Venture Fund

“And by the way, there have been times in the market, including recently, where being consensus driven has been extremely valuable and extremely lucrative as a fund.”

“I think that people blaming like, you know, YC or whatever for some of their companies being frauds is probably not like directionally correct because like internally it's not like any venture fund really wants to like invest in a fraud and people that are lik…”

“Which by the way, in 25, the median size venture fund is a little over twenty six million dollars.”

“When LPs go to the biggest venture funds in the world, and private equity funds, and say, we're not investing in your next fund until you get liquidity in these names.”

“The things that get us most nervous is when someone tells us they're on a three to four year clip. And look, everyone says three to four. In reality, they mean two and a half. We accept that. That's just the reality of venture today. But when someone puts all …”

“Carta sits on top of the cap table of 60,000 startups these days, as well as fund admin for two and a half to 3000 US venture funds.”

“If you were to look at our returns or the top performing venture funds, let's just call it that relative to, you know, top performing PE funds, the top performing venture funds outperform.”

“The venture funds are still the venture funds, but like most of the assets are not in the venture funds. They're in heritage.”

“In the market last year, I think around 350 venture funds raised, 75% of the money went to 25 funds.”

“I just saw there was a stat out about Carta where it says like, you know, basically on, on, and DPI is the term distributions to paid in. And basically says like, you know, over 12 years in only about half the funds have returned one X DPI.”

“Well, after the bubble the, I don't know the exact numbers, but there were 1500 venture funds that the bubble started. There were 800 a year later.”

“I think some things are categories of one, and they're very hard to access. And that's the kind of deal where you just go, good on them. I'm not sure you build a repeatable venture fund around that.”

“We have a three hundred million dollar seed fund eight hundred million venture fund, and one and a half billion gross fund.”

“Yeah, about 2500 venture funds, about 35,000 startups.”

“And so for us, when we do a venture fund, our target is a forex net. That's our goal.”

“We ask for trending revenue, trending gross profit, and trending free cash flow for the top 10 nabs of every, every fund of we underwrite.”

“The time to liquidity is getting pushed out way further. It used to be, you know, five, six, seven, eight years to get your money back. Now it's like 12, 1315, like even these venture funds keep getting extended.”

“As much as we hear about crypto, it's still very non-consensus. A lot of venture funds just simply, maybe they'll have a little bit of Bitcoin, but they'll, otherwise they'll rule it out if there's tokens and things. You talk to fund funds they, a lot of them …”

“A lot of venture funds just simply, maybe they'll have a little bit of Bitcoin, but they'll, otherwise they'll rule it out if there's tokens and things. You talk to fund to funds. They, a lot of them will say we have a no crypto rule, you know, sovereign wealt…”

“What it means is that the bigger your fund, the more imperative it is you have to be in those six deals, which explains why capital is so easy to raise for those companies. It all makes sense. It was great analysis. I'm not sure it points to everybody can do g…”

“Those are the LP of choice for the small early innovative funds. It's not a great trend because, you know, if you're raising a billion, you've long since stopped talking to Harvard in a meaningful way. You're actually talking to pick your sovereign wealth fund…”

“If someone's buying a fund from you, They're really only buying the winners and the rest is bullshit, right? And like, so in an ideal world, they just carve out the pieces they want. Like, I want this position and this position and this position because I care…”

“Within our data, we're actually seeing capital flows increase Q one, 20, 41, 25 by almost a double. And into just venture funds. And like we talked about SPBs and all of that, but like just venture funds alone, capital flows are almost, have almost doubled.”

“It's actually shocking that like, that the number of venture funds over the last like five or seven years has actually increased given that the exits are getting longer, not shorter.”

“What people don't understand is it's actually closer to 20 and 20. It's one of the best kept secrets because venture funds charge those fees for 10 years. So if you raise a hundred million dollars, The investor makes twenty million bucks, maybe even 25, regard…”

“I can tell you people have started venture funds with way weaker value propositions than what you've outlined. It's a good idea.”

“In China, a lot of the venture funds are state funded and the founders have to sign like a full personal guarantee. So if you raise five million dollars and your company doesn't work out, they're going to take your house to like repay it.”

“Just because you're good at writing 250,000 dollar checks does not mean you're good at writing five million dollar checks into later stage companies. And your competition might be different, and your deal flow might be different, and your pricing power might n…”

“Your fund size is your strategy, and I guess I'm kind of famous for saying that for a long time. I don't know if I've ever really expressed why that is, so here's why. The power law is real, and so people don't realize that Pareto is not just eighty-twenty, it…”

“And I think next year, no one, if you're not a serious fund, you're not gonna raise capital.”

