The Ledger
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Woody Marshall: Large venture firms face strict auditing on portfolio valuations
“If you're a firm as big as mine or as Devon's, there's a very sophisticated process that gets reviewed by auditors, which is a little different than, you know, with a lot of the early stage guys, so it's hard for us to play around with valuation”
Woody Marshall: Entry valuation matters less if competitive durability is high
“Getting that durability of the value proposition, and whether that's competitive modes, whether that's management execution, those are the important things to get right. But if you get those right, I do agree, valuation in hindsight can be a little less releva…”
Woody Marshall: Penalizing venture partner mistakes creates risk-aversion and mediocre fund returns
“If all of a sudden you start smacking people on the hand for, if they make a mistake in a risk business, what are you going to end up with? You're going to end up with a risk averse set of, You know, investors and you're guaranteed your next fund is going to b…”
Woody Marshall: Refusing to reset inflated valuations causes suboptimal business decisions
“The smart companies are, you know, resetting the deck. They're ripping bandaid off because the problem with companies that hold on to some of those valuations is they're going to make decisions that are suboptimal.”
Woody Marshall: TCV's 2021 investments will take longer to yield returns
“If you look at the things we invested in, in 21, we like those companies a lot. It may take, it's gonna take us longer. To get our returns. It just is, because multiples have come down.”
Woody Marshall: Secondary markets provide adequate liquidity without company approval
“I think now with all of the secondary liquidity options that are out there, if you want to sell as a private company, even if The company doesn't want to sell, but you want to sell your shares. I think there's adequate liquidity sources”
Marshall: TCV underwrites expecting half of hold periods post-IPO
“A lot of times we will underwrite an investment understanding that maybe half or more of the hold period could be as a public company.”
Marshall: Market size is the last concern when evaluating tech companies
“And I think if we're interested in a business and it's leveraging technology in an interesting way for either an enterprise or for a consumer, the last concern that you have is, is it a really big market?”
Woody Marshall: Public markets shifted Rule of 40 expectations toward balanced margins
“Two years ago, if you had talked to the public market... It used to be 60 to 70% growth with the -20 to -30% EBITDA. Today, depending on who you talk to, it's like 30 and 10, 20 and 20. Like they want to see both.”
Woody Marshall: TCV has made no direct AI investments as of late 2023
“We have not made any AI specific investments, although I would say. 100% of our companies are leveraging AI in lots of different ways, whether it's, you know, how you touch the end customer or how you make some of your processes more efficient.”
Woody Marshall: Less than 20% of TCV's investments are in the Bay Area
“Less than 20% of the investments that we make are in the Bay Area.”
Marshall: Deploying larger VC checks is harder due to fewer scalable opportunities
“It's always more challenging to find places for larger and larger checks. There's just fewer opportunities that are out there, but”
Marshall: TCV avoids market risk and invests only after commercial acceptance
“With us at TCV, we're looking for commercial acceptance. So we're not taking the risk of whether there's a market or the answer in the question, will the dogs eat the dog food?”
Marshall: Expanding market value of tech companies justifies venture capital mega-funds
“The first thing I would say is if you look at the size of the global technology pie, it's bigger than ever before. You know, look at the top 10 highest market cap public companies today. You know, Apple's over a trillion dollars. I think five years ago was pro…”