The Ledger
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Cem Sertoglu: UiPath grew $1M to $100M ARR in 21 months
“I believe a UiPath went from a million to a hundred million ARR in 21 months. At the time that was, I think, the fastest ever.”
Sertoglu: VCs sell time, attention, and portfolio capacity, not cash
“I think our, what we sell is not our cash. The cash is available. It's I mean, the seed and a rounds are flush with New capital coming in all the time. So I think what we sell is our time and attention and capacity, and we're selling one of those 20 slots in t…”
Sertoglu: We intentionally disagree with founders during term sheets to test dynamics
“We usually try to disagree with the founders in the term sheet process at least once so that we kind of see the dynamics of what happens around that.”
Sertoglu: Founders originating from Eastern Europe typically lack executive polish
“Our Eastern European-rooted founders are not polished.”
Sertoglu: Every single European VC passed on UiPath at least once
“I think that every single European VC has passed on UiPath at least once.”
Sertoglu: Earlybird returned 3-4x its fund via UiPath secondaries before IPO
“We were still the largest shareholder going into the IPO in the company but you know, we had also realized you know, already, I think Three, four times the fund at that point.”
Sertoglu: Early-stage VCs lose their edge once a startup goes public
“Once the stock is public, we felt that we have lost our entire edge in trying to Manage that investment. And I think as early stage investors, our job is to then leave that decision to our LPs.”
Sertoglu: 10-year fund life is too short for early-stage VC funds
“I think a 10 year life for a seed and a Focused fund is too short. This is evidenced by the fact that almost, I don't know a single early stage VC fund that was liquid by year 10.”
Sertoglu: Downside protection terms like liquidation preferences are overrated
“I think it's overrated. You know, as I mentioned before, our deals, our investments, are not real investments the way you go by Apple shares on the stock market. They are long-term contracts around a vision, and ultimately it doesn't really move the needle tha…”
Sertoglu: A VC Fund's Vintage Is the Single Biggest Predictor of Performance
“I think a very humbling fact is the biggest predictor of a fund's performance is its vintage.”
Sertoglu: The majority of 2021 vintage venture funds will not return 1x
“I haven't seen the underlying data. I would suspect that is probably the case. I, I'm afraid that is a right prediction.”
Cem Sertoglu: Bek Ventures Fund 1 achieved 20x MOIC, 85% from UiPath
“The best single venture investment, you know, 16 and a half million investments that has brought us back to .1000000000 dollars in proceeds. So fund one is 20 time multiple on invested capital. 2.7 of that is non UiPath. So about 85% of the proceeds of fund on…”
Sertoglu: Early-stage VC cannot be commoditized or scaled with capital
“I don't think it is getting commoditized because it's limited. It's, you cannot scale it by just pouring money on it.”
Sertoglu: Doubling UiPath's seed valuation would not have impacted fund returns
“For UiPath, if we'd done the seed round at twice the valuation, it wouldn't have really, you know, made a, made any difference. It would have still been a fantastic outcome.”
Sertoglu: Passing on Bolt's seed round was Bek Ventures' biggest loss
“I mean, one example that's probably our biggest loss is we met Bolt, the car ailing company, and they were called Taxify at the time, a small Baltics ride-hailing company, and even though, you know, Marcus, the founder, was extraordinary, we really couldn't se…”
Sertoglu: Bek Ventures' early UiPath check returned 12.5x the entire fund
“In the case of UiPath, I mean, we thought it could return the fund. I mean, it has returned 12 and a half times the fund already, so that's been, you know, very miscalculated analysis, but we do do it.”
Sertoglu: Headcount is the easiest metric for startup founders to inflate
“First of all, ours is a, is an industry that fetishizes growth. And as you know, the easiest metric to grow for a founder is headcount.”
Sertoglu: Venture capital is the only asset class where assets choose investors
“You know, we're the only asset class where the asset chooses the investor, right?”
Sertoglu: Seed and Series A Rounds Are Alignment Contracts, Not Investments
“The early rounds are not real rounds. There are contracts where you're demonstrating alignment around, around a target that is very far out ahead. I mean, every early stage check, you're buying a very out of the money call option on these businesses. So it's n…”
Sertoglu: Bek Ventures Passed on Rushed Deals, Not High Valuations, in 2021
“In 2021, when the market was in a frenzy, we would never categorically pass on evaluation, so we've written very expensive checks in that period, but we would categorically pass on not having enough time to understand the business and digest the opportunity”
Sertoglu: Bek Ventures partners committed nearly 10% to their $250M fund
“We think a lot about GP commitment size. We have a very high GP commitment in the fund, and what is it? It's close to 10% of a two hundred and fifty million dollar fund.”
Sertoglu: Holding Emerging VC Managers to High GP Commitments Is Inexcusable
“I think that's inexcusable to hold a young emerging manager to that to that hurdle.”
Sertoglu: VC reserves exist for overlooked companies that defy standard molds
“And that's what we, that's what our reserves are for. Our reserves are for those companies that will be misunderstood by the market or overlooked by the market because they don't fit into the mold.”
Sertoglu: Earlybird sold UiPath secondaries at a premium to primary rounds
“I mean, our secondaries were all at a premium to the primary round. So there was, each round was so oversubscribed that we were able to actually sell at a premium our share class you know, shares that are at a lower class on the liquidation stack.”
Sertoglu: Earlybird should have participated in Sequoia's $3B UiPath round
“In hindsight, we should have participated in that three billion dollar round by Sequoia.”
Earlybird Funded UiPath's Bridge Round When Other VC Funds Refused
“We've done, I mean, the bridge round at UiPath, no great fund was touching the company, and we had to build our conviction internally.”
Sertoglu: Sign funding rounds if success probability increases beyond dilution
“For the founder, I think the most important thing is probability of success. You know, Is this round that I'm closing? Is this gonna impact my potential of getting where I want to get to? As a percentage, will it make up for the dilution I'm suffering? So if I…”
Sertoglu estimates his overall angel investing track record yielded a 10x return
“I haven't done the math. I can get it to you later on, but it must have been about 10 X overall.”
Sertoglu: Foreign tourist capital repeatedly rushes into and retracts from regional markets
“It happens in every cycle they rush in and then they rush out very, very quickly. And also when they rush in, they miss, miss out on the nuances of the region.”
Sertoglu: Prematurely assuming product-market fit is the biggest scaling impediment
“I think the biggest impediment to that scale for some companies is assuming product market fit prematurely and being tempted into going into hyperscale mode prematurely.”
Sertoglu: Earlybird passed on UiPath's $3B round and began divesting at $7B
“Then when Sequoia led the three billion dollar next round, we sat it out. We did not participate. And then when the seven billion valuation series C happened. Was it C or C or D? I can't remember. But then we started to carefully divest.”
Sertoglu: Bek Ventures' Fund 1 returned capital on 12 of 15 deals
“In fund one out of 15 investments, only three of them did not return capital for us. Now, six companies are still live, but we expect to make money from all six of them, so they will not be lost. So we will have made A positive return out of, on 12 out of 15 i…”
Sertoglu: Founders underestimate cap table leverage and overnegotiate terms
“Founders usually underestimate the leverage they have on their cap table. They negotiate things for very obscure situations, etc. I think experienced founders know that it's their company, and they will have a lot of flexibility around managing things when it …”
Sertoglu: Bek Ventures partners average one to two investments per year
“When you are a small partnership, I mean, in our firm for every fund, each partner writes about four or five checks per fund. So in kind of each vintage, we're talking each year, we're talking about one or two investments at most.”