“I mean, a venture fund is the, is like the best way to price discriminate in, in an audience of founders because the higher value the founder, the more money you make when you invest.”

“Historically, The average crypto fund has outperformed the average venture fund, or basically, no, the average crypto fund has outperformed, like, the top 20% venture fund.”

“People think these companies take like five, seven, nine, 10 years. Not true. They take like 15 to 20. That means your venture fund takes 15 to 20 years to distribute the money.”

“The death zone is working at a mid fund or a family office and not being able to do a lot of deals because then you're not building up the brand value of working at a great firm and you're just not doing enough volume of deals so that you can build up a track …”

“I think that you're, it's okay as a VC to position yourself as an expert in a certain sector, but branding your venture fund as a specific industry is, is almost like committing seppuku because They're just simple. Almost always is not quite enough opportuniti…”

“Some of the venture funds that they had invested in 10 years ago, 20 years ago, they felt like had become asset managers. And the idea of being able to invest in a pure play venture fund that had experience, but also a lot of hustle was something that we think…”

“At least like the data I've seen is only 17% of venture funds make it to fund four.”

“As a venture fund, all of your marketing should be towards founders, which is one customer, and then, you know LPs, which is your other customer.”

“Which is instead of thinking about a foundation as a single grant giving organization, they built a conglomerate. And the conglomerate contains a grant giving foundation, typically called a private foundation, a private operating foundation, which is also a fi…”

“This is why I tell almost every individual do not invest in venture funds. It's dumb for individuals.”

“Cash flow over valuation any day of the week. What I mean by that is, who cares if a venture fund is going to say your business is worth a billion dollars? It feels nice. But building cash flowing businesses is ultimately a huge reward from a financial standpo…”

“And then the second half of this year I think we're going to see a significant increase in just dollars deployed from venture funds. That's also going to be on, you know, individual check sizes, I think are going to go up again in the later stages. And then al…”

“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.”

“Over the years, and I'd say over the fifteen-year time horizon, the last 15 years of my life, I have occasionally thought about, should I start a fund? There's definitely a lot of drag coefficient associated with that that I was not particularly excited with, …”

“I would say at the early stages, having really strong public equity and hedge fund, Expertise is really important because that's where most of the assets are going to live. You can dream about getting into venture funds and buyout funds and all of that, but mo…”

“So on average, we're averaging about 10 to 15 venture funds per year. And six to eight buyout funds per year.”

“A lot of LPs also pre-spent future budgets, if that makes any sense. If you were raising a fund every 18 months, and I thought you were raising every three years, I had two choices. Either I pull from future year budgets, or I reduce my check so that I stay co…”

“What was also sort of heartbreaking was the fund one to fund four on average, again, these are averages, some years are better, some years are worse, is 17%.”

“There's been really good evolution in the type of manager in India, in venture, which looks like the U.S. A lot now in terms of the type of person who finds themselves with a venture fund, and it used to be investment bankers, a transaction experience, and it …”

“I bet that there'd be an appetite right now for a venture fund called six day a week or five day a week in person. And it only funds companies that are in person with an in-person pledge five days a week. Like I actually think they would outperform.”

“And so, so that means you need a three billion of exits, right? Gross. So that means you need thirty billion of market cap to make that fund work. If you have 10% real ownership, thirty billion of market cap.”

“When you compare it to venture funds the, and venture funds are the traditional structure and we have a pretty large venture fund business. Individuals are actually down 60% from like when we compare it to about a year ago.”

“Individuals are actually down 60% from like when we compare it to about a year ago.”

“I think around liquidity is probably the biggest whereby, especially I think in the next years it'll be really prominent, which is whereby you have a venture funds with not a lot of DPI. And they know that they need DPI more than ever to raise their next funds…”

“Unfortunately, I think that is gonna be the comeuppance that a bunch of funds suffer. LPs are gonna say no.”

“I'm an LP in funds they're not marking their books down very much and very reactively, Tom.”

“Institutional investors, endowments, pension funds, traditional family office LPs and venture funds are Making far fewer commitments this year to new funds, as I think we all know, and that tightening will play out in the venture funds that'll get raised for t…”

“Probably 80% plus of venture funds are not great.”

“Like there are economic models that are going to crumble under the pressure of the market that we're going into now.”

“Investors, LPs in venture funds have basically put on the brakes. And so any fund that is trying to raise right now is having a pretty hard time for the most part.”