:46 The KPIs Human Ventures uses to measure success

28:22 How the pandemic validated their human needs economy investment thesis

31:26 The advice she would give to emerging managers

33:51 How Heather views the Seed Market currently

38:02 Heather’s most counterintuitive lesson as an investor

39:08 The lesson she took from her biggest investment miss

41:05 The Investors that inspire her

Mentioned in this episode:Human VenturesGive and Take by Adam Grant

I’d love to know what you took away from this conversation with Heather. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Transcript:

Samir Kaji:

Hi, I'm Samir Kaji and welcome back to another episode of Venture Unlocked, the podcast that takes behind the scenes of the business of venture capital. On this week's show I'm excited to bring you my conversation with Heather Hartnett, CEO and Founder of Human Ventures, a New York based venture firm that leverages a really unique startup model that combines traditional fund investing, any business creation platform in order to back exceptional founders. Before starting Human Ventures in 2015 Heather's career spanned across roles and firms including City Light Capital, Claremont Creek Ventures and time at the David Lynch Foundation where she worked with some of the country's largest family offices and institutions. Heather was also a member of the prestigious Kauffman Fellows program in class of 21 and is a frequent writer about VC on Forbes.

Samir Kaji:

We had a really fun conversation covering topics like creating a successful studio model, navigating in today's early stage of market where capital is a commodity and her experience in raising for a firm that has so many non-conventional parts. Now, let's get into the episode to hear all of that in more. Heather, it's so great to have you on the show. Thanks for joining us.

Heather Hartnett:

Thanks for having me.

Samir Kaji:

Usually, when I start these conversations, it's going back into history of what catalyzed somebody's journey into investing, but your model is so unique. I actually want to jump ahead to 2015 when you started Human Ventures, what was the hypothesis that you had and what exactly does Human Ventures do?

Heather Hartnett:

Human Ventures is an early stage venture firm, and we are focusing on pre-seed to Series A investing in primarily consumer tech and product in areas that we call the human needs economy. And we can unpack that a little bit too, but largely in the areas of health and wellness, future of work and innovating technology that supports those human needs. Large part of what makes a successful startup ecosystem is the concentration of founders building together and helping one another and I met my partner who I founded Human Ventures with, Joe Marchese, about 12 years ago. And he's just a consummate entrepreneur. We very much connected on the fact that entrepreneurs see the world 10 years in the future and a lot of times they feel misunderstood. Having a community and a support system is so crucial, especially at the earliest stages of building your company.

Heather Hartnett:

And there wasn't really a lot of fundamental resources for founders in New York City. New York is a massive economy. So many different industries. Tech was not the center of that by any means, but now all of the industries are becoming tech enabled and founders are the lifeblood of innovation. And so, we're starting to see more and more founders start their businesses in New York. And so, in 2015, my background, just quickly, I actually started venture in 2005. I was out in the Bay Area. My father was an entrepreneur. I was exposed to entrepreneurship at a very early age. Kind of got thrown into venture at a time where there was not a lot of upward mobility there, there was not a lot of proliferation of venture firms. And so, but I did get exposed to it and I got bit by the bug early.

Heather Hartnett:

Fast forward, I was at tech companies. I was in philanthropy for quite some time and it built up my network of family offices quite a lot. And in New York, when I moved to New York, we really saw that the next generation philanthropists was an entrepreneur. They were people who were wanting to make a change, but they were doing it earlier. It wasn't that you have to make your money for the first 70 years of your life and then you gave back. Founders were starting to see where there were challenges and see where there were opportunities and they were building around that. And so, we decided in 2015 to start of a business creation platform, we called it a startup studio. And that was really to be able to help founders build together and create an opportunity for them to have shared resources, operational expertise and just build a community around that.

Samir Kaji:

Looking retrospectively, it definitely seems really pressing to actually create platform versus just a traditional fund. But it does introduce a different degree of difficulty when so many firms when they first start, they keep it really simple. They just raise a traditional fund, invest in companies and maybe there's some aspect of value add that they incorporate. You had all these different moving pieces. Why was this so important to you?

Heather Hartnett:

Yeah. I mean, even then it felt like capital was a commodity. It was, how are you actually giving back to the founders? Why are they choosing you as a source of capital? Why are you seeing the best companies? And for me, the funding gap was the very earliest idea stage from zero to one. And it wasn't necessarily that there weren't first check investors because San Francisco had made that become a thing with angel investing. But I think founders were more, it's easier than ever to start a company, it's harder than ever to win. So how are you really building in those first 100, 150, 200 days with people who know how to cut the corners or the hard stuff, you always have to go through it. So can you give founders some more resources to be able to do that faster?

Heather Hartnett:

And so, I think I said, "What would Andreessen Horowitz be if it started today?" You start with the platform first, should you start with the funding first? There were a lot of funds out there. I had a background in building. My partner, Joe, was a founder in building. Our third partner, Michael, led us, corporate, M&A and finance and operational expertise. So together we created the system to be able to create businesses. We felt like that was going to be more of a value add to founders. And then as our company started to grow, the ones that we were building together with founders, then the funding source made sense and then kind of evolved from there.

Samir Kaji:

Can I maybe go back to that time when you're creating this? And I think there's so many things here that, today, it's very clear that capital is even more commodity and how you differentiate isn't necessarily around what your brand is. But it's really, what are you providing? How quickly can you move on opportunities? And are you building certain relationships with these founders that allow you to, to get into the companies you want? The counterbalance with a lot of people listening to this podcast is, "Well, that sounds great, but I don't have the capital." If I raise a $10 million fund, I have $200,000 in management fees that barely puts food on the table for me. As you thought about the model in the early days, how did you think about capitalizing it? Because you did need to bring on team members, you needed space. Tell us a little bit about that raise, and were there other ways you had to be creative in capitalizing the actual platform?

Heather Hartnett:

Yeah. Definitely. I mean, Joe and I were both founders in our own DNA. And so, you really do have to think about creating a sustainable model. It's not the scarcity mindset of just operating on management fees. And building an ecosystem of connected individuals is truly the biggest differentiator. And it takes time and effort to be able to create that engaged and connected community. So we knew that you couldn't just start that from day one, but what did we have? We had our trusted networks. And that forced me to say, "What do you want to start with?" We went out to our trusted sources of people that we knew would believe in us. And we raised capital as a parent company structure to be able to hire people, to be able to help add value to founders from day one.

Heather Hartnett:

And that was very much a part of our DNA. Can we be founders as well first? And I think to be able to create a firm, not just a fund, where you have multiple funds and you have multiple product serving founders, you really have to think about building a firm, not building just a fund. So we started with the platform first and we aggregated Titans of industries who cared about where founders were building. Because if you are in a Fortune 100 company right now, what's keeping you up at night is not necessarily your shareholder earnings call. It's who are the disruptors that are coming around the corner? So some visionaries like David Solomon from Goldman Sachs and Beth Comstock from GE and Shari Redstone from Viacom, they all we, had trusted personal relationships with them and they backed Human from day one. And that set us up, right? That connected network of individuals who cared about innovation in New York, set us up then to be able to start adding value to founders that they wouldn't get from small fund.

Samir Kaji:

And then when you go out and raise a fund and you have the platform that you've set up, which does have this very unique platform, that's really actually hard to replicate. This is not an easy thing to do. Did investors, traditional LPs as you're raising their fund, how did they view the platform? And tell us a little bit about the story itself? Because I always find from at least my perspective in talking to a lot of limited partners, is that they want comparative advantages and they want differentiation. But when I talk to managers that have a lot of differentiation and a lot of pieces of the story, it's hard for those people to really get to a decision point because they get paralyzed by the analysis of so many different parts. How did you become successful? Because I know you closed that $50 million fund in, I believe it was 2019 based on the public clippings. Tell us a little bit about how you brought all that story together and how did the LPs really understand what you were doing?

Heather Hartnett:

You really have to sell a vision. And we were talking about this, I think the risk appetite of limited partners is not all the same. There's a continuum. And I say, that founders are 10 years in the future, traditional LPs by nature have to be 10 years in the past. Emerging managers are kind of the gap. They're bridging the gap between the two of them. So how are you finding and picking people who are seeing the world as it should be, but then also selling to your investors that you know how to bridge that gap? And that is a big task to do. And so, it's not easy. You have to find people who bet on you as builders, so that we were company builders and we could do this. You have to find people who were building on you as money manager or betting on you as money managers.

Heather Hartnett:

You have to find founders who are betting on you as trusted partners. And so, it's a lot of trust building. A lot of trust building and then execution. So in the beginning, yes, we were not like any other fund. We didn't check the boxes of a traditional fund. And we also weren't checking the boxes of a traditional studio necessarily. So you have to find visionary capital sources. And we found our niche with family offices. James Murdoch is a Partner, him and Catherine they have Lupa Systems, which is their big investment shop. They themselves were very visionary in how they wanted to build that and human fit and align with that thesis as well. So you start to know who your buyer is, right? Who are people who see the world the way that you want it to be and how they're going to back that.

Heather Hartnett:

Then as you start to gain proof points and you gain track record, then the people who you know are incentivized, and it's their job to be more risk averse, right? If you're managing a pension fund and an endowment, you're not wanting to take these huge bets on a young gun like me. But if you start to see that you have the ability to rinse and repeat starting a company and getting that unicorn and seeing some of the metrics that you are more useful, then you start to come on. So I think it's really finding those people who are along the same risk continuum you are on.

Samir Kaji:

You're hitting on some really interesting points that I do want to even unpack further as we get into this conversation. But talking about the continuum between fund managers, entrepreneurs and LPs, and I love the description of our GPs that's kind of sitting in the middle, where entrepreneurs are looking 10 years in the future. LPs are really looking at what happened in the past to assess and make decisions, I would say that the emerging manager community probably is closer to the continuum of where the entrepreneurs are, then the LPs and it creates a little bit of a misalignment. The thing that I always think about though, is as you're going, and you're talking about finding their true believers, people that really understand, are willing to take a little bit of risk because they understand the vision and the upside of investing in emerging manager.

Samir Kaji:

It's usually not the big institutions because of that risk element. And finding early believers is really hard in that, how do you find these people? Because it's such an opaque and fragmented universe of people that are entrepreneurs or people that are institutional or family offices. Did you learn anything specifically during that first fundraise that now you take away and say, "Hey, if I were to start from scratch, this is how I would go get my early believers."

