Venture capital offers attractive returns for ultra-wealthy families: Ultra-wealthy families, including those managed by multi-family offices, have historically seen significant returns from venture capital investments due to its strong performance over several decades. This investment choice helps preserve and grow their wealth.
For ultra-high net worth individuals and families represented by large pools of capital, such as those managed by multi-family offices like Crescent Partners, investing in venture capital has historically yielded significant returns. This is due to venture capital's strong performance over the last several decades. Families seek to preserve and grow their wealth and venture capital offers an attractive avenue for achieving these goals. With a focus on preserving capital and growth, venture capital's potential for high returns makes it a popular investment choice for these families.
Partnering with experienced managers for access to top VC funds: To access top-tier venture capital funds, partner with experienced managers who can provide access and offer institutional-quality private investment opportunities with a broader diversified asset allocation strategy.
Accessing top-tier venture capital funds can be challenging due to their small size and the high demand for investment. For families and individuals seeking exposure to this asset class, partnering with experienced venture capital managers who can provide access to top funds is crucial. Cresset Capital, for instance, has built a practice around this by assembling a portfolio of top-performing venture capital firms and offering investment opportunities to their clients and external investors. The venture capital industry's unique nature, with its quixotic fund managers and finite number of successful startups, makes it a challenging but rewarding industry to navigate. For emerging firms like Cresset, gaining the attention and trust of these top funds requires persistence and a compelling value proposition. By focusing on providing institutional-quality private investment opportunities and offering a broader diversified asset allocation strategy, Cresset has successfully attracted both clients and external investors to their venture capital offerings.
Growing organically or through strategic acquisitions and building strong industry relationships are keys to gaining access to top venture capital firms.: To enter the venture capital scene, firms must first grow organically or through acquisitions to a significant scale and build strong industry connections. LinkedIn is an effective tool for B2B marketing, especially for targeting senior-level executives, and can generate a higher ROI compared to other social media platforms.
For firms looking to enter the venture capital scene, reaching a certain scale and building strong relationships are crucial. Crescent Partners, for instance, had to wait until they had over $20 billion in assets under management (AUM) and had established connections with influential figures in the industry before they could gain access to top venture capital firms. This experience highlights the importance of growing organically or through strategic acquisitions, and building a strong network in the industry. Additionally, LinkedIn can be an effective tool for B2B marketing, particularly for targeting senior-level executives, who make up 18% of its user base. LinkedIn ads have been shown to generate a higher return on investment compared to other social media platforms, making it a valuable resource for businesses looking to build relationships with decision-makers and drive results.
Despite economic downturn, top VC firms remain oversubscribed: In a tough economic climate, LPs prioritize existing relationships and strong brands, making it challenging for new VC firms to secure funding.
Despite the economic downturn and the subsequent reduction in commitments from Limited Partners (LPs), the top venture capital firms in the United States continue to be oversubscribed. New firms, especially those without a strong brand or network, have struggled to secure funding. LPs are hesitant to change their strategies and risk being crowded out, leading them to invest less in new managers and focus on their existing relationships. This trend, which was also observed during past economic downturns, highlights the resilience of venture capital and the importance of a strong brand and network for new firms. Additionally, there has been an influx of hedge funds and venture tourists in the industry, leading to concerns about overvaluation and subsequent markdowns. Managing these expectations and potential losses for high net worth individuals requires transparency and clear communication from venture capital firms.
Market shift from founder-friendly to investor-friendly: Capitalize on investor-friendly market and AI opportunities through top VC funds and co-invest programs.
The current market environment is shifting from founder-friendly to investor-friendly, leading to more realistic valuations and stricter diligence. This change, coupled with the significant opportunities in AI, makes it an opportune time for top venture capital funds. Our fund, for instance, was fortunate enough to have made most of its investments in 2022, after the peak of the founder-friendly environment, ensuring no significant haircuts for our clients. While timing the market is challenging, maintaining a consistent allocation to venture capital is advisable. Our co-invest program allows us to partner with these top managers, leveraging their expertise and resources to identify and invest in the winning companies. By doing so, we can maximize returns for our clients.
