The Ledger
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Suster: Founders should avoid demo days and batch fundraising hype
“Like, you've got one company, and there's no divorce clause from investors, so I really think entrepreneurs need to take the time to get to know their investors, which is why I'm not a big proponent of demo days, or overhyping your company, or Waiting to meet …”
Suster: Upfront generated $1.4B from six hard-to-fund, capital-efficient startups
“On average of our companies that take longer and that we had reserves for. On average, it took six years to raise a growth round. Okay. But those companies by definition are more capital efficient because they didn't have access to it. I have six deals that fi…”
Upfront Ventures sold $1.2B in secondary positions during 2021 peak
“We sold 1.2 billion dollars worth of positions in 2021. When everyone was writing crazy checks, I sold six hundred million dollars that year.”
Suster predicts lead VC ownership targets will rise above 20%
“Yes. In fact, I think it'll go up from 20%, not down.”
Mature startups facing cash crises will be hardest to refinance
“So when we're looking at companies, we're looking at bright-eyed, bushy-tailed, we're going to build this for the next 10 years, we're in the first six to 18 months of our journey, as opposed to a company been around for six years and suddenly finds itself in …”
VC fundraising will be harder from 2020 to 2025
“I suspect it's going to be harder to raise funds for the next five years than it was for the last five.”
Upfront Ventures deployed nearly $50M into discounted secondaries in 2023
“So in 23, I started buying secondaries at discounts. We deployed almost fifty million dollars into secondaries in 23 at deep discounts at a time where other people were, like, scared about the market”
Suster: Upfront seed-invested in Ring after Shark Tank passed
“We were the seed investor in Ring. Everybody on Shark Tank passed on it. We wrote a check.”
Upfront Ventures is closing deals entirely remotely without meeting founders
“We funded a company today. We submitted the term sheet two weeks ago, and I've never met the founder in person. We greenlit another term sheet last Monday. It'll fund early to middle of next week. I've never met the founder in person. We are going to our partn…”
Nortman: Deal picking accounts for at least 50% of VC value creation
“I definitely think the picking is 50% or more, but I very much believe in the doing”
Prioritize great teams in good markets over decent teams in great markets
“But in general, I think the reality is I would take a great team in a very good market over a decent team in a great market. Cause I think at the end of the day, the great end of the day, the great team has a flexibility insight to really move into great marke…”
Underdog founders have a higher likelihood of success than silver-spoon peers
“I think people who've kind of worked through and gotten themselves in a position to succeed in Probably have a greater likelihood of having a very successful outcome, and so those are some characteristics I look for.”
Suster: VCs should evaluate founders over time using 'lines, not dots'
“But probably the best known post I've ever done was a post I wrote saying I invest in lines, not dots. And the metaphor is an x-axis is time, and a y-axis is your performance. And on any given day, I'm judging your performance on that day. How well did you pre…”
Mark Suster limits secondary sales to 40% maximum during market run-ups
“Usually, in a run-up, I'll usually sell 33 to 40% maximum.”
Suster: Upfront maintains $3.2M-$3.5M initial checks and 18-21% ownership
“Since 2009, if you take every one of our funds, they've been median between 3.2 to 3.5 million dollar first check in. And they've been median between 18 to 21% ownership.”
Suster: Upfront Ventures participated in zero SoftBank or Tiger deals
“So we had zero SoftBank deals, we had zero Tiger deals, we had one Coatoo deal, one Insight deal.”
Mark Suster: Upfront's 2012 fund will return over 5x cash-on-cash
“That 2012 fund for us, I think is going to be a phenomenal success. By any measure, it'll, it should return north of five X capital cash on cash.”
Suster: Upfront reserves 58% of fund capital for follow-on rounds
“So, we invest 40% of our fund, usually 42% of our fund, and we reserve 58%.”
Upfront has maintained a strict three-year fund deployment cadence since 2009
“And we've been religiously on three years since 2009. So our funds have been oh nine, 12, 15 and 2018.”
Upfront has two portfolio companies closing $50M+ capital rounds in April 2020
“And we have two companies closing north of fifty million dollar rounds this month.”
Upfront portfolio company traded 40% contract discount for one-year extension
“One of the things I was involved in helping guide one of the portfolio companies of which I'm involved through their single largest customer renegotiating their entire contract. And what we were able to do, sadly, you know, we cut, I don't know, 40% off the an…”
Reacting to strong founders outperforms pursuing top-down market theses
“What I quickly learned is I'm much better off reacting to strong entrepreneurs who think they can do something with a market versus my own point of view about a certain market.”
Winning DTC investing requires recurring high-margin markets and founder advantage
“My formula is a very large market opportunity that doesn't have multiple brand participants that can play in, let's say high margin categories that have reoccurring purchasing characteristics. Meaning this idea of I can build a direct to consumer brand in cate…”
Suster: Seed and Series A investing relies on intangibles over traction
“There's all these intangibles that I'm trying to judge because I'm a seed or a round investor. So I'm usually not betting specifically on traction, which tends to be more of a B round activity.”
Silicon Valley bias against LA startups is now a non-issue
“Fast forward to today, I think that's a non-issue with people like, you know, Mark Suster and Upfront Ventures and Snapchat in LA.”
Suster: Upfront Ventures is deploying significantly more capital into space
“We're putting way more dollars into space right now.”
Suster: Upfront Ventures maintains median entry valuation between $11M and $12M pre-money
“So our median valuation on entries between 11 to 12 pre”
Suster: Upfront Ventures is not doing a lot of generative AI investing
“We don't write right now upfront is not doing a lot of generative AI.”
Upfront reserves roughly 60% of fund capital for follow-on investments
“So we're investing somewhere between 39 to say 42% Of our fund in first jacks, and we reserve the balance and then we pace ourselves.”
Upfront Ventures favors $3M checks over $10M checks during economic downturns
“We're tending to fund a lot more, call it, three million dollar checks than ten million dollar checks in terms of new money right now.”
Upfront allocates 89% of fund dollars to Seed and Series A
“So we do 89% over the last several funds has been about 89% in seed and A. And of that 89%, two-thirds of it is A, one-third of it is seed. So we're actually pretty sizable seed investors, but we are, as you said earlier in the show, A investors. We do 11% of …”