Heather Hartnett:

I don't think that I ever stop fundraising. Because you just, like I said, you gain more conviction in what you're building the more you see the results and you learn what the market needs to understand about what you're building versus, sometimes my biggest problem a lot of times is that I am too far in the future. I am thinking about what I already know is going to come, and this isn't trying to be, I'm not trying to brag here, you just have to operate where the puck is going, not where you are right now. And so, that's just what I learned the most is just what you said, don't differentiate too much that you can differentiate yourself out of somebody to be able to believe what you already know to be true.

Samir Kaji:

It's a tough thing to sort of reconcile at times because you do see where the world is going. And back in 2015, for example, there wasn't a lot of smaller firms that were employing a platform first approach, and then raising a fund on top of it. Or if they were, it was more traditional in the sense that it was an incubator and the incubator took X percent ownership and then invested very small amounts to get the ownership in some cases. Or there was new era of startups, and startup studios rather. And a lot of the startup studios that I've looked at have been working with a few companies per year or starting a few companies per year where the startup studio gets massive ownership, 30, 40, 50% or even sometimes higher. You don't fit into either of those buckets in terms of how you approach your own cohort building. Tell us a little bit about where you fit in, and just for those that aren't as initiated, what is the continuum between incubator to traditional studio and where does Human then fit in within that?

Heather Hartnett:

So Human Ventures for me, we call it our business creation form and right now the three big pillars are a true venture studio, where we're co-building companies. And Joe is mostly running that. He is the founder who has these ideas. He brings other founders and they build together. So those are true cohorts. Then we have a pre-seed incubator, which is bringing founders in at very early stages, but still six to 10 months before the market has conviction in them. And that's, I love that stage. It's called Humans in the Wild. We do a call for Humans in the Wild because that's the time that humans who are thinking about the future, they feel the least understood. And they should be. If they had that idea right now that everybody thought was commercial, it would be already done or be funded. So humans in the wild, and that's our edge there.

Heather Hartnett:

And then we have the fund franchise. And those three pillars are what we think the business creation platform really needs to have to be able to go from concept phase to billion dollar plus exits right and do that over and over again. So those three components are what we've landed on, but the studio structure has kind of gone two different ways. One way is, the landscape. One way is what you were talking about. Studios will bake a concept internally, pretty far they will raise a lot of capital for it or put in their own money. And then they'll hire in a management team and kind of off to the races. Start on third base. Or the other way is start building products and services to support founders, surround them earlier, bring in the founders really early and have them dictate where, be the vision driver of where that company is. We had a fork in the road where we said, let's go to the ladder, right?

Heather Hartnett:

That our programs and services are there to support founders in a way that then brings out their vision and makes them go faster versus us saying that we have all of the ideas. And everybody wants a cookie cutter approach to this, but I think the biggest differentiator that we've built is just the internal functionality that allows us to adapt to our core customer, which is the founder. And that might take different lenses. We've had corporate innovation programs that we've worked with and given Entrepreneur In Residents training to some of the people they've brought in. I think the studio has the ability to be much more multifaceted, and that ultimately is what's going to create the most value. Do LPs like to hear that? We do have a systematic approach of investing in how we're doing, and how we're going to consistently have returns. But I think you also want to maintain this agility of every six months, what's working? What's not? Where are the founders? How can you meet them? What do they need, and how can you add value?

Samir Kaji:

It seems interesting that you bring up these three legs of the stool, and two of them being the incubator and then the startup studio. In both cases, you get to spend a lot of time with the founders before ultimately investing a lot of capital into the cap tables. They're also very difficult things I think to operate because they do have operational complexity, you need people. I've always been curious in terms of the startup studio model which, by the way, I've seen many do fantastic in terms of performance. The type of companies that come out of it. Sutter Hill, for example, has had some amazing, amazing outcomes as we all know. But what does it take to build a successful studio, if someone was just starting off?

Samir Kaji:

And I know a lot of people that I've talked to in the market are thinking about starting at their studios, because they really enjoy that model. They think the co-creation makes a ton of sense, but don't really know what goes into it. And what are the pros and cons? Maybe you can just give us a little bit of a sense of your decision making process in the early days of what you've learned.

Heather Hartnett:

I think you have to know how to hire really well. It's just like, now you're a founder as well. Hiring is everything. It's all about the people. Michael Letta, like I said, operational guru. We have Evan Cohen who was Dennis Crowley's right hand operational business hire at Foursquare for so many years, and was at Lyft. And they know how to operationalize kind of the primordial ooze that founders know how to work within. And so, that, I think, combination of knowing people who have to break the boundaries, think about visionary ideas, then people who know how to operationalize that without killing it and then also people know how to manage money in this ecosystem, have to be all respected and have to have weigh in.

Heather Hartnett:

So those are the three archetypes that I would say. We also like to hire people who are multifunctional, who understand they're mini CEOs and then they actually end up going into the companies that we build or that we back early. And I think you have to be okay with going outside of the traditional titles and the more you make a studio, I think, a consulting agency or an agency at all, the faster you will kind of put yourself out of business

Samir Kaji:

And maybe even taking us even more in inside baseball of how it works. So let's go into the co-creation, because there's so many people that are interested in these co-creation models. How does it actually work in practice in terms of conceiving an idea, building a team around it, having the Human Ventures' operational team helping, at what point does it then become a traditional standalone company?

Heather Hartnett:

So every company is different, when you build it. There are systems that we keep true and that's how we evaluate founders, how we think about their strengths and weaknesses, how we bring in teams to support them. Every founder is going to have strength, right? And then they're going to need to be able to hire in for all the weaknesses. So that process and systematic approach is what we're really good at. Identifying talent is what we're really good at. Motivating people, understanding community. We have a term operationalizing our network, so we're only as good as our quickest response back for a founder. So putting in a lot of Goodwill into the community and offering events and creating value for operators so that when we do ask for something for a founder, they can get that response very fast.

Heather Hartnett:

And that is a true value that we've brought up. So operationalizing the network, operationalizing some of those early systems and procedures. A lot of what we've baked into our humans in the wild programming, that 100-day sprint is what we learned from the business design process of working with founder from day one. And that's talking to 200 customers and it's knowing what the real MVP is and it's knowing when to lean into your gut versus going on the data and all of that. Self discovery is a big part of that 100-day sprint as well, that I think you'll start to see more people employ. And that's great. Using founder coach in residence and having a founder be an ambitious founder growing very fast without the company breaking them is key.

Samir Kaji:

I love the Humans in the Wild title and concept. It makes so much sense and it's really interesting to think about how that actually translates in terms of how you run these cohorts, which is very community based. And there are firms like First Round Capital, that was the first to really embrace founder communities. And of course, that firm is a legendary firm at this point with Josh and team. But going to the operationalization of the networks, this is always something that people are challenged to do because you have the network, they have full-time jobs. I had a recent guest on the show, Ben Casnocha from Village. And we talked about that. And what they do is they create certain incentives for the network to be responsive, to add value to the founders. Are there things that you found to be effective and incentivizing people to say, getting back who a founder within 24 hours are helping and really being proactive and leaning in on the type of value that can be provided?

Heather Hartnett:

It goes to the type of qualities that we look for in founders. So founders of the future don't look like the founders of 15 years ago and I think one attribute that we look for is reciprocity. It is this idea of the giving without thinking about taking in return will ultimately net in a positive way. And so, if you invest in a portfolio of founders who have that network mindset then you're, the whole is greater than the sum of the parts. And so, that might be a little bit too esoteric for you. Yes, we do have some, we've tested out a lot of different programs and incentivizing some of the founder to own bits of each other's companies so that they feel more incentivized.

Heather Hartnett:

But at the end of the day if you give them the platform to be able to give and people know what other founders need, people are inherently wanting to give if you're investing in the right types of people. Adam Grant has his book Give and Take. And it's one of my favorites. And we have taken that to another degree, which is how are you giving people the opportunity to ask, make their asks and then, people the opportunity to give in an effortless way. And people who have that personality will tend to do it naturally.

Samir Kaji:

Yeah. And it's a great book that I would just suggest that anyone that hasn't read it should read it. It's definitely a staple of how to think about managing networks. And I commend you for building such a strong group of people in your network that truly fundamentally help each other. Now going to the fund itself for a second, I want to understand little bit more about the portfolio construction and the deployment of capital, given that there's these three unique distinct business models being the studio, the accelerator and then just the traditional fund investing in companies that are outside of the first two. Can you just walk us through how that all works together?

Heather Hartnett:

The debut fund really was a proof of concept to say that these three types of investments investing in true co-builds, investing pre-seed and following on, and then doing some external investing as well to round out our diversity in our portfolio. Which one's better? What is more effort for the biggest outcome? I would double down on the strategy where we do about a third first check-in, we do a third external and then we save the rest for follow on because the follow-ons now are a lot of where you see that value and you want to make sure that you have that. So coming into my next fundraiser will definitely be thinking about, how am I setting that up for an opportunity fund as well? Early learnings, we left a lot on the table, because our companies have raised more than we were able to syndicate. So now we've syndicated. And syndicates are all the rage but it's still very inefficient, that process too, which hopefully allocate will be touching on that as well.

Heather Hartnett:

But it's getting to be more efficient. It's only going to be better be able to size up your capital in that way too. So I say we pick stock in people, right? Our goal is to find founders six to 10 months ahead of the market, not too far ahead of the market, right. Which we've done that too, where people didn't understand the value of that founder until too far later. But that's what we can gain conviction because working with them in a really hands on capacity, right? We're not meeting the founder two, three times then doing a diligence memo and then figuring out whether or not we're investing. We're actually seeing the work. We have a term called build velocity internally. It's how fast is that founder building? Because the idea will not be the same from when it starts to when you read about it at the IPO, it's going to take so many different turns. So you just want to make sure that that founder understands that internal build velocity.

Samir Kaji:

And you talk a lot about the global VC market and where Venture is going and emerging managers, which has been great and I know you've written a few posts recently. Before I get into that, there's one last question I have about the Human Ventures model. And as you think about whether it be incubator or the startup studio or the actual fund, how do you measure things? Are there certain KPIs that you measure internally to really assess the performance of those individual legs of the stool?