Co-investment programs offer benefits like reduced fees, faster DPI, and access to fund managers' ecosystems: Co-investing allows firms to blend down fees, access private companies earlier, and leverage fund managers' expertise for higher returns and informed investment decisions
Co-investment programs have become an essential part of many investment firms' fund strategies. These programs offer several benefits, including reduced fees and faster DPI (Days to Private Investment). Co-investing allows firms to blend down fees and access private companies earlier in their growth cycle, which can lead to higher returns. Additionally, co-investment programs provide firms with valuable access to the ecosystems of the fund managers they invest in. By leveraging the knowledge and expertise of these managers, firms can make more informed investment decisions and increase their chances of identifying high-potential opportunities. However, it's important to note that there is adverse selection in the co-investment world, and firms must be strategic in selecting the opportunities they pursue. Ultimately, co-investing offers a unique advantage in the private markets, where information is asymmetrically distributed and access to valuable opportunities is limited.
Factors in successful tech investing: follow-on investments, power law, and risk management: Investing in tech requires careful consideration of high-risk seed investments, power law's impact on returns, and risk management for significant profits and diversification.
Successful investing in the tech industry involves careful consideration of various factors, including follow-on investments, power law, and risk management. Seed investors make high-risk bets on promising startups, but they must also consider their position size and potential returns before deciding to invest more. The power law, which suggests that a few investments will generate most of the returns, necessitates a diversified portfolio to capture the average return and some outliers. Additionally, risk management is crucial, and investors must be prepared to take profits when opportunities arise to secure significant returns and reduce overall risk. The ecosystem of seed, venture, and public market investments creates a vibrant and symbiotic environment for risk-taking and value creation.
Reaching $50 billion from a $1 billion fund is difficult in VC: Successful funds struggle to reach 50x returns due to power law in VC, requiring significant ownership in winners and multiple bets on same company.
Generating a $50 billion fund from a $1 billion fund is extremely difficult due to the power law in venture capital. The most successful funds, like Horowitz, Founders Fund, and Light Speed, while generating fantastic returns, may not reach the 50x mark due to the math involved. To reach such numbers, a fund would need to own a significant percentage of companies with massive exit values, which is challenging even for the best-performing funds. Instances of achieving such returns are rare and usually occur at the seed stage, as seen with companies like Instagram, Uber, and Twitter. The most successful funds, like Founders Fund, have shown some predictive ability and have a higher likelihood of identifying and investing in winners, allowing them to get multiple bets in the same company at different stages. However, this strategy requires a high degree of conviction and a significant amount of ownership in the companies, which is not common among most venture capital firms.
Balancing established and emerging managers in a diverse venture portfolio: Assess emerging managers based on their background, network, and individual reputation to identify those with a knack for finding top opportunities and securing investments.
Building a diverse venture portfolio involves balancing established managers with strong track records and stable returns, and emerging managers with high growth potential and innovative ideas. Emerging managers are typically defined as those in their first to third funds, and evaluating them can be challenging without extensive track records. However, factors such as their background, network, and individual reputation can provide valuable insights. The importance of individuals in venture capital has become increasingly evident, with founders often seeking specific investors to work with. Therefore, when considering emerging managers, it's essential to assess whether they have a knack for identifying the best opportunities and securing investments in those businesses. Lemon.io, a platform for hiring on-demand developers, can help startups find great tech talent more efficiently, allowing them to focus on growing their businesses.
Venture capital firms rely on networks and trust when evaluating new fund managers: New fund managers must build strong relationships, demonstrate a track record, and showcase decision-making abilities to gain trust and investment from venture capital firms.
Venture capital firms value a strong network and trust when considering new fund managers for investment. They look to other GPs, LPs, and founders for insights into a manager's abilities and reputation. Seed and pre-seed stage deals can be competitive, and LPs may not fully understand the competition dynamics at these stages. Building strong relationships and demonstrating a track record are crucial for new fund managers looking to break into the venture capital scene. Additionally, LPs may look for evidence of a fund manager's decision-making abilities and their "doubling down" strategy, which can set them apart in the competitive landscape. Regular reporting and communication with LPs can also help build trust and confidence in a manager's abilities.
Evaluating Seed Stage Investments: VC firms use criteria like investment round size, leading firm involvement, and effective governance to prioritize investments, reduce competition, and increase returns.
Successful venture capital firms employ a rigorous framework to evaluate potential investments and distinguish between likely and definitive winners during the seed stage. The criteria include the size and quality of investment rounds, the involvement of leading venture capital firms, and the establishment of effective governance structures. This approach allows firms to prioritize investments, reduce competition, and increase the likelihood of achieving high returns. Additionally, this framework can also serve as a contrarian investment strategy by identifying opportunities where there is a lack of competition among investors. However, it's important to note that this is a working theory and continuous refinement is necessary. Furthermore, data-driven firms can also benefit from this framework by identifying opportunities that may be overlooked by others.
