The Ledger
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Singlehurst: Return on equity is critical at scale, yet anathema in VC
“One of the single most important factors is the return that you make on equity. And this notion, this concept is, is almost it's almost an anathema within the venture world.”
Singlehurst: Expecting an 80% probability of a 5x return is delusion
“If you think that there's an 80% chance of making a five times return in investment, like, you're probably deluding yourself in the levels of probability and confidence that you can have in a long tail or, you know, high outcome scenario, like a five times ret…”
Singlehurst: Post-2021 trauma drives venture investors to herd into safe consensus deals
“I think that there is like a herding into a much smaller number of names. I think that's quite a sort of understandable, like, human psychology here, right? The industry is still digesting the trauma of twenty-twenty-one and the pullback in twenty-twenty-two. …”
Singlehurst: Evaluating Tech Companies Should Focus on Return on Capital
“Everybody talks about like this trade off between growth or profitability. It should never be about growth or profitability. It should be about incremental return on investor capital. It should be about long run return on equity.”
Singlehurst: Bending Spoons targets broken VC-backed businesses
“And their addressable market basically is the broken parts of the venture capital ecosystem, which is companies that are good products, but really bad businesses. And they can take these good products and make them amazing businesses. By virtue of being part o…”
Singlehurst: Probability-adjusted upside can grow as companies scale and execute
“I think that the probability adjusted upside of companies can often grow as they become larger. And so even though ostensibly the price, yes, might be lower in the previous round, As I said, I think sometimes the probability of outsized returns can grow as com…”
Singlehurst: 10-year public equity investments should be treated as illiquid assets
“If we're investing in a company with a 10 year view, You probably shouldn't be doing anything two or three years into that investment journey. You should really be thinking of it as being pretty much as illiquid as any private holding.”
Singlehurst: Founder zeal matters more in growth investing than competitive analysis
“The thing that I should have placed a much greater weight on. Was the founder of DoorDash and, you know, why he'd started the business and the level of commitment that he had to these small businesses that he was wanting to help and kind of bring online and he…”
Singlehurst: Investor discipline means selectively paying high prices for breakout companies
“Like being a disciplined investor doesn't mean I will never pay more than X multiple, because when you find a really special company, you should lean into valuation. Now, the danger is that you can tell yourself a story that every company is a special company,…”
Singlehurst: Investors can only truly understand a company by becoming shareholders
“You only really ever understand a business by being a shareholder, and so we feed that into our, you know, to our portfolio construction, and of course then we don't add to those companies where we're not building that conviction.”
Singlehurst: Diversification should focus on capturing outliers rather than mitigating downside
“Diversification is normally thought of in terms of downside risk mitigation. We would think about it much more in terms of diversifying to maximize the probability of capturing outliers.”
Singlehurst: Going public should aim to deter misaligned investors
“They should actually treat the process of going public as much as an exercise of trying to put off the wrong kind of investors.”
Singlehurst: Long-term investors will inevitably look foolish during winning investments
“If you are sufficiently long-term even in your most successful investments, there will always be a time when you look and feel really stupid.”
Singlehurst compares overcapitalizing startups to force-feeding foie gras
“Because it leads to overcapitalization of businesses, and it leads to companies being, I sort of have this, like, sometimes this mental model in my head, and it's not a very nice sort of mental image, but you know how they make foie gras.”
Singlehurst: Fintech offers prime investment opportunities at reasonable valuations today
“If you want to invest in a fintech company today, like actually a lot of these companies are making amazing strides towards profitability. They're not having, you know, everyone and their mother throwing capital at them. And you can find some really good busin…”
Singlehurst: AI tools will not completely disrupt core fintech complexities
“And again, like, you know, I think coming back to financial technology, I think this is quite a good area where the difficulties and the nuances of those kinds of companies is, you know, a lot of it is about like how you manage regulation. And like, will AI so…”
Singlehurst: Public and Private Growth Investing Share Core Analytical Questions
“The core analytical questions I think are pretty similar. You have different sources of information, whether you're doing public or private, but like you're still looking for the same characteristics, right? Like if you make it very simple, you're still lookin…”
Singlehurst: Understanding business models over tech suits growth over venture
“There are people on my team who are much more interested in technology itself, and also love investing, love businesses, but my focus, and I think this is a focus that perhaps makes me better at, say, growth stage investing than I would be at venture stage inv…”
Singlehurst: Private investing gives public market managers a 5-10 year advantage
“They basically get a window into the future. They get to see the businesses that will be in the public markets over the next five or 10 years and just get insight and understanding and relationships with those companies that you could never get if you weren't …”
Singlehurst: High turnover prevents investment teams from developing true trust
“I think that just gives rise to a kind of level of trust and a level of working together that we couldn't have if this was a sort of organization where kind of people came in for a couple of years and then left. And if it was more of a kind of high turnover so…”
Singlehurst: High-Probability Investments Carry Far More Risk Than Investors Assume
“And that the things which appear to be low probability actually often have a much higher probability than you might think. And the things which you think have a very high probability, sometimes actually have a much lower probability than you might think.”