Heather Hartnett:

First and foremost it's returns, right. You start to see what ownership you need for what types of different companies. But I'll say, those three different components of use of capital are just along, again, a risk spectrum. We say early stage or we say pre-seed, seed and A, those terms mean nothing. It's where the milestones hit, where the business is. And our valuations are crazy right now, and those are always fluctuating. But when you come back to what value are you being created? And are you being really judicious about how you are placing that valuation? You're always going to get a better outcome if you're producing real value, right. So from build ideas on a paper, so building to then bringing in pre-seed where the founders know a little bit more about where they're going that they still have a lot to prove out, to then investing externally where they have some revenue or product or whatever, that continuum allows us to be able to see what the value really should be on some of these companies that are kind of mispriced a lot of times. So I won't pay up for hype.

Samir Kaji:

That is the world we live in today, which 15 months ago, if you and I were having this conversation, we were all talking about the same thing, which was the triage, the pending economic recession, down rounds, flat rounds being the new up round. And of course, the market has not played out that way. So just taking a step back, where are we looking at today in Venture? You spent a lot of time thinking about the future. Where is your assessment in terms of where Venture is today?

Heather Hartnett:

Pre-COVID, we had the same thesis that we do now. And I talk about the human needs economy because we saw the writing on the wall that technology was outpacing the human condition, that companies were being forced to grow at all costs and not thinking about necessarily, move fast and break things was the trope. Okay. So what are the things that are falling out from that? Because value still has to be created. And we looked at healthcare, we looked at future of your livelihood. The attention economy. Joe's background was in media and advertising, where is the attention economy? And all of these businesses that were at the height of innovation.

Heather Hartnett:

And whenever there's a big paradigm shift like what just happened to us in the last two years, something comes out of that in a much bigger way. Something is reborn. So it's really the industries that we think are going to be unlocked. The next trillion dollar industries are around these human centered businesses. It doesn't mean that technology's not a component of it. That's definitely always there, but it's technology and service of the human need, not the other way around. And so, when you find a white space like that, and you find new who are founding, who are seeing those opportunities and then you see new fund managers who are finding those founders. You understand that there's an entire white space of innovation happening. That's where I get excited. But that's going to be a little mispriced and misunderstood right now.

Heather Hartnett:

So I'm buying low right now, and that's in those areas, and it still is buying low. And that's what we're really excited about the opportunity, because right now FinTech, those are the billion dollar, multi-multi billion dollar companies. What FinTech is today, health tech is going to be tomorrow. We have two unannounced unicorns who are coming in from, especially female healthcare. You just see it in the next, the next before the end of the year, we'll have multiple unicorns in female healthcare. And I think they're just overlooked. These areas are overlooked, but still a ton of innovation. And then the market will price itself. You just create value and then the market will price itself.

Samir Kaji:

Yeah, I agree with that. And ultimately, there's only certain things that you can actually control in terms of how you invest, how you help the underlying companies. The market will set the valuations which today, of course, there's been a big step up in seed and Series A. And seed right now we're seeing valuations range from as low as five in certain cases, but more likely in the 10 to $30 million range. And there was actually a piece of data that came out recently that said, the average seed round is three to 5 million, the average Series A is 15 million. Which if you take 20% ownership at the Series A, it sort of translates to evaluation or post money valuation of 75. And so, it is a interesting market that I think is tough to navigate with when you look at the overall numbers, the difficulty of getting ownership, winning deals, but you've done this now and had the reps. What advice would you give for somebody that's just starting off and investing at the early stage?

Heather Hartnett:

If you're interested in early stage investing, then you have to have a very strong sense of a trend that you're spotting that other people aren't. And you have to gain conviction in that area. And then you have to figure out what networks or founders are building in that area. And you have to convince them to take your money, and you have to wait for six to 10 years to see if you're right. And that is a lot to stomach, but it's also where the greatest reward is if you're an early stage investor. I can't speak to growth stage. I think Jenny Fielding did this great tweet the other day. She's like, people have to realize that as an early stage investor, we're more like therapists, coaches, founders, people pickers, talent agencies.

Heather Hartnett:

Then we are the Series B and growth stage because once it gets to the spreadsheet stuff, once it gets to escape velocity, once the banks are now investing in it, that's a totally different ballgame. And that's not where you should be focusing or chasing those deals. You should be finding the alpha in places that other people are not looking. And you should have conviction in yourself for understanding why there's value there when other people are not seeing value. And that's where LP should be looking for their fund managers too, if they want to go into that space as well.

Samir Kaji:

I've spent a lot of time thinking about this and I do agree. And I've always said that the seed ecosystem really is its own sub-asset class within venture with very different risk return characteristics than even traditional Series A, Series B. And then you get into the growth stage and that's where all the capital comes in. It's the crossover funds. And of course in today's world folks like Tiger and Coatue, even coming more upstream and investing earlier stage, but really putting the dollars at that Series B and later a lot of the funds have gone bigger. So today the venture industry looks like a barbell. A lot of seed funds. If the number of seed funds is in the thousands in the US, the dollars are still around $10 billion, raised by those seed funds.

Samir Kaji:

Although, as we know, there's more capital deployed by those seed managers through things like SPVs and opportunity funds and things like that. And on the other side, you have the bigger managers that are now becoming multi-product, multi-geography, bigger and bigger. So moving away from the seed universe, how do you think about the other side of the barbell, which is the growth stage, funds getting bigger and bigger? What's your take? And if you were an LP, how would you assess that part of the market right now?

Heather Hartnett:

A couple of different things are happening, right. Those larger funds are coming back to the trough faster and faster. So the traditional LPs have to re-up, they're overallocated in cap and VC as an asset class. So I think what's happening is the funding sources are diversifying. We were talking about this before, the insurmountable amount of family office capital that is looking for putting money to work in innovation. So I think the big opportunity there is making family office, and that's a huge term, right? That you meet one family office, you meet one family office. But creating efficiency out of that asset allocator profile is going to unlock a ton of capital and therefore returns in the earlier stages as well. Later stage, look, I mean, that's not my job. If I start a company and we own a significant portion of it, my job's not to write it necessarily to these $80 billion numbers. I will, if that's what's supposed to, but I can also take money off the table earlier and return my fund.

Heather Hartnett:

I think having the discipline of having a small fund in this day and age is fantastic. And I think founders are now, they're being put in a really interesting point to be a decision maker of where they take their capital. And I think they should be very careful of taking capital from really large institutions who have come up market, who have come writing seed checks because the calculus is much different from writing a 500k check if you're a $2 billion fund. Than if you are a $25 million fund writing a 500k check, you've done so much work to make sure that you have conviction in that founder. And so, founders should know who their investors are and the signaling risk of taking capital from something that's too big. And then the large institutions should be looking at the emerging managers to say, who aligns with our thesis? Is there going to be M&A in this space? Maybe. If I was a big, if I was Coatue or Tiger, I would be looking at what fund managers am I acquiring? Is that happening? Where's the consolidation? And I think that's what you'll start to see too, is that consolidation of large institutions thinking about the emerging managers who see that opportunity.

Samir Kaji:

And it's going to be interesting to see how this all plays out. I agree with so many of those points around investing in emerging managers. I do think a lot of the large firms, by the way, they have partners that are active investors in emerging managers because they see the value that the emerging managers, especially at the seed level, can provide in terms of value to those founders. Because as you said, if you put a total of 500,000 into a $20 million fund, that's a significant part of your investable capital versus a fund that's a billion dollars putting that same $500,000 check and really acting as a flyer and probably getting no type of real engagement with them. And so, I do think that we should see more of that. Also, I'm seeing some of the bigger firms invest out of their funds into emerging managers. And of course, even family offices. I mean, the unique sort of alignment is they are returns focused. They don't necessarily have a full investment committee in many cases, and are really looking for co-investment opportunities which often come from the seed environment.

Samir Kaji:

Now, the question that we always try to navigate through is that group is so opaque and fragmented. They don't hold a sign saying, we're open for business, managers come find us. And so, navigating through that universe is hard for the fund managers. But it's also hard, on the other side, those LPs finding the right fund managers given how big the ocean is today. And so, it's going to be interesting to see how this expands, we're working on some of that. And there are groups like Operator and Recast that are also looking to give Lyft, which I think will bring more efficiencies, but also bring a much more diverse set of allocators and fund managers which we're excited to see. So I want to end with our heat check where I ask you three questions, rapid fire, and get your reaction. The first being, now that you've run Human Ventures now for six years, what's the most counterintuitive lesson you've learned as a venture capitalist?

Heather Hartnett:

I think we hit on it, but it's really that people don't want you to think too far in the future if you're a capital allocator. So it's really broadening your range of how you can share your vision. And knowing what points you need to let people in at which different points throughout your journey.

Samir Kaji:

Don't give them the kitchen sink. Just give them little parts at a time so they can digest. So the other question I have, and you've worked with so many different companies, both through the incubator, through your own experience, having been in venture now, I guess, 16 years, everyone misses on deals. And there's this anti-portfolio that's in people's head, Bessemer, of course. Has their public anti-portfolio. Has there been a company that you look back on that you did miss on? And do you look back and say, I missed on it and today I'd probably do things differently. Not because it's hindsight or this was a great company, but there's an ingrained lesson about why you missed that you now learn and say, I would learn so much. I would never make that mistake again.

Heather Hartnett:

Yeah. I think it's when you have this gut feeling on a founder, and my learnings have just been solidifying my conviction on my own intuition. I started in venture as early as I possibly could have. I had a very nontraditional path into venture. We didn't even cover that, but I think my regret is not starting earlier. I came from parents who were very progressive in their thinking. They started meditation in the '70s. I grew up with, I vague in meditation and wellness and sustainable living practices, and all this sort of stuff. And if I knew what I know now, I could have definitely capitalized on these trends that happen they're so mainstream now. But I say taboo today, mainstream tomorrow. I think building that muscle to see where the trends are going and having that conviction in where you think the world is.

Heather Hartnett:

And then on the time continuum when that is going to come to fruition, that's what you have to hone in as an early stage investor. And so, I'm just trying to get better and better at that. I don't feel like I've missed deals that I wish I was in not because, because I'm that good, but because I've fought to be able to become a capital allocator in a way that just gave me now that authority to be able to act on the things that I knew were coming to fruition. So I don't think I could have done it any other way. It's a privileged position to have missed some of those deals because you have the capital to be able to allocate. Now going forward, ask me in a couple of years what I've missed. And then I feel like I'm in a position that now to miss some of the big ones.

Samir Kaji:

It's always going to happen. It happens to the best of us. Speaking of venture, I've always viewed it as very much an apprenticeship game where you continuously learn as you go along. And a part of that is actually learning from other people. Is there somebody out there that particularly inspires you, you really believe in how they think about things and has been a mentor? If so, who is it in? What about them?

