The Ledger
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Senkut: Optimizing for unlimited upside outweighs initial valuation and ownership constraints
“I think what we decided as a firm is the only thing that matters for us is to be in the world's best companies, because out of all the things that you can optimize for unlimited upside is the single most important one, right?”
Small seed funds face major headwinds as small M&A dries up
“More and more we're seeing the bigger companies, you know, focusing on only on large M&A and companies' success driven more like either they get to a scale where they can go public but there is not as much glory in kind of smaller successes. So I think there's…”
High entry valuations did not correlate with Felicis' exit outcomes
“So we have a very, very good data set, and what we found is that at least half of these companies, we were borderline, ah, about coming in because they were very expensive deals. But that had nothing to do with the eventual outcome.”
Only Google has an AI dataset comparable to Diffbot
“I think the only other company in the world that has that kind of data set is Google.”
Senkut: The ideal VC fund portfolio size is 40 to 50 companies
“I really do think that in venture, the ideal size is around 40, 50 companies and not 20.”
Senkut: Crossover funds focus 99% of their investments on enterprise software
“All these people have been 99% focused on enterprise software. So any other vertical, you don't have as much impact because they're not investing in everything. They're primarily investing in enterprise software, and it might grow from there.”
Senkut: Low acceptance rates don't build great VC firms, hits do
“You cannot build a great franchise just turning down companies. You have to say yes to some great companies. Otherwise, there's no way, you know, like everybody talks about, we're so selective, you know we meet thousand companies and we only say to 10. Absolut…”
Senkut: Venture capital cannot scale without 100x to 1000x return bets
“Because if you don't get that hundred X or thousand X type of bets, you know, like, this is not a business that's gonna scale with, like, just two, three X type of investments, if you know what I mean.”
Senkut: Felicis invested in Living Carbon for genetically enhanced carbon-capturing trees
“So one of the latest investments that just got public is this company called Living Carbon. So I think this area is going to be increasingly more interesting. And we said yes, because this is an amazing company that managed to biologically enhance trees to cap…”
Venture capital is a derivative business like an art gallery
“I basically immediately realized that venture capital is a derivative business. It's like an art gallery. We are not building these companies, but we're creating these companies and we're supporting them.”
Felicis was the first VC firm to pledge voting with founders
“For instance, you know, ah, two years back, we were the first venture firm to officially, you know, vote, always with their founders,”
Felicis' anti-portfolio valuation is a multiple of its actual portfolio
“If you take our anti-portfolio and add up their current pending valuation, it's probably a multiple of that.”
Senkut: Felicis's $41M debut fund backed Rovio, Shopify, and Fitbit
“The very first fund we had was only forty one million, and we invested in Rovio in Finland from that. The whole round was bigger than our whole firm. Shopify's A round and Fitbit's B round”
Senkut: Experiencing LP fundraising is necessary for building a VC firm
“For people that get into VC and that never seen that side of it, like, some people never see the VC fundraising, and I feel it's a very necessary part of it, like, it's a very necessary part of franchise and firm building.”
Senkut: Shopify and Canva grew 10 to 20 times larger than expected
“But what I have seen with all the great companies we had, whether it be like Shopify or Canva or Adyen, it ended up being like 20 to 10 to 20 times bigger than what we expected.”
Senkut: 2021 round sizes and valuations jumped 50% to 150% over expectations
“We had a great plan with the new fund and all of a sudden all the round sizes and valuations ended up like 50 to 150% higher than we expected.”
Senkut: Selecting Right People Is 100x Harder Than Picking Startups
“We think that picking companies is hard. I think picking people is like a hundred times harder, right?”
Senkut: Passed on Airbnb at a $2.5M valuation cap in 2008
“I still have an email from 2008 from Brian Chesky. I didn't. We really like you. You sure you don't want to invest at like 2.5 million dollar cap, right? Like I just overthought the risk.”
Senkut: Felicis prefers distributing post-IPO stock to LPs over managing positions
“Then I realized that our responsibility to our LPs is not managing their public stock is to be in great companies. And that's why we like to give them the stock, because listen, maybe for some, the right context is to sell the stock right then and there.”
Senkut: Felicis intentionally filled its first LP board with its toughest skeptics
“We didn't construct a board with all the LPs that were just like in our favor and just kept telling us we're doing a good job. We put the most skeptical ones on our board, the toughest ones”
Rovio became Shopify's top store out of 10,000 within a week
“In seven days, the Rovio store was up and running on Shopify. Instantly, it became the top store in Shopify among 10,000 stores. They sold out their whole inventory in a week”
Felicis passed on investing in Uber, Airbnb, and Pinterest
“Passed on Uber, passed on Airbnb, passed on Pinterest.”
Y Combinator classes were only 10 to 15 companies in 2006
“When I started 10 years ago, Google and Facebook were still buying a lot of small companies. YC classes were only 10, 15 companies.”