Founder or leading investor involvement as a strong signal of conviction and potential market fit: Founder's involvement and investor conviction can lead to rapid growth and customer support issues, requiring engagement and board presence for informed decision making and potential opportunities.
The involvement of a founder or a leading investor in a startup can serve as a strong signal of conviction and potential market fit. The founder's willingness to take a significant risk on an unconventional candidate can indicate the creation of a new category or extreme product-market fit. This can be seen when the startup experiences rapid growth with minimal marketing efforts, leading to customer support and sales becoming the primary issues. At the seed stage, it's crucial to engage with customers and have a board presence to stay informed about future funding rounds and potential company sales or secondaries. These events can offer valuable opportunities for venture capital firms to expand or reduce their positions. Lack of customer engagement and governance are major red flags, especially in the crypto sector.
Validating product and customer base with lean startup method: The lean startup method can help companies validate their product and customer base before investing heavily, but applying it to consumer hardware can be complex. Demand for investment remains, with platforms like Kickstarter and Regulation Crowdfunding democratizing access to venture capital.
The lean startup method, which includes techniques like the painted door test and charging customers upfront for a product before its official launch, can help companies validate their product and customer base before investing heavily in production and distribution. However, applying this approach to consumer hardware can be challenging due to the complexities of manufacturing, distribution, and margins. Despite these challenges, there is still demand for investment in this space from both accredited and non-accredited investors. The democratization of venture capital, with platforms like Kickstarter and Regulation Crowdfunding, has made it possible for a larger pool of investors to participate in funding rounds.
Democratizing Venture Capital Investing: The speaker advocates for greater access to venture capital investing through education and regulatory changes, unlocking trillions of dollars in value for individuals. A potential solution is an educational accreditation process and a scratch-off ticket system.
There's a need for greater democratization in venture capital investing, allowing more individuals to invest in top-tier firms despite current regulatory restrictions. The speaker believes that this would unlock trillions of dollars in value for those who understand the power and risks of venture capital. He suggests implementing an educational accreditation process to enable wider investment access. The comparison was drawn between the lack of regulation in gambling and the current venture capital investment landscape, highlighting the disproportionate impact on lower-income individuals. The speaker proposed a scratch-off ticket system as a potential solution, allowing investors to allocate a certain amount into venture capital based on their results. Overall, the conversation emphasized the importance of making venture capital investing more accessible to a broader audience.
Jordan Stein from Cresset Partners on VC dynamics, evaluating emerging managers, & more! | E1901
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Todays show:
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Mentioned on the show:
OpenAI o1’s announcement: https://openai.com/index/learning-to-reason-with-llms/
OpenAI release article on The Verve: https://www.theverge.com/2024/9/12/24242439/openai-o1-model-reasoning-strawberry-chatgpt
Supermaven article: https://techcrunch.com/2024/09/16/ai-coding-assistant-supermaven-raises-cash-from-openai-and-perplexity-founders/
Twitter post from Michael Seibel: https://x.com/mwseibel/status/1835063692117103090
Waymo and Uber expand partnership: https://waymo.com/blog/2024/09/waymo-and-uber-expand-partnership/
Polymarket on Fed Interest Rates: https://polymarket.com/event/fed-interest-rates-september-2024?tid=1726496650092
Leaked Mr Beast doc: https://drive.google.com/file/d/11dV24Mda_kNEBCLtPtBomWG4IkngvQKK/view
Travis Kalanick | All-In Summit 2024 video**:** https://www.youtube.com/watch?v=8j7lwauJN2s
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Relationship Advice of the Investor Sort with Meghan Reynolds of Altimeter | E2008
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(25:55) Market sentiment and single deal SPV dynamics
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(31:02) VC allocations, private credit, and market dynamics
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Great 2023 interviews: Steve Huffman, Brian Chesky, Aaron Levie, Sophia Amoruso, Reid Hoffman, Frank Slootman, Billy McFarland
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The New Power Law & How I Built a $100B Portfolio | E2007
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Timestamps:
(0:00) Jason joins Pejman Nozad and Jason Shuman at the Liquidity Summit 2024.
(3:25) Pejman Nozad’s “How I Built a $100B Portfolio”
(10:42) .Tech Domains. Don’t miss our “Jam with JCal” contest! To apply and get more details go to https://jamwithjcal.tech/
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(23:50) Jason joins Pejman for a fireside chat.