Heather Hartnett:

Kirsten Green is absolutely an inspiration to me. She's done what many founding female fund managers have tried to do or wanted to do. She really was a founding firm female fund manager. And so, I appreciate her lens on the consumer behavior, how she's built up her franchise and her team and just her ethos in general. And so, we're very aligned in the way that we're investing. So I would say her. Then I would also say on the mentorship side, Howard Morgan. Howard Morgan is the grandfather of venture, there is nothing that man hasn't seen before. He is constantly reinventing himself and hitting the refresh button, understanding where there's new energy and new talent. And then putting his money where his mouth is. And you see it time and time again. So he's been a constant inspiration for me, both on the investing side and then also on just understanding where the world's going in terms of the people who are allocating capital. So those two people for me have been very fundamental in my growth.

Samir Kaji:

Great people. I don't know Howard personally, I know Kirsten. And believe it or not, it's only been just under 10 years since she started Forerunner Ventures into the giant it is today. And so, those are some great names. Heather, this has been a lot of fun. Thank you so much again for being on the show.

Heather Hartnett:

Thank you so much.

Samir Kaji:

Thanks so much for listening to another episode of Venture Unlocked. We really hope you enjoyed our conversation with Heather. To learn more about her or Human Ventures, be sure to go to ventureunlock.substack.com for detailed notes of the show and my ongoing comments all about the world of venture capital. Venture Unlocked is also available on iTunes or Spotify for download. And while you're there, please leave us a rating and a review as it really helps us out. Finally, hit the subscribe button in order to get each and every Venture Unlocked episode as soon as it's released.

Podcast Production support provided by Agent Bee Agency

Follow me @samirkaji for my thoughts on the venture market, with a focus on the continued evolution of the VC landscape.

As we move towards the end of 2021, we wanted to record an episode that focused on the LP perspective on current capital and ventures. To that end, this week we are joined by joined by Chris Douvos, founder of Ahoy Capital, Elizabeth “Beezer” Clarkson, Managing Director of Sapphire Partners, and Guy Perelmuter, founder of GRIDS Capital.

The three of them have spent decades investing in venture funds and companies across multiple cycles. While we didn’t come into the discussion with any set agenda, we ended up covering everything from emerging manager views to global capital trends.

This was a fun one to record, so hope you enjoy.

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In this episode we discuss:

02:22 Complete this sentence: Venture today is "[Blank]04:51 How are they as LPs navigating the seed and early-stage market for manager selection15:39 View of the late stage boom and potential for returns24:40 Perspective of Opportunity Funds and whether they represent a good product for LPs34:29 Returns Beezer is writing to on a multiple cash on cash basis on different types of managers40:05 Things they look for beyond track record in emerging managers44:41 Common mistakes and red flags for emerging managers that can scare off LPs47:15 Tangible characteristics that they look for in emerging managers53:15 How non-traditional and non-mainstream managers can attract institutional LPs56:08 What emerging managers should lead with when they don’t have a track record beyond the last few years60:22 The investment category each are most excited about

Mentioned in this episode:

Episode 013 Chris Douvos

Episode 021 Beezer Clarkson

(Guy’s episode will drop in early 2022)

I’d love to know what you took away from this conversation with Chris, Beezer, and Guy. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Transcript:

Samir Kaji:

All right. So I'm super excited about bringing the first LP roundtable to Venture Unlocked, where we dive into a number of different topics that relate to venture. And we'll look to dive deep. This will be an unscripted conversation, so we'll let it go where it goes. I want to first introduce three of the best LPs in the business, Chris Douvos from Ahoy Capital, Beezer Clarkson from Sapphire Ventures and Guy Perelmuter from GRIDS Capital. One of the things we were talking about before this podcast started was how fascinating a time we live in right now. And within venture, it certainly seems A Tale of Two Cities where it's the best of times, and it's the worst of times. And we'll get into that during the scope of this discussion over the next hour or so. But let me first start with an icebreaker for the group here. If you were to complete this sentence, how would you complete it? Venture today is X. Chris, why don't you start? What is X today?

Chris Douvos:

To get hype for this is discussion I watched some TikTok so I'm feeling like I've been around a long enough time that I got to stay current and stay youthful to be relevant in venture. So if I had one word based on what I've been hearing from the kiddos it's "lit," this market is lit. And that's both a good thing and a bad thing. I mean, we can go into that, but hey, for the moment, we're lit.

Samir Kaji:

All right, Gee, are you going to top that? What's your description of the market today?

Guy Perelmuter:

Top Douvos? Never, sir. That's impossible. I will say that, for me, the current venture market is extraordinary. And I mean it literally, right. I mean, it's beyond ordinary. We're now a few standard deviations from everything we've seen before. And again, as Chris said, this could be good and could be bad. So for me, in one word, it's extraordinary.

Samir Kaji:

That's a great word. Beezer?

Beezer Clarkson:

I think I'm going to go with "spicy," "spicy."

Chris Douvos:

Oh, caliente.

Samir Kaji:

I like it.

Beezer Clarkson:

Caliente.

Samir Kaji:

I like this.

Beezer Clarkson:

I was going to say fuego, but I'll say "spicy."

Samir Kaji:

So between spicy, lit and extraordinary, it's very clear that all of you think this is a very heated marker with a ton of momentum. And I would agree with that. And I was looking at the Q1, Q2 numbers and roughly $300 billion went into venture-backed startups, two-thirds of that, as you can imagine, was late-stage. And it seems like the venture market has, or at least the capital market for tech companies, has moved into a barbell where on the right side, you have large aircraft carrier type of firms that are investing across stages, have the ability to pump a lot of dollars in at those late stages, let's say series B and later and series C and later. And then on the left side of the market, you have a ton of seed funds, which by number, are quite high, by dollar amount, are still pretty low.

Samir Kaji:

I feel like from an LPs perspective, it's harder to navigate than ever before to figure out where can you place capital to get the best risk-return? And we've all talked about this, it, feels like managers are coming back really quickly. There's not always that much differentiation that matters, and it makes it really tough. And so, I'd like to start with, maybe, Chris on this question, how are you navigating in today's world?

Chris Douvos:

I'm old enough to remember, as we all are, but I started at Princeton's endowment back in '01. And I remember I became a venture guy because our then venture guy left. And at a Monday meeting, somebody was like, "So who wants to do venture?" And it was like that nose game where everybody touches their nose and last person not touching their nose gets stuck with whatever task. And that was me, and I became a venture guy. And I remember like 2002, 2003, 2004, the wreckage. And those were years were like $5 billion, I think, in 2003, went into startups and like 20 billion... I remember Bill Helman at Greylock was like, "What is the rational size of the benchmark? Is it $20 billion a year?" It's like those numbers seem quain. But in fairness, the scale of exits has made those numbers seem reasonably quain. It's not like this is an outrage and people are just spending like drunken sailors.

Chris Douvos:

But what I'll say is, there are a lot of risks that have been taken off the table, and like a main risk is financing risk, right. And it's because there's so much like plentiful capital out there. I come from like a classically trained institutional investor standpoint, you're always thinking about risk-adjusted return. Well, how do you adjust return when there's like actually no risk and it's been like such a one-way market for so long? And I think people have forgotten that actually the trees don't all grow to the sky.

Chris Douvos:

And that's something that for the last, maybe, year and a half, has really influenced my own thinking, which is why, maybe to my great detriment, I've doubled down on what I call the "grownups" in my portfolio. So we're doubling down on firms where the investors are really kind of seasoned. Maybe seasoned is a fancy word for geriatric. Whether they're established groups that we've backed for a long time like First Round, or True, or newer groups like Neil and Trae over at Defy that have a long kind of history of investing. But I want people who have kind of seen what actually happens when risk exists again, because I think too many people have grown up in a world where the only answer is buy, and if you can't if you can't buy yesterday, buy today.

Beezer Clarkson:

I think I went through a bit of like... What is that called? ... the trough of despair, and then there's like the arc of euphoria, whatever those like sine curve is. I think right now I'm finding it actually really fun, which I know it's a little bit of the... If you don't need to sleep, it's actually a really fun time to be doing venture, because it's unbundling in a way that I love. I think the options now for where an entrepreneur can get money is awesome, for an entrepreneur.

Beezer Clarkson:

It's interesting questions for an LP and where to put your dollars. But there's so many more alternatives now, you can do the classic funds, you can do what Chris is talking about. We've been trying to keep some dollars available for newer managers and trying some newer methodologies, not just... We've done some sort of new but classic kind of structured funds. We're trying to look at, are there other alternatives? The rise of the solo GPs, there are syndicate structures, there are some service for equity structures out there. We haven't done a rolling fund, but I find them fascinating.

Beezer Clarkson:

So I think right now, I actually feel really greedy because I'm like, there's so many different things I'd like to invest in. And it's just a question of, no LP has unlimited capital, there has to be the constraint, because nobody has all the money in the world, and you wouldn't want to index venture anyway. But I just find that hard time picking because there's so many awesome things I'd like to do. So I find it right now, a fun but challenging market from that perspective.

Guy Perelmuter:

Yeah, one thing that comes to mind when I look at this market right now, it reminds me a little bit of what happened in 2000, 2001, in the hedge fund industry, because that was a time where a lot of prop desk folks were leaving their jobs at investment banks to start their own hedge funds. And you could see like on a weekly basis, there was a new long-short equity fund sprouting from nowhere. And it was not really long-short per se, if the manager had like 40 longs and two shorts, he would call himself or herself a long and short fund, right.

Guy Perelmuter:

And something that really catches my eye in this environment is the sheer amount of new funds coming to market by people, by "portfolio managers." And again, that's fair for people to try their hand at running other people's money. But to get your stripes and to be called a portfolio manager, that's a process, right. I feel like this title is misused a lot. We had to have some sort of standard process to make sure that someone can put that in their resume.

Guy Perelmuter:

So right now, the venture environment, and I agree with what both Chris and Beezer said before, the options are incredible and we are living in a world where the opportunity costs, to Chris' point, is zero, right. Interest rates have been almost zero for longer than any one of us have ever experienced, paradoxically, the pandemic has accelerated so many trends in the minds of so many different people from different walks of life. And it seems like, at this point, all roads point to venture, right. Everybody has their own reason to think of, "Okay, I should expand my venture portfolio. I should add more chips to this particular asset class." And it doesn't feel like this is going to necessarily end badly. And I'm sure we're going to go into that over the course of this conversation.

