Craft Ventures

“One of my partners at craft actually created a new tool called lobster tank. Which is a version of Open Claw that's got some enterprise security wrapped around it.”

“I signed a lease for an Austin office for craft.”

“So yeah, we raised like forty three million dollars so far.”

“Toothio I saw announced in, I think Axios, and Kraft had led their seed round, and I reached out to Jeff Fleur, who led the deal, and was like, hey, can you make an intro? And it was like, The deal was closed, like, three months prior, and I was like, hey, you…”

“We haven't done a fundraising announcement, so we're backed by Kraft. They've been helpful. Nomad Venture is out in LA. I love those guys. Yep, I was just chatting with James on the way over. They've been very, very helpful. And they were our seed investors.”

“So we basically sold, I think it was around two hundred million dollars of crypto, of which around eighty-five million dollars was personally attributable to myself. And we cleared that before day one, paid taxes on it, and basically so there wouldn't be a con…”

“No, I mean, I've already said before, I'm the key man at craft. I can't do that. But, you know, look, I would do something part time, meaning if it wasn't a full time job, if I didn't have to leave my current job, if it was just serving on some Advisory commit…”

“Similarly, I had my IT department check and make sure that we didn't have it running anywhere. We don't. I'm just gonna be frank. I don't trust this company.”

“No, in our portfolio allocation, we say this much early stage, this much late stage, this much Elon.”

“I mean, David Sachs, who I have a ton of respect for, you know, I, you know, he's raised almost four billion for Kraft since I started investing, right?”

“We had one with David Sachs, who now has three billion at Kraft. And we had an offline discussion with Byron Dieter, who runs Bessemer's cloud practice. And they both said over 80% of our money in SaaS is going to AI.”

“I said, of your 3.5 billion dollars, how much of your new money is going into AI? I think he said 80%.”

“David Sachs did an opener with me. He said of crafts, 3.3 billion, they said, 80% is going into B to B AI.”

“We're at 3.3 billion.”

“Half of that is in new funds that we haven't deployed yet, so.”

“In terms of looking for new ideas, I think the team is spending 70 to 80% of their time looking at AI.”

“We've only made, I'd say, a couple of, you know, well, we've made a few seed investments. Seed checks are a lot easier to write right now. I think we've only written one or two, you could call them, like, series A type checks.”

“There's still, I think, you're still gonna see over the next year or two a lot of companies, you know, Run out of money and die, or have to take down rounds or, you know, restructure.”

“Your burn multiple, which is just your burn divided by your net new ARR, it should be going down. And obviously, by the time... That's the point, it should be going down, and so, like, if you're a late stage company, you're like a growth stage company, like, y…”

“Do not let your burn multiple go above two, because We're going into a tough period. It's more likely that you're gonna miss than exceed, and if you miss, your burn multiple's gonna, like, go off the charts. It's gonna be even worse than you're planning, right…”

“We do have a lot of dry powder and we're going really slow. I mean, there's no feeling that we have to rush out and deploy this capital.”

“That bar hasn't changed for us, but the number of companies meeting that bar has gone down considerably.”

“When you get to series A and you want us to write a 10, 12, fifteen million dollar check, we kind of want to see some revenue.”

“So I got my first notification from a portfolio company. This is a company I invested in before craft. It's not a craft investment, but my personal investments, and they're doing a pay to play round.”

“The most important thing to me, like what would make it a partnership is for me to know that the founders have done everything in their power to reduce costs and put the company on the right trajectory before Going out and basically issuing capital calls to th…”

“We would never consider taking money from Russia or China.”

“We never had SVB as a limited partner, and we also never directed our startups to bank at SVB.”

“Yeah, we have a vintage, 2017, 2018 fund that's actually fully returned at this point.”

“We started doing portfolio updates with our entire portfolio of founders in February last year saying this is a regime change. You gotta cut costs. We did another one in May. You can watch them both on YouTube. Okay. And we were telling founders, cut your burn…”

“We had about forty-five million dollars that we were about to distribute to LPs. And I'm like, whoa, that's crazy. So we were able to sweep that to an account we used to make in-kind distributions.”

“We voluntarily slashed the valuation in half and reissued options to the employees to keep them motivated.”

“I've gotten all sorts of inbound from people asking me if I'm like leaving craft ventures to do something at Twitter. No, it's not true. We're just, Jason and I are just pitching in and helping out while Elon establishes his permanent team at that company.”

