May 24, 2022 · 1h 1m · news
Oren Zeev: How I Raised $1 BILLION in 12 Months | 20VC #888 · 20VC with Harry Stebbings
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In this episode of 20VC, legendary solo venture capitalist Oren Zeev shares his contrarian investing philosophy, discussing why he rejects standard VC dogmas like rigid ownership thresholds, over-diversification, and LP-driven constraints. Drawing on decades of experience, Zeev details his rapid fund deployment, his founder-first approach to both growth and graceful shutdowns, and how early partnership failures drove him to build his highly successful Solo GP model.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Harry holds 16.5% of the talking time here. How this is scored →
Harry as informed peer 3.9 Guest teaching 6.4 Guest disagreement 2.8 Harry pushing back 2.4
speaking balance: gold is Harry, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 7:00 Rejection of Vintage Diversification
Zeev directly tells Stebbings 'yes, I think you're wrong' regarding temporal diversification and describes kicking out an LP who lectured him on deployment speed.
Hardest push from Harry ▶ 7:08 Stebbings Challenges Deployment SpeedStebbings refuses to accept Zeev's fast deployment pace at face value, invoking classic portfolio construction principles and asking if he was sold a lie about vintage diversification.
Biggest teaching moment ▶ 57:30 The Riverside Investment LessonZeev educates Stebbings on venture evaluation by explaining why he backed Riverside at a $7.5M valuation despite severe product bugs, while Stebbings over-indexed on technical imperfections and missed the deal.
Harry holds his own ▶ 28:30 Stebbings Dissects LP Incentive FlawsStebbings demonstrates deep institutional domain knowledge by laying out exactly how LP incentive structures are broken, explaining how managers prioritize brand allocations over true fund returns.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Harry as informed peer | Guest teaching | Guest disagreement | Harry pushing back | Why |
|---|---|---|---|---|---|---|
| Comparing Historical Market Crashes to Today | 2 | 5 | 1 | 1 | Stebbings asks Zeev to compare the current downturn with the 2000 and 2008 crashes based on his long tenure. Zeev explains that 2000 was a nuclear crash where businesses completely collapsed, whereas today public valuations are slashed but underlying business fundamentals remain strong. | |
| Navigating Investor Psychology During Downturns | 4 | 7 | 6 | 5 | Stebbings challenges Zeev on his rapid deployment pace and asks if temporal diversification is essential for venture portfolios. Zeev bluntly rejects the premise, telling LPs who complain about vintage diversification to 'deal with it' and sharing how he kicked out an LP who lectured him. | |
| Follow-On Strategy and Evaluating Price Sensitivity | 4 | 6 | 3 | 3 | Stebbings asks how Zeev handles follow-ons and price sensitivity when valuations feel stretched. Zeev explains that 80% of his capital goes to follow-ons and argues that paying 50% more for hyper-growth companies catches up within six months. | |
| The Importance of Shutting Down Gracefully | 2 | 7 | 2 | 1 | Zeev delivers a masterclass on dealing with failing companies, advocating for transparent conversations and shutting down gracefully rather than burning through cash to the bitter end. He uses a healthcare end-of-life analogy to show that trying to survive a few weeks too long causes unnecessary agony and loss of dignity. | |
| Debunking Venture Capital Ownership Threshold Rules | 5 | 7 | 4 | 3 | Stebbings and Zeev dissect venture industry orthodoxies around ownership targets and firm structure. Zeev criticizes arbitrary 20% ownership rules and explains how partnership politics drive partners toward mediocrity and defensive decision-making. | |
| The Fallacies of Pro-Rata and Over-Diversification | 6 | 6 | 3 | 4 | Stebbings calls pro-rata rights 'BS' and pushes back on extreme portfolio concentration for typical VCs. Zeev agrees that protecting arbitrary ownership percentages is foolish and argues that LPs are severely over-diversified across GP relationships. | |
| LP Incentive Flaws and Multi-Stage Signaling Risk | 7 | 5 | 2 | 3 | Stebbings showcases deep knowledge of LP internal dynamics, pointing out how institutional LPs tolerate bad economic terms just to gain prestige from brand-name funds. Zeev agrees and elaborates on how slow LP decision processes suffer zero competitive consequences. | |
| Preempting Funding Rounds and Managing Secondary Sales | 5 | 7 | 3 | 2 | Stebbings asks how Zeev successfully preempts rounds and increases ownership over time. Zeev details his core principles of never pressuring founders or using other funds as stalking horses, while also noting he almost never sells secondaries because 'the ones you want to sell you can't'. | |
