Zanutto: Hedge funds use early checks as loss leaders for pre-IPO allocation
Derek Zanutto · 20VC: Lessons from Investing in Uber and Airbnb, How To Think Through Bundling vs Unbundling, Late Stage Funds Moving Earlier, Early Stage Funds Moving Later& The Mechanics of Venture That Founders Should Know with Derek Zanutto, General Partner @ Capital · Nov 9, 2020 · at 20:37
Derek Zanutto, General Partner at Capital G, discusses why large hedge funds and crossover investors participate in early-stage venture rounds.
0:00 / 0:25exact quote · 25.3s
720p mp4 · rendered on demand · StarZero watermark
“Frankly, a lot of these hedge funds manage such enormous pools of capital relative to the size of the traditional VC fund. That for them, you know, writing a 25 or fifty million dollar check into an A or a B round is a rounding error, right? So for them, they can afford to write bigger checks into earlier stage companies and very high valuations, and they can afford to have that be a bit of a loss leader for them as sort of a feeder to the later stage kind of pre-IPO allocations that they really want.”
quote is from the automated transcript, cleaned for reading: filler sounds and stutters are removed, nothing is rephrased. names can be misheard (the analysis reads context, assessments check outside sources). how →
More from Derek Zanutto
Zanutto: High valuations and easy money create severe downstream financing risks
“One learning that I've come away with from those conversations and experiences is if you take the money and it's at a very high price and it's easy money, there is a risk to that because you, if you take it at too high of a price, you get over your skis and th…”
Zanutto: Established VC firms lose performance sensitivity due to stacked management fees
“A younger fund's partners will make nearly all of their money based on how well their underlying portfolio companies perform, while older funds will be less sensitive to underlying investment performance given the steady stream of stacked management fees that …”
Zanutto: Every enterprise will need Armis for unagentable devices alongside CrowdStrike
“As IoT devices continue to proliferate, you know, every enterprise will need a CrowdStrike for their agentable devices and an Armus for all unagentable devices.”
Derek Zanutto: Pursuing market breadth over depth in expensive markets fails
“What I worry most about, and I think what's most challenging is if in markets like this where prices are incredibly high, going for breadth and trying to chase everything, I think is a losing strategy because then you're going to, you know, not have enough, en…”
Derek Zanutto: Enterprise Data Stack Will Consolidate as CIOs Rationalize Vendors
“And I think there's a case to be made that you're likely to see a bit more consolidation down the road as CIOs and CDOs look to rationalize all the vendors are using to solve, you know, common pain points throughout the enterprise.”
Zanutto: Startup media overemphasizes individual founders over teams
“No one investor is the be all and end all for any given company's board. No one individual can build a world beating business all on their own. And I think the media around startups and venture often defaults to the story of the individual because it's frankly…”