The Ledger
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Akkina: Every venture firm eventually declines due to botched generational transitions
“Every firm, no matter how great, has a half-life, right? No firm is going to be great forever. They'll eventually botch a generational transition or something, if they even try.”
Akkina: Virtually Every Venture Firm Was Undisciplined in 2021
“We all know that, that we were all undisciplined for some period of time, right? It's not a secret, and you know, every, every, virtually everyone did it.”
Akkina: MITIMCo Passed on an Early Opportunity to Invest in OpenAI
“I mentioned we're investors in YC, and when Sam left YC, around then we also had an opportunity to invest in OpenAI, and we didn't do it. So that's definitely an error of omission that I think about a lot.”
Akkina: VC managers should not force LP evaluations too early
“It's good to build relationships, but you don't necessarily want to force people to evaluate you too early. Because I think particularly with larger institutions, it can be the case that, you know, once they evaluate you once, they may not be willing to look a…”
MITIMCo is significantly reducing its investment exposure in China
“We're definitely, I think like many others, we're doing a lot less there now. I mean, we're not gonna categorically not do it at all yet. But we are reducing it, and to the things that we keep doing, we're, you know, we're very careful about whether they're pe…”
Akkina: MITIMCo will scale out of VC funds that become too large
“If a firm gets too big and we're no longer confident that we can make exceptional returns over time, we're going to have to scale out.”
Akkina: Unliked venture managers can succeed at seed, but rarely at Series A
“So I think in seed, that's probably more doable than in series A, for instance, right?”
Akkina: Sequoia's Dominance Came From Partners Appealing to Different Founder Profiles
“An interesting observation I heard about Sequoia once actually is that one of the things that made them so successful was there was this period where they had Mike Moritz and Jim Getz and Doug Leone all kind of in their prime all very impressive VCs in their o…”
Akkina: VC funds go sideways by growing too big too quickly
“Well, one thing is I think sometimes firms grow too big too quickly, right? And that forces them out of whatever their sweet spot was.”
Akkina: MITIMCo commits $50M–$150M across 6–8 core U.S. venture funds
“So today, at least in the U.S. Venture portfolio, we probably have Maybe six to eight core relationships we would refer to them as where we're writing checks of like 50 to a hundred fifty million per fund.”
Akkina: MITIMCo writes $1M checks to emerging managers without track records
“And then the, a third bucket we have now is things where basically we'll write a million dollar check because maybe it's extremely early and the person had no track record, not even an angel track record, let's say, or we're doing it to work with them to sourc…”
MITIMCo scaled annual private market commitments down from $3B to $1B
“You know, at peak we probably were putting three billion out the door in one year, and now we're probably down to about a third of that, so maybe a billion dollars.”
Akkina: LPs Avoid Criticizing Top VCs Due to Scarce Fund Capacity
“The tension there, right, is the top VCs have scarce capacity relative to, You know, their fund size relative to the universe of LPs who might like to invest there's a big mismatch there, right? And so I think LPs often feel reticent to criticize people too ha…”
Akkina: VCs should not be criticized for deploying capital during bubbles
“In the public market, if a manager went all to cash in their portfolio, we wouldn't like that either. We would say they're trying to time the market, right? So similarly, I don't think you can criticize VCs for deploying money during a bubble period, right?”
Akkina: MIT Endowment Remains Liquidity-Constrained Until Major Unicorns Like Stripe Exit
“We're less liquidity constrained now than we were say at the beginning of last year, but the major issue still continues to be that there's all these big companies like Stripe, for instance from the last cycle that have not had liquidity events yet. And so unt…”
Akkina: Direct co-investments offer higher conviction than blind-pool fund commitments
“I personally find it easier in a lot of cases to write a big check to a co-invest than to a blind pool fund, right? Because no matter your conviction in someone, when you're writing them a blank check, you know, we don't know what's gonna happen, right? And as…”
Akkina: Traditional Endowment Incentives Fail to Reward Risk-Taking
“The traditional endowment or foundation, I think part of the reason they're not good at this stuff is they don't have an incentive to be right, and people, when they don't have an incentive to take risks, they're not going to want to stick their necks out.”
Akkina: Family offices should require investment staff to co-invest personal capital
“I, you know, if I think, if I had a blank sheet of paper, if I were running a family office, let's say, I would probably do something where, one, people would be required to invest a lot of their own money in the investments the firm was making. You know, eith…”
MITIMCo approved a Rippling co-investment within hours on a Friday night
“Within a few hours, Friday night we made the decision to back that deal.”
Akkina: Generating consistent public market alpha is harder than venture
“I just find it much easier for me and my personality to I think generate alpha on the private side. I mean, the public side is always becoming more competitive. You think, if you think venture is competitive, try making alpha versus you know, the NASDAQ, right…”
Akkina: Delaying economic sharing causes venture firms to lose top talent
“They're thoughtful about how they share economics and, you know, they don't wait too long to do that. And I think one of the reasons a lot of firms sometimes lose some of their best people is because they don't do that quick enough.”
Akkina: LP interest in late stage, solo VC, and crypto will return
“Two years ago everyone wanted to do lots of late stage and solo capitalists and crypto, and then, you know, a year later they all think it's dead and don't want to do that ever again. I think most of those things will come back.”
Akkina: Talking to other LPs undermines independent investment thinking
“We try to stay independently minded, right, and I think the more you talk to other LPs, the harder that is to do.”