| Major Venture Misses and Going Solo | 2 | 6 | 2 | 1 | Zeev recounts major career misses during his time at Apex, including missing out on Facebook and being prevented by partners from taking Audible private before its sale to Amazon. He cites these exact partnership failures as his primary reason for becoming a solo GP. | |
| The D Local Mistake and Key Lessons | 2 | 7 | 1 | 1 | Zeev analyzes his mistake with D Local, where he invested personally (returning 100x) but passed on behalf of his fund because he feared a quick 2-3x exit. He explains the lesson learned regarding capital recycling and why fear of a quick moderate exit was flawed reasoning. | |
| Quickfire AMA and the Riverside Success Story | 4 | 7 | 4 | 2 | In a rapid-fire session, Zeev discusses founder primacy and doubling down $4M into a written-off investment to play to win. He then recounts making the early Riverside investment at a $7.5M valuation while playfully ribbing Stebbings for passing on the deal due to early product bugs. |
Statements from this episode (32)
Zeev: The entire Israeli venture industry was just 10 people in 1994
“It was 1994, and the whole venture industry literally started overnight, and the whole industry was 10 people, and I was lucky enough to be hired by, ah, to be hired by, ah, Apex, who wanted to open operations in Israel, one of two people.”
Zeev: Most portfolio companies are not seeing any customer demand weakening
“Valuations were cut by 50% in the public markets on average, but most of the businesses are still going very strong. You know, most of my companies, we don't see necessarily any weakening of demand.”
Zeev: The 2022 tech downturn is not comparable to 2000 or 2008
“If that, if there was a healthy business before, it's the healthy business now. So I don't equate the current crisis to those two big ones.”
Zeev: Every venture investment I made in 1999 failed completely
“Personally, I can tell you that every single deal that I did in 1999 tanked was a bad deal, and every single day, like, really zero percent success”
Zeev: I raised $1B in 2021 and am raising another $500M
“Because in 2000, in 2021, I raised three funds total, total about a billion, and then now I'm raising another five hundred million.”
Zeev: I keep zero capital reserves for follow-on investments
“And I don't keep reserves, so I, you know, invested, you know, invested at all.”
Zeev: I banned an LP who complained about rapid fund deployment
“I had a, an LP who joined in the third fund, and four months later, I tell him that you know, I'm raising our fine for, I finished, I'm raising, and he totally freaked out, and he started lecturing me on, he didn't call it what you called it, he called it vint…”
Zeev: LPs achieve vintage diversification simply by re-upping in annual funds
“If I raise a fund every year and they just are in every fund, they do get the you know, even if one fund is not what he called vintage diversified, they would be vintage diversified if they care about it. I don't care about it, but if they do, you know, they c…”
Stebbings: 20VC is passing on 80% of deals we previously funded
“Eight out of 10 deals that we might have done, honestly, we're a very diversified fund, unlike you actually, we're not fucking doing now. It has to be a nine and a half out of 10, and so the bar's just gone up for us.”
Zeev: 80% of my deployed capital goes into follow-on investments
“So even if I continue to invest at the same pace from a new investment standpoint, that's only about 20% of the cash that I invest. 80% goes into later stages of companies that I got in early”
Zeev: VCs should not be price sensitive on high-growth companies
“In general, I don't think one should be overly price sensitive. Obviously, you know, you have to have some discipline, but the reality is that if you're dealing with companies that are growing at over a hundred percent per year, and you believe it's sustainabl…”
Zeev: Founders should shut down failing startups before running completely dry
“If you decide to give up a month or two too late, the agony And the lack of dignity. And the pain is like 10 times, you know, when you decide to stop in time, you have enough time to do it in an organized fashion, to make sure that everyone is taken care of, t…”
Zeev: I bought a 3% stake in Uber Freight from Anthony Levandowski
“I had an opportunity when Uber Freight spun out of Uber. I had a very unique opportunity to get ownership and the ownership that I, to buy ownership from actually from the from Anthony Lindowski, the guy who allegedly or not allegedly actually, because it was …”
Zeev: Uber Freight will achieve a double-digit billion-dollar IPO
“And I'm still very happy to have done it because I think it's going to be double digits in billions outcome when it goes public.”