Guy Perelmuter:

But one thing that I think it's inevitable is that some of the GPs out there who have already earned their stripes, I think they're going to be at the premium in this market because, inevitably, we're going to see failures over time, it just takes a little longer in venture, but they'll be there. And these GPs I expect them to continue to do well. And I think there's a list of probably 20 to 30 names out there that are going to be in great shape in another three to five years. And for those newcomers, I think the environment is going to be increasingly challenging for raising money and for being able to be in the cap table of really interesting deals.

Chris Douvos:

And by the way, that's a great point because, in venture, all of our train wrecks happen in slow motion, right. And what's actually has always been kind of acute to me is, in the public markets, if an idea goes sour, the capital is destroyed and the managers who were pursuing that strategy get kind of lit up and exit the business. In venture, we're surrounded by melting ice cubes, right. And all it takes is one great deal to get that melted ice cube back in like kind of solid ice condition.

Chris Douvos:

I was having lunch with a good friend of mine the other at the Creamery here in Palo Alto and a GP walked by, and this is somebody who like literally had been an incinerator of capital. And this person leaned into me and said, "Oh my God, can you believe that guy's in company X and they put in like a million dollars and it's now worth like a billion and a half dollars and it's going to like rescue this fund, which has been on life support for years?"

Chris Douvos:

So in addition to like these funds that like kind of never die, you got what Beezer talked about is like all these, not only all these new managers, but new modalities of investing. And for somebody like myself who tries to do like one new investment a year, it's crazy. It's like we always used to when I was at Princeton's endowments, "It's harder to get into our portfolio than it is to get in our college." And that dilemmas only been kind of magnified by an order of magnitude.

Samir Kaji:

I sort of look at where the market is today, and I remember starting my career back in '99 actually, and it was like the height of the tech bubble. And remember, I forget if it was '99 or 2000, like a hundred billion was raised by venture funds. And it was at a time where the public market cap was like $13 trillion. Venture was still very much a vertical industry on the fringe. And technology, in particular, right, we were still internet 1.0, less than 350 million people were online. And you sort of look at the maturation of technology in '06. What happened was AWS came out and it made software development cheaper than ever before. In '07 was the iPhone. And that made, not only you had the development cheaper, but now you had the distribution channels. And today, of course, over 5 billion people have smartphones. So part of me thinks this is just a continued evolution of the technology market and now capital is starting to catch up.

Samir Kaji:

The 14-year bull run has certainly helped. But the size and scale of these companies now are at points we've never seen before, right. If you look at the top five public companies, they're all technology companies, total market cap of 9 trillion. But look at what their revenues are, look at what their profits are. And then you see some companies, even like a Canva, for example, if you look at their revenues, we would've never seen companies hit those type of revenues, but now you have the distribution and tech being truly horizontal.

Samir Kaji:

Now, I do have a question though, which is related to one side of the barbell, which is late stage, which most of the capital goes into. And again, that's two-thirds of the capital. It seems like investing at that stage, the risk levels are more aligned with what we have seen with traditional middle market, with maybe a slight higher alpha potential given the size and scale of technology companies. But in many ways it does seem that companies as they achieve scale, even at 10 or $20 billion are still private in nature. And we've seen that on many different occasions with some of the best companies. From my perspective, there's some parallels to investing at that stage as we might have seen maybe 20 years ago in the markets right after public offering, let's say, the 12th to 24 months after in terms of risk-return. Do you agree with that? And how should we be thinking about the late stage markets?

Chris Douvos:

It's really interesting because about 10 or 12 years ago, Josh Kopelman from First Round did a blog post where he looked at the market caps at IPO of a bunch of different kind of tech stalwarts from kind of Microsoft through like the early 2000s, like getting Salesforces and their Netflix. And he figured out that of the eventual appreciation in the public markets, 97% was available to the public investors. Whereas, since then, we've seen radical shift into the late stage private market. So I think, the late stage venture market certainly looks like the IPO market of old. And there are a lot of reasons for that, but partially, what it's... I mean, I look at my own portfolio in my funds and it looks like the S&P MidCap 400. And I think that's really unhealthy for market structure, and I think it's really important for investors to be able to access emerging growth.

Chris Douvos:

But the thing that worries me about all that is that I always think about Buffet's equation, which is opportunity equals value minus perception. And what happens is the private markets like really feed on themselves and create these like fire storms almost where the temperature gets hotter because the fire's burning, which makes the fire burn more, which makes the temperature hotter, and it's this big recursive circle. And there's not as much discipline with respect to price and the sale prices and all this stuff. And so, you get these like crazy valuations. And I think, Samir, you alluded to this earlier, we've seen some companies really struggle in the public markets, and I think it's because there's so much exuberance in the late stage private market that's disconnected from Buffet's equation.

Chris Douvos:

And so, that's something that worries me. But running an early stage portfolio, I'm actually kind of delighted because it kind of really minimizes financing risk and gives the portfolio companies that we're backing much more optionality and much more survivability and anti-fragility. So as long as that capital is there, it's great. The problem that I worry about is, what happens when that rug gets pulled out?

Samir Kaji:

One comment on that. I just want to read out off a few things. So percentage of first 20 billion in market cap captured pre-IPO, so Airbnb, first 20 billion, 100%, Snowflake, 100%, Slack, 100%, Twitter, 82.5%, Facebook, 100%, Salesforce, 8%, Amazon, 3.2%, Cisco, 2.4%, and Dell, 1%. So it does go to show how much scale of valuation happens in the private markets. But yeah, I mean, I think your point in terms of what happens if the public markets retract, what does that mean for all those late stage rounds that are done, where you're buying basically at almost a peak? And oftentimes, even right after the IPO, it drops below what the last private market valuation is. Again, I think that's a real risk, but Beezer, I know you were going to maybe take a different position, perhaps.

Beezer Clarkson:

So one of my colleagues wrote a paper literally like last week on this topic, which is why it's just top of mind, basically, Long Live The Tech IPO and Steve Abbott did it if people want to Google for it. And it looked at this question of how much money gets captured privately versus publicly. And the answer is, in a bull market, there is still a lot of room to run in the public market. So, just going to shout out, people can read that because it's all very data driven.

Beezer Clarkson:

But it is predicated to the point Chris was making, is that, yes, it's worked out well historically. If you look over the last 10 years, because even if there was a high valuation privately, there was still so much more publicly in the strong companies. But you have to have this bull market to make it happen, and if not, we all know it happens, companies go out, they flounder, either they get recapped or sometimes they get taken private by a private equity tech company and repackaged. So if they're there, things can continue.

Beezer Clarkson:

I also just think there's been a much healthier IPO market in the last 18 months than there's been before if you look at the number of companies that are going out. And I do think from a venture perspective, that is very healthy. The venture market wasn't predicated on people staying private forever. The circle of life of capital flow is critical. No one wants to work at a startup if they're never going to have their options worth anything, that's the whole premise of why you join a startup, right. And the same thing for an LP, the premise is that you invest money into a fund that goes into a company that comes back around so the dollars can be redistributed again back into venture. So, we're positive on the signals that are happening right now. But yes, everyone worries about retraction, and my crystal ball does not have a date for when that's going to happen. I'm very sorry. Maybe Chris' out of the shop, and he knows when the market will drop

Chris Douvos:

My crystal ball is still in the shop. I mean, I want to get by your repair person because mine's still busted.

Guy Perelmuter:

So, here's something that I believe we can kind of expect... right. Because if history has shown us anything is that markets will correct, markets will fluctuate, we'll see those prices going up and down. But here's what is unusual about or unique about the environment that we're living in right now... And I think your point about the barbell approach has a lot to do with it. If you think about each round or each series that a privately owned company raises and you stack them on top of each other, and you think about the IPO or the listed company at the very top of that stack... I'm not talking about capital structure, I'm just illustrating the path of a specific company right.

Guy Perelmuter:

Whenever things happen in public markets and they're there for everybody to see, right, and the results and the actions and the volatility is abrupt, it's intense, it does capture headlines, that's what people are going to read about in the evening news or hear about in the evening news. So what happens is that the shock waves they get from the public markets, they will start going down the structure of the stack, right. So they'll hit head on the late stage, the mega rounds of still privately owned companies. And it'll go all the way down. But now, there's this gap between the late stage and the very early stage, so there's no dampening of this effect.

Guy Perelmuter:

So my concern here is that this eventual correction in the public markets, that may or may not have anything to do with the private markets, will create a ripple effect that could make capital scarce, which basically is what fuels this industry, right? Capital people are interested in financing new companies and new ideas and new technologies. And I think that this is probably one of the most important aspects of this market that we should keep a close eye on because when the dampening effect of those intermediary rounds, if you will, are not there, then that's something quite unique to this specific moment in time and we should be on the lookout for the first signs of trouble.

Samir Kaji:

Yeah. And it's hard to really understand if there is truly a canary right now in that coal mine that can be actually identified. I can't seem to find anything that would suggest there's going to be a near-term retraction in the economic cycle. But historically, you're right. When you see drops in the public markets, it affects capital flow, which then... Usually, it starts with the late stage and then goes to the mid stage and then goes to the early stage in terms of capital and of course, valuation.

Samir Kaji:

But even if you plan the early stage today where, yes, valuations have gone up, but if you redefine what the outcomes could be, it really doesn't matter too much. At least it's not as sensitive and fragile relative to late stage markets. A lot of the early stage funds are playing both, because they raise a core fund and then they raise an opportunity fund. And I think over the last two years in particular, I've seen more opportunity funds than maybe the 10 years prior to that.

Samir Kaji:

The historic LP view on opportunity funds was actually very negative. And I think I've talked to everybody about at this. And now, it seems to be thawing either as a function of being forced to do it or viewing it as the late stage market where a manager has an asymmetric view into a company could be a really interesting place to put capital and still get a nice risk-return. How has your thinking either stayed the same or modified as it relates to opportunity funds today?

Chris Douvos:

This calls to mind my favorite quote from Keyser Söze, which is, "The greatest trick that devil ever pulled was convincing the world he didn't exist." And what I mean by that is that there was a time, not too long ago, and people believed that kind of modest fun-size actually was a creative to positive returns. Then if you raise too much capital, it was tough to compound that capital. And so, I think a lot of funds started raising... A lot of people were consciously small. And I think that then they saw that they had all these kind of pro rata rights. And so, you'd see this kind of people go through this process of where they had a modestly sized fund and then they were in hot companies. And companies are kind of more hot than they normally would be because there's no risk in the economy right now or risk isn't getting priced, I should say.