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(38:02) Jason Shuman’s “The New Power Law: Good vs Great Funds”:
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Great 2023 interviews: Steve Huffman, Brian Chesky, Aaron Levie, Sophia Amoruso, Reid Hoffman, Frank Slootman, Billy McFarland
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Boom: Supersonic speeds for everyday travel with Blake Scholl | E2006
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Todays show:
Boom Supersonic’s Blake Scholl joins Jason to discuss the future of supersonic flight (1:18), Boom's vision and test flights (9:25), the evolution of hardware startups (22:29), the future of autonomous aviation (1:17:06), and much more!
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Timestamps:
(0:00) Boom Supersonic’s Blake Scholl joins Jason
(1:18) Commercial flight speed & Concorde history
(8:34) Vanta - Get $1000 off your SOC 2 at https://www.vanta.com/twist
(9:25) Boom's XB-1 test flights and airline partnerships
(15:04) Pricing, market comparison, and venture capital's view on hardware startups
(21:16) Squarespace - Use offer code TWIST to save 10% off your first purchase of a website or domain at https://www.Squarespace.com/TWIST
(22:29) Evolution of startup market and hardware innovation
(29:03) Boeing's innovation decline and attracting talent to projects
(36:15) OpenPhone - Get 20% off your first six months at https://www.openphone.com/twist
(37:42) Working with tech legends and overcoming engine design challenges
(49:14) Cross-discipline innovation
(57:01) Learning from Air France 447 and cockpit safety design
(1:03:36) Cockpit technologies and the MH370 mystery
(1:11:30) Public perception of aviation risks and airport security impact
(1:17:06) The future of autonomous aviation
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Great TWIST interviews: Will Guidara, Eoghan McCabe, Steve Huffman, Brian Chesky, Bob Moesta, Aaron Levie, Sophia Amoruso, Reid Hoffman, Frank Slootman, Billy McFarland
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Scaling Childcare with Tech: Winnie.com’s Blueprint for Growing with Purpose & Profit | E2005
This Week in Startups is brought to you by…
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Timestamps:
(0:00) Sara Mauskopf, CEO of Winnie joins Alex
(1:45) Winnie's evolution, pivot, and focus on childcare services (7:25) Building Winnie's database and reflections on company growth
(9:55) Brave Search API. Get started for free at https://www.brave.com/jason
(12:08) The value of transparency and growth metrics
(19:20) CLA. Get started now at https://www.claconnect.com/
(21:16) Market positioning, motivations, and goals in the childcare industry (23:30) Addressing gender dynamics and startup funding (27:34) Balancing investor expectations with business models
(29:43) Sprig. Visit https://sprig.com/twist ****to book a demo and get a $75 gift card.
(31:10) Profitability, operational efficiency, and managing costs (37:01) Marketing strategies, brand growth, and the impact of Google’s model (40:30) Adapting to changing childcare demands due to remote work (44:08) Efforts to reduce childcare costs and home-based business challenges (50:06) Balancing profitability with growth and venture capital experiences (54:00) SaaS pricing challenges and the impact of AI (58:22) Tech M&A, FTC regulations, and innovation policies
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Great TWIST interviews: Will Guidara, Eoghan McCabe, Steve Huffman, Brian Chesky, Bob Moesta, Aaron Levie, Sophia Amoruso, Reid Hoffman, Frank Slootman, Billy McFarland
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The Rise of Stablecoins with Circle’s Jeremy Allaire | E2004
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Todays show:
Circle’s Jeremy Allaire joins Alex Wilhelm to discuss the growth of stablecoins (49:06), stablecoin market infrastructure (22:23), their impact on global financial systems (56:07), and more!
*
Timestamps:
(0:00) Circle’s Jeremy Allaire joins Alex Wilhelm
(2:08) Jeremy's early career and the evolution of the internet
(5:28) Transition from Macromedia to Circle's founding
(12:10) LinkedIn Jobs - Go to https://www.linkedin.com/twist to post your first job for free.