“So after Q one board meetings, I would say about two thirds of portfolio companies We're hitting their numbers, and one-third were missing, and it still appeared to be, like, problems related to those specific companies, not a macro trend. I would say after Q-…”

“I think the fact that Tiger and the other kind of crossover investors, the fact they've pulled back way back from venture markets gives smaller firms like us an opportunity to do growth deals.”

“It really does start with a company hitting the metrics hurdle that we need to see for example, series a you know, it's a call it, you're roughly more or less a million dollars of ARR. You want to be growing 15% month over month, certain net dollar retention, …”

“So now what we're telling our portfolio companies is you want to have two and a half years of runway right now because you got to go raise six months before you run out of cash, and you really want to have two years of cushion because things could be choppy fo…”

“In our second fund, we had about a hundred and twenty million of a firm stock, and we were sitting on it because we believe in the company and still do, and we're still sitting on it. And that was like a hundred million dollar mistake.”

“We actually have signed to growth term sheets recently, and it was much harder for us to do growth rounds last year, just because you had these huge mega funds come in at crazy valuations, but now they're kind of licking their wounds and we're starting to see …”

“We don't like looking at projections for runway. We just look at how much you burned last month and how much money you got in the bank.”

“On the left you can just see the number of PLG IPOs since 2012. It's been hockey sticking. Similarly the performance of these stocks Relative to NASDAQ index or just general tech stocks, PLG seems to see some outperformance.”

“The only reason I'll ever take a board seat is because I have to do it because the founder insists that otherwise they won't go with... I always time limit it now because I just can't, I mean, I can't make a tenure obligation. You know, it's typically like one…”

“When we looked at this company, they had great numbers. It's just, the valuation was ahead of those numbers, but the numbers were always great.”

“Our philosophy now is just to be price takers and just to pick the companies that we want to be in and then the market sets the price.”

“Kraft is the beneficiary because we invest, we're the first investors in multi coin. We were kind of like their seed investor invested in there. We put in something like 40% of the money for their special opportunity fund. They were one of the first investors …”

“I can tell you right now, like this second, we are sitting on Solana that we have not sold.”

“Most of the companies, when we, you know, write a Series A term sheet, they're in the, I'd say, 10 to 20 employee range. And they're looking to sort of roughly double, you know, in size over the next, say, six months.”

“So we have a written policy, and there's a process for amending it if it ever needs to be amended. And what our policy does is it just uses the most recent preferred round to give us the value of the shares.”

“We actually invested, we gave them a million bucks at a 20 cap to help set up their firm, and then we invested in their, they had both a venture fund and a hedge fund, and they were, like, the first money into Solana”

“It will end up being about, you know, a billion dollars of, I think Solana for us in terms of returns, but it's the multi-coin guys determine the trading decisions on that.”

“Back in 2017, we invested in BitGo. Actually, Bill Lee helped found that company many years ago. And then that became last year Galaxy announced a deal to acquire them for, I think, 1.2 billion dollars. Largest crypto acquisition to date.”

“Now I think what we might do in that case, because we incubated it is we'd let somebody else lead the round and then we would participate. So you have some third party setting the price because we incubated the company.”

“SoftBank is engaged in a style of investing that we would never engage in. It's absolutely Pathetical to the way that we invest, right? They're making five hundred million dollar seed investments in massively overvalued companies.”

“One of the reasons why we like SaaS and marketplace at Kraft is they're very milestone based. I mean, we, you know, if we invest before you have a functional product, it's going to be at a seed valuation, you know, like a 10 cap, ten million dollar valuation, …”

“Our motto is, show me the product, not a PowerPoint, because the same PowerPoint can describe 10 or a hundred different products.”

“Certainly in the case of Bird, what we saw in the early days It was a explosively growing service, and the thing that we gave them credit for was the ability to develop a higher quality scooter, because the original scooters were kind of these retail scooters …”

“If the burn multiple is less than one, which means, like, let's say you've got an early stage startup, and we've seen a few like this, where they're able to burn a million dollars or less to achieve a million dollars or more of net new ARR, I would qualify tha…”

“I strongly disagree with that mantra, and I think it's one of the chivalests that gets startups in trouble. The whole point of technology is to find the elegant, scalable approach and the sooner you do that, the better off you're going to be. When you start to…”

“We've done four or five deals, I think, since the whole kind of quarantine started.”