Chris Douvos:

And so, people start offering SPVs and they're like, "Oh, too many SPVs, that's a pain in the butt. Let's raise an opportunity fund." And before you know it, your friendly neighborhood $200 million fund is now raising $600 million between the two vehicles. And it's like, "Wait a second, you guys used to say fun-size matters and now it doesn't matter." So I've done my fair share of these because I think the risk-adjusted return is actually okay, but it just makes me think that people aren't being kind of terrifically, intellectually honest with themselves about keeping their fun sizes small.

Chris Douvos:

And I think we're kind of whistling past the graveyard in some of this stuff, because what happens when you got different securities in the two funds, and if there's a downturn and the securities find themselves in conflict with each other? Somebody's going to get crammed down and somebody isn't, or both people are, and someone doesn't have capital to do a pay-to-play. It's symptomatic of the world of live in. I think, if you're in the full send economy, if you're going to send it, send it. But this is something that I think has worked really well to date, but makes me really nervous about the future and hope that we don't step in any holes in the bottom of the airplane.

Samir Kaji:

Chris, can you maybe explain just for a second, when you say "conflict of a certain security," what does that actually mean for people that don't know what that actually relates to?

Chris Douvos:

I remember in like ‘99 and '00, a lot of funds were raising, actually, like, "Our VCs have raised two funds in a single year." Like a lot of people had 2 ‘99 funds, and sometimes, they do crossover investments in those funds, so similar to what you'd see in an opportunity fund and a core fund. And then, when the downturn hit, you might see like fund nine is in the A of a security and fund 10 was in the B. And you might have like a pay-to-play where if you don't come into the round, you're going to get kicked to common. And fund B might have reserves and fund A might not. Or fund B has some kind of preferences and fund A doesn't and fund A gets buried behind the preference stack. And the fund B investors make out and make out well, and the fund A investors don't.

Chris Douvos:

And that kind of stuff created a lot of drama, I call it the Great LP Wars of 2002, where you'd see like some GPs, who are today, kind of top five GPs, spent like half the year dealing with the crankiness of the different constituencies of their LPs.

Beezer Clarkson:

The opportunity fund discussion has so many different implications, right, because there is the one that Chris was talking about, like what swim lane is a fund in anymore? And there was this beautiful time in venture when everyone had a swim lane and we don't have swim lanes anymore. And I think, it'd be lovely if it was that way, and it's just not. And LPs are going to have to deal with it. You can't crush people back into the old ways of working, it's just not going to happen. You can assess each opportunity fund for it's still return potential, to Chris' point about the risk-return. And we treat them all very individually, that way, we have return targets for our dollars. And the question is, will this opportunity fund deliver it? Some can, some can't. Right. It's each one's its own specific little, beautiful snowflake.

Beezer Clarkson:

But the complications of the business exist no matter what. Right. Like, is it the same team? Is it a different team? The security questions Chris is raising... We have a fund who has successfully invested in multiple times in the same company in different vehicles. Actually, the company's doing well, but the question about when you sell is still different for each different fund, because if you're investing at series D, they might want to hold that for longer. But you're at the series A and your fund is smaller and you want to start creating some DPI for your LPs, who do you sell to because they're not the same LPs in these funds anymore? And the business complication has just gone up so astronomically and I don't think until you've lived it, to Chris's point, it's as clear to a GP, but to LPs who are looking at the paper, you're like, "Oh, this is going to be an awesomely difficult question to answer." And there's not as many of those conversations.

Guy Perelmuter:

I absolutely agree. And actually, this is an interesting segue into something that I have learned over 20-plus years of allocating capital and investing, which is, there's only one thing that LPs hate more than losing money, in my opinion, it's surprises. An LP will understand the rules of a game if you explain them in advance and say, "This is how this game works. This is how this project works. This is how this fund is going to work."

Guy Perelmuter:

But to Beezer's point, after four and a half years or five and a half years, you got to start going deep into the weeds to start talking about specifics because of cross-investments in different vehicles and different timings and downturns. Those are the bombshells, those are the hits that LPs take and that will ripple throughout the industry, because that's when you start getting the domino effect, because then there's a credibility issue, then that GP is going to have to spend 95% of his or her time explaining himself or herself to his LPs or to her LPs.

Guy Perelmuter:

So I think that the whole opportunity fund versus individual SPVs versus what is your core competency, those are questions and issues that have to be thoroughly understood prior to writing a check. Because again, Beezer is right, this is not like a hundred meters race, right, that's it. "I only run a hundred meters." "No, no, I only run a hundred meters, but on occasion, I'll do a long jump, and eventually, I can do a 400 meter race as well." And you can mix it up and do everything as long as you are in agreement with your client base. Surprises are very, very unwelcome to LP, that has been my experience time and time again.

Samir Kaji:

As you were all talking about opportunity funds, we actually had looked at 25 very successful seed funds that have been around anywhere between five and seven years, on fund 3, 4, 5. Out of those 25 that we looked at 22 raised an opportunity fund along with their last fund. And I remember in the past, and this again, dates me a little bit, but we used to talk about swim lanes and we used to always say there's different muscles that you have to exercise to be successful at early stage versus late stage. And some of that has been just eschewed by the fact that there is capital chasing these and the pro ratas are there. And candidly, a lot of the institutional investors, be it the endowments or foundations, are actually not set up for doing SPVs. And so, the opportunity fund has offered them, no pun intended, an opportunity to place more money behind a seed stage manager than they otherwise would. And so, it also fits into a little bit of the demand of the LP market and what they're looking to do per manager.

Guy Perelmuter:

I agree. There's a market. And if you are a successful seed stage venture capital fund and you're seeing your companies go off the charts time and time again, and you have a limited pro rata and you see a clear opportunity where you can do more and you can bring more of that, to your LPs, why wouldn't you do it? Right? That's just markets being efficient and trying to... The old adage that says, "Nature abhors the vacuum, right. There's no room for vacuum in this industry. So people are going to feel that in as fast as they possibly can.

Guy Perelmuter:

I'm not against the opportunity funds because I think the reason behind them is very, very in line with the LPs best interests. And it's been my experience that out of a lineup of LPs, maybe 15% will be interested in doing directs, in doing SPVs. Most of them are, "Okay, I'm paying you to take care of my money. I'm not here to start cherry picking on company A, B, C, or D, that's your job. So don't bring five SPVs per year to my attention because I don't have the bandwidth, the interest, the knowledge to analyze them." So I think it's the market being the market in adjusting itself.

Samir Kaji:

Beezer, you mentioned something earlier about risk-adjusted returns on opportunity funds and core funds. As you underwrite to the different stages, what are those returns that you're actually underwriting to on a multiple cash-on-cash basis?

Beezer Clarkson:

Sure. Well, historically, and I say it this way because I we're in the process of reconsidering this given the performance recently, we said if you're series A investing, right, the bulk of your dollars are going at series A and whatever, however the vehicle is being structured, we need to see a 3X net potential performance, that's our bar. And so, seed therefore should be greater because there's higher risk, so that's 5X. And this is why the seed fund's doing a series A opportunity fund, it can still work. It gets harder if you're... And sometimes, this is like a shout out to GPs, if your opportunity fund's going to out on your early fund, your math isn't working or your opportunity fund is a lot smaller, which is also fine. And sometimes that is true. But if an LP is doing the math and saying it doesn't stack up, get ahead of that and make sure you understand your return profile, because we can talk about things that turn off LPs, but if we have to do your return profile math for you, that's not a positive sign.

Beezer Clarkson:

But what we're seeing in the market right now is because there's been so much strong performance, we see growth funds. We don't tend to do these, but they pitch us and they have 3X net performance, legit, or more, in which case, the series A funds, we have high single digits, we have double digits, we have seed funds doing double digits. And again, in this bull market, it's hard to then say, should this be the new norm for forever? But it's certainly the standard today. So when looking at adding new managers to the program, you have to believe someone's going to outperform pretty incredible existing performance right.

Chris Douvos:

This is so top of mind for me right now because... I call this syndrome Syndrome. So if anybody remembers the Pixar movie, the Incredibles, right, the bad guy is named Syndrome. And he always said his aim was to bring superpowers to everybody because when everybody's incredible, nobody will be. And I feel like, literally, every single fund that comes across, my transom is like sporting numbers that would, in different times, make me drool. But performance is a lagging indicator, not a leading indicator. And then, we don't even need to get into like, "Okay, who's going to put moolah in the coolah." Because I always remember when I was at Princeton at the endowment, we had a big conference table filled with tombstones from Wall Street deals, whether they were acquisitions or IPOs. And all of the tombstones on that "Graveyard of Broken Dreams" were companies from which the only distribution we got was that tombstone right. They literally went public and we got zero because they went to zero. So, I've always been kind of super sensitized to that so this is why this is top of mind.

Chris Douvos:

I was just talking to one of my biggest investors and when this guy invested in my fund, in my first independent fund in 2012, I told him like, "Look, our return target, the baseline is at 2.5X net, and hopefully we can get up into threes net at the fund level." And today, that fund sits with a lot of public companies, and some about to go public, in the mid threes. That's not even a humble brag because I don't even think that's good anymore. I don't know it's good anymore because I look at other things and I hear about people putting up five, 7X funds and I'm like, "Holy smokes, how can I get me some of that?"

Chris Douvos:

To extend the metaphor of like the Olympics and events, I feel like we're all doing kind of pole vault on the moon, right, where there's no gravity. And at some point, gravity's going to kick back in, and I think there's going to be a fine line between who was lucky and was able to get out of stuff. It's inevitable that the markets will come back to earth, it's just a question of when and how, and will people have been able to generate enough liquidity in the interim to kind of sustain these kinds of returns?

Samir Kaji:

I think there's probably something in the middle that's directionally true in the sense that, yes, there's going to be some gravity at some point. Some of these companies are never going to live up to the valuations that they've been given in the private markets. At the same time, a lot of these funds are investing at a stage of these companies where the exits that do happen, that are successful are going to be a step function far bigger than they ever have. And so, do we redefine what a successful seed fund is? I mean, I remember a few years ago, we said 3X, if you can get to a 3X that's great. Most people would say today it's at least a 5X. And I've seen multiple 10X type of funds. And then, we'll see if the DPI gets to 10X, but this kind of reminds me of like the '80s and your early '90s, when you saw a lot of that when there was very little capital, very few firms.