(13:21) Bitcoin, stablecoins, and Circle's compliance
(20:53) Google Cloud - Get up to $200K in Google Cloud credits – or up to $350K for AI startups – plus training and guidance. Apply at https://startups.google.com/twist
(22:23) The current state and future of stablecoin market infrastructure
(28:07) Integrating stablecoins with traditional finance
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(35:40) Stablecoins' impact on global financial systems
(41:30) Circle's business model, scalability, and blockchain potential
(49:06) Growth of USDC and other currency stablecoins
(51:10) USDC market cap trends and interest rates
(56:07) Stablecoins in the global financial system and US regulation
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(34:12) Beehiiv - Get 30 days free and 20% off your first 3 months at https://www.beehiiv.com/twist
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Related Episodes
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Anniversary Bonus: Founder Roundtable
Happy one year of Found! To celebrate our anniversary, we welcomed back four founders whose stories really stuck with us since we talked to them. In what Jordan called a “founder smoothie”, we talked with Brie Code from TRU LUV who was on our second episode, Earl Cole from SMART Tire Company who was on the following episode, as well as Aditi Shekar from Zeta, and Jelani Memory from A Kids Company About who joined us a few months later. They talk about perspective shifts they’ve experienced in the past year, their different takes on fundraising, and how they stay true to their respective core missions.
Take our listener survey and let us know a bit about yourself and what you think of FOUND.
Connect with us:
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- Via email: found@techcrunch.com
- Call us and leave a voicemail at (510) 936-1618
Found posts every Tuesday. Subscribe on Apple, Spotify or wherever you listen to podcasts to be alerted when new episodes drop. Check out the other TechCrunch podcasts: Equity and Chain Reaction. Subscribe to Found to hear more stories from founders each
Connect with us:
Tim Westergren: How The Band Kept Playing At Pandora
Bitcoin/Fintech - Has the Bubble Burst?
In this episode of Northland's - The Artisan Podcast:
"Bitcoin/Fintech - Has the Bubble Burst?"
Listen to the insights of Peter Misek, co-Founder of Frameworks Ventures who was one of the earliest investors in Google along with Arthur Salzer, co-Founder & CEO of Northland Wealth.
Find out:
- Has the bitcoin bubble burst?
- How to value bitcoin and other cryptocurrencies?
- What is the next 'big thing' in Fintech?
- Who will be the next PayPay or Square?
- Does India present opportunities in Fintech?
Peter Misek is a co-Founder of Framework Venture Partners. Based in Toronto, he come with over 18 years of venture capital experience as an Advisor/Venture Partner for DN Capital including direct involvement in multiple unicorns. At Framework, Peter's investments include Paper, Incode, Continup, FlipGive, Daisy Intelligence, GoViral, TouchBistro, Wattpad and Wave Financial.
Prior to Framework, Peter was a Partner at BDC IT Venture Fund. With an entrepreneurial background, Peter is Chairman and Founder of SoundPays Inc. and an original programmer of the technology. Peter has almost 20 years of investment banking experience as Managing Director and co-Head of Global Technology Research for Jefferies in NYC and as Director of Research and Global Technology Analyst for Cannacord.
Peter holds a CA, CPA, from Illinois as well as a CFA.
Ep 51: Investing Nerdy and Early in Smart Hardware with VC Sunil Nagaraj of Ubiquity Ventures
The beauty of smart hardware lies in its agility. With a recurrent feedback loop and regular software updates, products can be improved over time. Ubiquity Ventures is focused on funding startups that pursue this continuous refinement, investing in a feature trajectory rather than physical product.
Sunil Nagaraj is the managing partner of Ubiquity, a seed-stage venture capital firm interested in smart hardware and machine intelligence. Prior to starting his own fund in 2017, Sunil spent six years as VP with Bessemer Venture Partners, where his focus involved IoT, developer tools, space and security companies.
Sunil sits down with us today to share his background as an entrepreneur turned venture capitalist. He explains the idea behind his startup, Triangulate, discussing the challenges he faced in A/B testing and why he ultimately decided to shut the company down. We discuss the benefits of smart hardware and its ability to ‘increase the velocity of the scientific method.’ Listen in for Sunil’s insight on understanding the world through the lens of a coder and his meaningful definition of success.
Connect with Sunil
- Sunil’s Website http://www.sunilnagaraj.com/
- Sunil on Twitter https://twitter.com/sunilnagaraj
- Sunil on LinkedIn https://www.linkedin.com/in/nagarajs/
- Ubiquity on LinkedIn https://www.linkedin.com/company/ubiquityvc/
Connect with Boost VC
- Boost VC Website https://www.boost.vc/
- Boost VC on Facebook https://www.facebook.com/boostvc/
- Boost VC on Twitter https://twitter.com/BoostVC