Akkina: Fund managers become arrogant after success, leading to worse decisions
“Frankly, if people have a spell of success, sometimes they become arrogant, right? They start to make worse decisions and treat people worse. When things are going well, you're never as smart as you think.”
Akkina: Venture capital is a secular growth industry despite cycles
“I think this is something that only goes one direction, and of course there will be cycles, like right now in things to You know, having a bad spell the past few years, it's become a little less popular and there's a little less competition, but I think that i…”
Akkina: Down markets weed out uncommitted emerging VC fund managers
“During times like this, when it's much harder to raise capital, you see which new firms really want it badly, and the ones who don't are disappearing, right? So I think that's one thing. And of course, look, at least for some period of time while we're in a do…”
Akkina: Venture fund evaluation requires assessing see, pick, win, and service
“It's see, pick, win, right? We need people who can see the best deals or at least a very large volume of deals, right? Hopefully the best deals are inside that set. Then we want them to be able to pick the best ones to try and invest in. And then finally they …”
MITIMCo evaluates GPs primarily on winning deals and servicing portfolio companies
“I would say we tend to spend the most time thinking about the winning and servicing angle, which kind of feed on each other. Because I think, you know, look, there's at least several hundred people in the industry at any given time, GPs I'm talking about, who …”
MITIMCo Biases Toward New Fund Managers With Angel Track Records
“Although, I would say when we back a new fund, we do probably have a bias towards people who at least have some kind of angel track record.”
Akkina: VC fund success cannot be judged in first three years
“Honestly, I would say in the first three years, you usually can't tell. Right. It would be some time between three and five years where we start to see whether they're, some of their companies really inflected. And we don't necessarily care whether something h…”
Akkina: MITIMCo's default strategy is loyalty to existing fund managers
“Our default is always to be loyal to the people who we're already invested in, right?”
Akkina: Green Oaks is one of MITIMCo's top fund relationships over 10 years
“And I remember actually, you know, my boss, Seth, and I decided, you know, let's, let's leave this and look at fund two or something. And the next, but I slept on it, and then the next day I decided to call my boss, Seth, back and say, you know, I think we sho…”
Akkina: MITIMCo supports strategy shifts if communicated early and purposefully
“I mean, we want people to do what they say, but if they discover the original strategy is not likely to work, then obviously we want them to evolve, right? So I think it's about, You know, communicating that early if you are gonna shift your strategy and doing…”
Akkina: MITIMCo almost never sells fund stakes on secondary markets
“We'll certainly think about it. We almost never do it because we're not willing to do it at a low price, right? I mean, the reason these secondary funds exist is obviously to get high IRRs themselves, right? And so, generally speaking you know, if we're sellin…”
MITIMCo invested $120M in Coupang, returning 7-8x at distribution
“So in, you know, in the case of Coupang, that was a hundred twenty million co-investment for us. We made, I think, a distribution price is seven to eight X or something like that.”
MITIMCo Declined Co-Investments From Respected GPs at Peak Tech Bubble
“I would give ourselves some credit for, at the peak of the bubble, we said no to several co-investments where, ah, you know, people that we really respect and still respect were pounding the table to do these things, and we said no.”
Few University Endowments Can Execute Large Direct Investments Quickly
“We're probably one of the few LPs, certainly one of the few university endowments who can react to one of these things very quickly in, in big size.”
Neil Mehta Completed Rippling Funding Deal Over Weekend During SVB Collapse
“With Neil, for instance, I think there was a big article maybe last year about the deal he did in Rippling, right? And that came together over a weekend, right? During this bank collapse.”
Akkina: Avoid businesses needing annual balance sheet reinvestment or having high churn
“You have to be very careful with businesses where you have to reinvest the balance sheet every year. You have to continuously reinvest the customers, right? So other parallels I sometimes notice, things like gaming, where maybe you have a very high churn rate …”
Akkina: VC fund managers should treat fundraising like enterprise sales
“I think you have to treat the process like an enterprise sales cycle, right? Which means you need to think of it as a numbers game, and you need to have a lot of funnels.”
Akkina: VC funds should limit single LP concentration to 10-20%
“Well, yeah, I think you probably don't want to exceed 10 to 20%, except in very unusual circumstances.”
MITIMCo backs Sequoia, Andreessen Horowitz, Green Oaks, Y Combinator, and Initialized Capital
“So we're lucky to be in a lot of the big names you would expect, you know, Sequoia, Kleiner Perkins, Andreessen, et cetera. And then, you know, there's some newer things as well that we've done in the past 10 or 15 years, like say, Green Oaks or Y Combinator i…”
Akkina: MITIMCo writes $10M–$20M checks for mid-tier venture funds
“And then after that, we have another bucket where the check sizes are typically 10 to twenty million per fund.”
Akkina: MIT endowment must pay out roughly 5% of assets annually
“Normally we know we have to pay out about five percent Of our assets per year to support our institution. That never really changes.”
Akkina: MITIMCo structured most of its Coupang investment as senior notes
“Most of the money we invested in that was in this special structured note where we felt it had very protected downside, but managed to keep a lot of the upside as well.”
MITIMCo was constrained to a small Snowflake pre-IPO allocation
“I mean, there's another opportunity where we co-invested in Snowflake before it IPO'd, and in that case, we were only able to get a few million bucks allocation, even though, given what we knew about the company, we would have invested a lot more if we had the…”