Samir Kaji:

But moving to sort of the emerging bucket for a second, if we are looking at 5, 7, 10X, I find with track records, track records can be very, very lacking in indicators. And sometimes, there are indicators that are just far too old to matter. Oftentimes, you're looking at a track record that's like eight years old when they had this great return and it's too long ago, too many variables have changed, the teams changed. And the track records that are more recent, there just hasn't been enough maturation or any sort of resiliency that portfolios had to show.

Samir Kaji:

So, if you're not looking at just track record, which again, has a lot of false positives and negatives, what are the things that you evaluate when you're looking at a manager and saying, is there a potential for this early stage manager to be a five to 7X? What are some of those things that are non-obvious?

Guy Perelmuter:

Charlie and the Chocolate Factory, which is, basically, everybody's looking for that golden ticket in their chocolate bar. And I'm talking, Gene Wilder Willie Wonka, not Johnny Depp Willy Wonka, because all of us, we know that's the legit Willie Wonka. And I think that emerging manager, at this point in time, the equation is a little bit flipped and I think that's going to be something that we'll see for a long time, which means there are far more managers out there, then talented and really awesome entrepreneurs, meaning that entrepreneurs, ultimately, I think, have their pick on who they want to work with, specifically at the fringes and specific niches and sectors. But I think we can paint with broad strokes this picture. And that means that when you look at the manager, you have to figure out why would this particular manager be able to attract, have enough gravitas to attract extraordinary founders and entrepreneurs and have the audacity to back ideas that are going to be 5, 8, 10, 12... Pick a number, any number, I don't care.

Guy Perelmuter:

The fact of the matter is that right now, I think that's the key question that one has to ask oneself. What's his or her background? What's the edge they're bringing to the table? We don't need to look at their track record because more often than not, there isn't one or there's one that they use at their old firm and now they're starting something new. So, I mean, there's so many variables in there. So I think the core question one has to ask himself or herself is why would this person be able to attract great talent and build a fantastic portfolio? And that's why I use the golden ticket metaphor, because I think it's a little bit like, you can buy all the chocolate bars in the world and you eventually get to your golden ticket, but you'll run out of money before you do that. So you have to make that golden ticket get to you in the first place.

Chris Douvos:

See, I always say we use lottery slogans of Ivy League veneer, it's things like, optionality is the same as saying, "Hey, you never know." You got to be in it to win it is the same as asymmetric payoff, right. We've co-opted some of this stuff, it's like, "Some days I think I'm not an investor, I'm just heading down to the bodega to buy a couple of Lotto tickets along with my diet coke."

Chris Douvos:

It's really interesting because one thing I think a lot about is, I don't know how you underwrite to kind of 10X returns, because the portfolio math on that is such that you have to underwrite to one outcome that's just so extraordinary that you can't underwrite to it. I remember when First Round invested with Uber, I was spending a lot of time hanging out with Rob Hayes. And nobody knew that that was going to become Uber. In that same fund, they had Roblox, which ended up actually distributing more to First Round than Uber did. And Roblox was like the 10-year overnight success story you just didn't know. Who knew that that was going to be the company that it is today distributing literally billions of dollars to that fund.

Chris Douvos:

And so, what I kind of underwrite to is I want managers that can demonstrate sustainable competitive advantage, which drives repeatability. And I've got some kind of short hands for what I think about that in terms of people who are leveraging specific ecosystems, and that manifests in a couple of different ways. And I feel like that kind of thinking can get me to like a 3X, but the gap between 3X and 10X is filled with just being really f-ing lucky.

Samir Kaji:

Another thing I've been really curious about is just the common mistakes that managers make that, over time, atrophy returns. One of the obvious things for me is when managers move out of the swim lane too quickly, to suddenly, and whatever comparative advantage they had dissipates because they're playing a completely different game. And an example would be somebody that's raised a $10 million fund writing small frictionless checks, non-lead. And then, all of a sudden, jump into 75 and being forced to really lead every single round. And those things can come at the expense of returns. Are there any common mistakes that you see or red flags that you think come at the expense of returns?

Beezer Clarkson:

When you're in a meeting and sort of like the magic happens, there's all sorts of like structural things, to Chris's point, like they have a team and they have a vision for market and there's all this stuff that everybody has. But there's something about an investor who's playing in a space. And it's just so true to how they think. The stupid phrase is they can see around corners. But the reality is that's the experience you have sometimes with an LP when someone's talking about something, you're like, "I have now understood D to C crypto enterprise software." You pick it in a different way because this investor is thinking about it in a different way, or is able to sort of capture something about their investing scheme that other people just are sort of more like paycheck venture capitalist.

Beezer Clarkson:

This sounds derogatory and I don't mean it that way, but people kind of go to work to be a VC versus someone who's like, "No, I'm compelled to do this because this is like what's going to be true in the world and I have to be there." And they can be emerging managers, they can be established. There's just something about their presence. And they don't have to be an extroverted charismatic, they can be super quiet about it. But when you're in the presence of one of those folks, be it brand new or established, it's just as different. And it doesn't mean to say they're not going to make some mistakes in investing because venture is a risk business, and that's fine, we sign up for that. But that's just really different.

Beezer Clarkson:

And I think when people don't have that and you have too many people that just want to write a check, you can kind of feel that too and it just feels very middling. Or if someone's super special because they work really well to your point, Samir, at seed, and all of a sudden, they're doing growth at seed. And somehow they're magic intuition. Some people can stretch both ways. It's hard, not everybody can and that can just sort of diffuse it. And then, you're also competing with a different set of folks. It's a really different game and people have different tactics and understand different things about companies.

Samir Kaji:

Is there anything from a behavioral characteristics standpoint that you can point to that's actually tangible? Because what we're talking about here is you feel something, right, you're across something, which by the way, I think the risks that all LPs have, including all of us, is we form biases about what somebody should feel like because we've seen certain type of people be successful and we've sat across people. What are some of the tangible things from a behavior or the way somebody thinks that is actually a good sort of heuristic or at least a heuristic that you all use? Is it hustle? Is it hungry? Is there self-awareness? What is it that you're looking for?

Chris Douvos:

This is a flummoxing topic for me because a lot of the stuff that I've, in my career, been kind of trained as like really important actually hasn't been in the last few years, and one is portfolio construction. If you look at the great funds of a lot of different eras, when they've been successful, they've owned a lot of their big winners, they've been thoughtful, they've been disciplined, all these things that we think of as asset management.

Chris Douvos:

And Beezer and I are in a fund together where we literally like kind of were yelling at this GP across the table because he was kind of just spraying and praying, and he his response was, "Look, you got to understand this isn't 1999, it's 1996. And the more investments you make the better because the rising tide's going to lift all boats." And I said, "Well, you don't know what the tide is going to be like at some undetermined time in the future." And of course, and so I'd sit here and I'd be like, "Oh, those guys really suck at portfolio construction and here they've got a big public company that's going to return somewhere between four and 6X their fund on its own." Right. That's one that historically has been really important to me, people are thoughtful about the craft of investing as opposed to just throwing money around.

Chris Douvos:

And a second one, which actually, I struggle with a lot and this is like the Swanson training in me is like alignment of interest is really important, right. And it can be financial, but more important, it's psychic. And you can tell when somebody's really all in. And I think what we've seen in the last like 4, 5 years is like the delantatification of venture capital. And we're seeing a lot of people who are just like, "Hey, I'll start a rolling fund and I'll do this for like six months and then I'll be onto the next thing."

Chris Douvos:

And I remember Swanson used to talk about like, "You want to manager like lash to the mast where like it's not that they own a free option, but rather that they need this to do well for them to be fulfilled both financially and psychically." And we just see a lot of people just kind of spraying and praying. And we as the LPs are short their optionality. And that's actually a super uncomfortable situation. But at the same time, a lot of those people have actually been successful. And some of the people who run what I'd call lifestyle funds have crushed it. And so, I sit here and go like, "Maybe everything I know is wrong."

Beezer Clarkson:

Yes, we always worry that everything we've been trained on is wrong because you do get these, to Chris' point, you get one kind that does so well and you're like, "Oh, well, guess, none of that other stuff mattered." And that's the glory a venture. [inaudible 00:48:34] to me like, what is it? Because I do agree with you, I think one of the challenges that has kept LPs from taking... There's a lot of reasons why LPs don't invest in net new managers to their funds, but one of them is there are a lot of classic training on what a venture capitalist looks like down to demographics. And that's really stifled the industry. It's just wrong. There's no one person who's genetically better at being an investor. If that was true, would know it, right. And it'd be seen throughout history. It's just more about who's been given opportunities.

Beezer Clarkson:

So I think when we listen to people when they talk, I'm not sure if it's quantifiable, but we ask a lot of questions because we want to understand their strategy like, how are they going after what they're going after? What is the opportunity set that they're seeing? How are they understanding the businesses they're going after? And for some people, it's very quantifiable. And some people, it's about margins. For some people, it's about consumer behavior. So the metric that's being used isn't as relevant as the fact that they're using something to help drive their decisions and they can explain it. And if they can't explain it, there has to be some other way of presenting it. Somebody literally asked me this question today, they're like how important is communication to being a great investor? And I was like, "I think it's probably really critical because if you can't explain what you're doing to somebody else, it's going to be really hard to fundraise.

Beezer Clarkson:

In the beginning, you're going to have capital from somewhere. And if you don't have your own capital, you can do it yourself until your track record grows, and people will invest in you even if you never say a word. Otherwise, you have to be able to articulate, in some form, maybe it's a TikTok video, maybe it's an Excel spreadsheet... I guess my point is we ask a lot of questions and try to take in a lot of different data to understand who these people are and where they're going to invest.

Beezer Clarkson:

So you can see what they see and where the puck's going and where we fall off with a lot of people is, to Chris' point, a lot of people haven't thought through it that much. It looks fun. You can start with nothing these days, which is awesome. And it does help create more entry rounds for folks to come in. But it doesn't mean they have thought through the whole entire business of where they're going and what they're doing. And if you want to raise institutional capital, the bar does get set somewhere around there, right. It's not just, "Hey, I want to invest." Well, everybody does, so it has to be more than that.