Zeev: VC partnerships drive investment decisions toward mediocrity, not exceptionalism
“So that's another example where I think that You know, a partnership can drive things more towards mediocrity as opposed to exceptionalism.”
Zeev: Follow-on investments should never be about protecting ownership percentages
“So I think that's another idea that to me, it's never about protecting the ownership. You know, if I put my money in a company again, It doesn't matter if it's a full on or new. It's because I want to put new money, not because I put something in the past and …”
Zeev: VCs with high hit rates only need 5 to 8 companies
“I do think that the number of course, some absolute number, I think that the higher the Probability of success of the underlying, of each individual underlying investment is the less diversification you need. If you believe that every deal that you do has 50% …”
Zeev: LPs are wildly over-diversified with 20 to 40 GP relationships
“I would say that on the LP side, I think they're way over-diversified because most of them have 20, 30, 40 relationships. That's crazy because each of their underlying investments or funds is also very diversified. It's not very likely to lose money. So each, …”
Stebbings: LP incentive structures prioritize brand names over financial returns
“Do you know what I think the biggest, most broken thing about LP worlds today is? It's the incentive structures for LPs. I'm speaking to a lot of them who are investing in the biggest brand names, and we don't need to name them, and they have the most egregiou…”
Zeev: Fund-of-funds LPs rely on brand-name VCs to raise capital
“Especially, especially true for the fund, the funds, because they also use, it's because they also need to use the brand names to raise money for their funds.”
Zeev: LPs face no competitive consequences for moving slowly
“I think that it's an extremely non-competitive space. I'm talking about the LPs now, because generally speaking, like, When you're a VC, you're competing for a deal. If you don't move fast enough, if you're not attracted enough to the, for the founders, they'l…”
Zeev: Institutional LP diligence processes add absolutely no value
“Something must be wrong in an industry where they take, you know, weeks and sometimes more to make a decision that is like, they knew what the decision was before they started to do, you know, the work and the work has no value whatsoever. It's just that that'…”
Stebbings: VC managers should set strict two-to-three-week LP deadlines
“That's why I always advise managers to like put in place deadlines that are not like tomorrow or next week, but like two to three weeks out, because if they're not going to make a three week out deadline, they're not going to do it.”
Zeev: Preempting and leading rounds is the only way to increase ownership
“At the end of the day, first of all, the end of the day, the only effective way to increase ownership is to preempt and lead the round. If you sit and wait for someone else to lead it, then at best you're gonna get your program.”
Zeev: I led Tipalti and Homelike rounds after poor market responses
“It happened to me twice with Tipalti, for example, that the company went and talked to investors and we didn't get the best reaction. And I stepped in and said, forget it. I'll do it. It happened to me with Homelike, for example.”
Zeev: In VC secondaries, you can never sell what you want
“I think that I have a very, very special rule, which is almost always true, which is the ones that you want to sell, you can't, and the one that you can sell, you don't want to sell.”
Zeev: Taking Audible private would have been Apax's biggest win ever
“This would have been by far the biggest win of Apex ever.”
Zeev: Audible would be worth $50B to $100B today if independent
“Today, I believe that Audible would probably be worth 50, a hundred billion.”
Zeev: I never want to have venture partners again
“The conclusion from these two instances, especially from the second one was that I never want to have partners again. Okay. So that was my takeaway that I don't want to have partners that I, you know, I want to own my own mistakes and own, I don't want to suff…”
Zeev: I made over a 100x return on my personal dLocal investment
“Now it's five, but actually, ah, but I actually make, made more than a hundred X on my, ah, more than a hundred X on my, ah, personal investment.”
Zeev: Quick 2-3x venture exits are worth taking via capital recycling
“And this is a teachable moment for me because next time, if the risk is that I only make two or three X, quickly, not after five years, then I should have done it. And I'll tell you why, because I totally forgot that I could recycle the money. So in the unfort…”
Shorts cut from this episode
▶ "Every single deal I did in 1999 tanked." · 20VC with Harry (@3:46)
▶ The BILLION $$$ MISS · 20VC with Harry Stebbings (@42:21)
▶ I made a BILLION $$$ DEAL by ignoring the rules · 20VC with (@19:20)
▶ How to manage your Investor Psychology · 20VC with Harry Ste (@3:46)
▶ The Billion $$$ Miss · 20VC with Harry Stebbings (@42:21)