Samir Kaji:

As you were all talking, it reminded me of a question from Twitter that I saw, and it really spoke to thinking about how do you differentiate? So all of us have seen hundreds, if not thousands of decks, and they all follow a similar pattern around team, and what's your asymmetric differentiation, your value add? And over time, people become a little bit immune to decks themselves and the stories because everything looks the same. And the question was really centered around, if you don't come from a place that has unique points that LPs look like, or at least the points that LPs tend to weight heavily, i.e., coming from a big firm like NEA, living within certain Silicon Valley circles for a long time, having built a network. How do you actually stand out from the crowd when you may not have any of those things? How do you all think about that? And are there things that managers that aren't part of the mainstream Silicon Valley circles and haven't been for a long time do to really stand out with LPs that are institutional.

Guy Perelmuter:

Well, I think one of the key aspects of investing... You asked before for concrete, palpable pointers, to be able to answer those kinds of questions and effect of the matter is that investment is a blend of art and science, right. There is a technical aspect to it where you run the numbers, you look at the correlations, you try to do your back testing, you try to do forward thinking... I mean, all of that stuff, it's fine. But there's a lot, to Beezer's point of communication skills of being able to kind of get into the other person's head to make sure they can articulate an idea or a thesis that makes sense to you, that fits with your view of the world.

Guy Perelmuter:

So for me, one of the things that we consistently do is we look for whatever is inevitable, right. What trends are being now accelerated and that are inevitable? And when there's a manager, to your question, Samir, that is able to articulate the inevitability, why it's inevitable, how they are able to explore that particular trend, and why they are in a unique, or in a privileged position to be able to do that. That's something for you to start paying attention, and picking that particular deck and say, "Okay, that's a conversation I want to have." It doesn't mean you're going to follow through, but that's, I think, a great start. It's when someone is competent enough, they have clarity of thought, they have a reasoning that has a beginning, a middle and the end. And it's not just trying to take some buzz words from whatever and trying to pitch phenomenal numbers, because...

Guy Perelmuter:

Guess what? Now, phenomenal numbers are the norm right. That became almost jaded at this point, with the numbers. You want to see something that is sustainable, because this is not something you can get rid of in another month or two, you're stuck with that position for a decade or so. So you have to be very, very confident on your evaluation process, on your analysis, and on that specific thesis that is being presented to you.

Samir Kaji:

You made a point there that I think is really important about track record, because everyone has track record. And I actually sent a tweet that, if your fund isn't at least three years old, no one gives a s**t about your track record over the last three years. It really doesn't matter. It's immaterial, there's too much gamification that can happen. But if somebody is approaching you, what should they lead with if it's not track record because a lot of people that are coming out to market don't have a track record that's more than three or four years.

Chris Douvos:

One thing I think a lot about is... I've been doing emerging manager since 2004. And not withstanding what we've seen in the last year, the vast, vast majority of these have been completely unfulfilling in terms of returns. And everybody's got their different heuristics for what might work. For me, it really comes back to, what is your unfair advantage and how can you articulate your own repeatability? This is actually Andy Weissman at USV who really kind of hammered into me the, "We're not investor's advice." The time I spend with him, he's always talking about repeatability and process driving repeatability.

Chris Douvos:

And for me, one of the things, and I tell this to all the managers that approach me, I'm looking for people who are leveraging ecosystems. So like, what are you part of? I've been doing a lot of university investing of late and so I love people who are really leveraging innovation on campus, particularly in hard tech. Are you leveraging some sort of community like Ross Fubini, a manager of ours kind has a couple of communities that he's very kind of embedded in and see some stuff through there? Or kind nontraditional managers. Do you have some sort of kind of position of authenticity in some sort kind of new and emerging area that has a lot of upside? And how do you maintain that authenticity?

Chris Douvos:

One fund that we didn't do, which I regret, although I haven't seen the numbers, but I'm sure they're crushing it, is somebody like Cross Culture. I thought they had an extremely nice kind of footprint and a lot of upside potential there. So, that's kind of my watch word because looking at each thing and saying like, "Huh, what are there? 4,000 managers out there, Samir? I don't even have time to meet with 400 of them," which is why I almost use this like, "What is your leverageable ecosystem?" That's my first screen.

Beezer Clarkson:

Don't know if we have something as specific as that, maybe we should. 

Chris Douvos:

Well, you're smarter than I am so...

Beezer Clarkson:

We don't meet with 4,000, but we do... One of the processes that we have used is when we start getting interested in the space, we do try to meet with as many as possible. And it's certainly easier if this space is like... Seed generalist is not the great way to do that. But for example, when we started looking at a certain category in enterprise or in big data, or in consumer, we might meet with a range of investors or funds to try to get a sense for what's existing and then you also then hear different voices. And again, it can be the established manager, this isn't just the emerging managers, but it's easier, at least for me as an investor to understand what's going on.

Beezer Clarkson:

COVID makes it really difficult to do that geographically, but to Chris' point LA. If you can go walk the streets and see what's going on while people are talking about they're investing, we love to do that too. We've done that very extensively in Europe and Israel to understand ecosystems. And then, when you bump into somebody who just brings something different to the game, even if it isn't obvious from the outside, when they talk about something, it can land, because you're like, "Oh, I see your world that you're playing in and I see who you're playing with, and this lands for us." But it's really time intensive. We consider ourselves venture specialists, but it's a lot, it's a lot of work. You can't just meet with one fund a year and do that.

Samir Kaji:

I feel like we can... I mean, we've only covered a small subsection of the topics that we could probably cover, especially within the emerging manager ecosystem. We haven't gotten into nano funds or solo GPs, and really the shift in that. I do feel like we need a part two for that because there's so much meat on that bone. But I do want to end, in the interest of time, with maybe a question on where there might be opportunities. We've talked about established managers, we've talked about growth funds, we've talked about series A, seed, I just alluded to nano funds and seed funds. Going around the table here, what is one area that you feel currently has the best risk-adjusted rated return of all of those things that I just mentioned?

Chris Douvos:

I've had a several years long kind of deep tech hypothesis going. Part of that is I'm really nervous about weaponized balance sheets and there's actually still financing risk in deep tech. Maybe there's capital intensity, but I think that keeps the company's honest. Then again, back to Buffet's equation, opportunity equals value minus perception, right, the perception of so many things is so high that I think it kind of constrains the opportunity and I think there's a lot of good value to be had in deep tech. But the reality is a lot of your deep tech has gotten mainstream a lot faster than I imagined it would so maybe that's going to constrain my hypothesis. But that's probably the area where I'm most focused in. And one articulation of that is a lot of the college related funds, I'm doing like House Fund at Berkeley, E14 at MIT, Freeflow down at Caltech, Rhapsody that does a bunch of material science stuff across a bunch of campuses and other research institutions. That's a lot of fun.

Samir Kaji:

So I never thought I'd hear the day where the guy that told me LP should invest courageously would say he's scared. But I think that it is a unique time and certainly deep tech is highly interesting for a lot of us. And Guy, I know this is core to your investment thesis. Let's move over to you and tell us a little bit about what you're most excited about.

Guy Perelmuter:

There's this quote that comes to my mind on a regular basis, and I think Chris is going to love it because it's a maritime quote, so I think it's right up his alley, it says, "There's no favorable wind for those who don't know where they're going to." And I think that's on us as investors, right. You have to have a plan, you have to chart your course and say, "This is where I'm going," because otherwise, how do you even know that something is of interest? Right?

Guy Perelmuter:

And to your point, Samir, we basically started GRIDS as a niche shop, deep tech only, that's the only thing we do. And hence, within that world of deep tech, and I fully agree with Chris, I think it has become relatively mainstream very quickly. And again, I think COVID plays a big part on that trend. But I think that within deep tech there are a few, and again, inevitabilities that we are clearly seeing now with climate tech, right, after the disaster of the 2000s, where climate tech was basically solar and that ended in a blood bath. But right now there's so much stuff going on in climate tech, the supply chain optimizations, the whole food tech revolution, because we're going to be 10 billion people in 2050, there's no more real estate for us to do more crops, we'll have to come up with inventive, innovative solutions. There's synthetic bio, which again, I think now everybody's pretty familiarized with. So these are areas where I think there are hu... aerospace in general, space, and so on, so forth.

Guy Perelmuter:

So in deep tech, there are those clusters of opportunity that are almost like brand new markets that, thanks to the history of technology, are now available for private investors to kind of dip their toes on the water. And I continuously, I've been excited about this particular market ever since I did my first angel check back in late 2000 and I still feel that there's a lot of room for that trend to unravel. So yeah, I absolutely am with Chris on that one, I think deep tech is going to be a phenomenal run for the next two decades if you know where to look and who to choose.

Samir Kaji:

So we got too deep tech and I'm not surprised. And it's something that I've spoken to a lot of both GPs and LPs about. And I do think, to your points both, it has become mainstream, but it's still very early stage in many different applications. So I'm excited about that. So last but definitely not least, Beezer, where are you excited? Let's go to the smartest person in the room here.

Beezer Clarkson:

Oh, I hope this answer doesn't disappoint you. I was thinking more generally. We're looking for the best early stage investors. We launched our business around... I don't have a specific area because one of the things that I've just discovered is I can't say, "I only want to do X" in advance, it doesn't work for me. I have to go meet the people. And we have a portfolio where we're just looking for great seed and a series A investors, and it can come in any shape and form.

Beezer Clarkson:

And there certainly are times when we find a trend that we're really interested in. We've been spending a bunch of time in FinTech recently. But that doesn't mean we're only going to do FinTech in the future, it just means we're trying to understand it right now. We have been spending a bunch of time with nano funds and some of these other structures to understand that we may or may not do anything. We just solve for the best early estate investors in whatever form they come in. I still think it's an incredibly exciting space, and all of the innovations that are happening are awesome. And yeah, I just think there's a ton going on and think it's a great place to play. I love where we invest.

Samir Kaji:

Yeah. Well, I'm glad you brought up nano funds because I was going to say that's an area that I'm extremely excited about. And the nano funds where somebody has something really programmatic on how they go about their business, having an incredible amount of self-awareness of what swim line they should be in, and when they factor in things like network effects, I mean, the returns have been through the roof. And I know many that are just starting that I have a lot of excitement about. And so, I hope more people do nano funds. I think right now it's still family offices and individuals. I know there's a couple funds that are now starting to do it, but that's my answer. I mean, this has been such a fun jam session. I know it's Friday, late, and we don't have a glass of wine, next time, we'll do part two with a glass of wine. But thanks everybody for being on the show here.

Beezer Clarkson:

Thank you for having us.

Chris Douvos:

Thanks guys. This is awesome.

Podcast Production support provided by Agent Bee Agency