The Ledger
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Chamath: Appropriate VC fund size may shrink from $1B to $50M
“And our capital allocation model is totally wrong size. Look, fund four for me was one billion dollars. Does that make sense? Nope. For the next three or four years? No, the right number may actually be fifty million dollars invested over the next four years.”
Chamath: FTX provided zero financials when Social Capital evaluated investing
“We were part of the process where they tried to show again, I have to be careful. My lawyers reminded me that we're still under NDA actually with FDX. So, but what I can tell you is we did not get any financials. So we were verbally described what was going on…”
Chamath: Social Capital marked up a single crypto position by $1B in one quarter
“We own something, which I'm not going to tell you what it is, but it's a crypto thing. And our nav, I had to mark my book up a billion net asset value on that asset. I had to mark it up because, you know, we have to submit to our auditors and just keep an accu…”
Chamath: Tech shifts combined with economic austerity generate the highest venture returns
“Whenever you see huge tectonic shifts in technology combined with periods of austerity, that's when the gargantuan dollars are made.”
Chamath: Social Capital and 1–2 others will dominate SPAC market
“My personal perspective, it's probably us and maybe one or two other people who really dominate the space.”
Chamath states his $500 million venture fund returned over 5x
“It was on five hundred million, so it was like. It's actually more than a five X.”
Chamath: Q1 2024 was Social Capital's first non-drawdown quarter since 2022
“This was the first quarter where in, since November, since Q one of 22, where I have not had a meaningful drawdown in my portfolio.”
Chamath: Social Capital achieved a 31% to 32% gross IRR prior to 2022
“I started the business in 2011, so now this is the 12th or 13th year. Just how hard this game is. I had about a 31 32% gross IRR going into last year.”
Palihapitiya: Decided against raising an outside venture fund for Social Capital
“I've been investing off balance sheet since 2018 and six months ago we started to explore whether we should raise a fund. And I think it was like two weeks ago we brought the senior partners in me and the Five other guys that run our business, and we said, we'…”
Chamath: Distressed startups avoided his repricing attempts by raising convertible notes
“I looked at seven at the end of last year, and I tried to reprice three of them, and every single one was able to get a convert done away from us.”
Chamath is guiding portfolio CEOs to breakeven or Q1 2025 runway
“I have been guiding our portfolio company CEOs to be at cash flow break even now or extend runway to Q one, 20, 25.”
Chamath: Social Capital instructs portfolio startups to maintain cash through Q1 2025
“I've been telling all of our startups that you need to plan to have money through the first quarter of 2025.”
Chamath: Social Capital is orienting around zero marginal cost energy and compute
“The two big investable themes that I'm orienting my organization around is this. One is that the marginal cost of energy goes to zero. And the second is that the marginal cost of compute goes to zero.”
Palihapitiya: Social Capital spent $125k overhead to invest $50k in Indonesian fishery
“We did this fishery in Indonesia. It cost us a 125,000 to give them 50,000. We still did it. Cause I just wanted to prove the point. They ended up tripling our money.”
Chamath: Social Capital does at most one deal per partner per year
“We have a permanent capital balance sheet, you know, we do, you know, at most one deal a year per partner”
Chamath Palihapitiya's non-SaaS portfolio company accidentally booked $40 million in ACV
“One of our businesses, which is not in SAS has started to sell SAS software. And we've already booked. Forty million dollars of fucking ACV by complete accident from zero.”
Chamath: Social Capital's private portfolio recorded $1B in paper gains in 2021
“But my private book was up a billion dollars. And I told the team, I'm like no, this is not real.”
Chamath: Crypto startups raise seed at $30M valuations with $200k-$400k checks
“When we see these projects, all these companies tend to raise, you know, three, four, five million bucks. It all tends to be at like, thirty million pre, and it all tends to be distributed. So like, you know, it's us, Andreessen, Sequoia, and it's like, you kn…”
Chamath writes early-stage checks up to $5M regardless of reasonableness
“In the early stage see a I rip I rip in 50 K to five million dollar checks all the time. I could care less if it sounds reasonable. I take a punt at it, right?”
Chamath says his GP commitment was 25% versus the typical 1-2%
“Well, the problem is venture funds are one to two percent. I was 25%.”
Palihapitiya admits two or three of his portfolio companies are severely struggling
“I called Freeberg last week and I was telling him a story about two or three of my businesses, just all just pounding, eating dirt.”
Chamath: Social Capital retains external technical experts instead of hiring technical VCs
“How we've solved this is we have a group of third party individuals that we work with, that we keep on retainer, that we compensate. And whenever we need to do deep technical diligence, we partner with them to do that work with us.”
Palihapitiya: Social Capital returned $2.5B over 11 years managing outside capital
“I think I passed two X across my funds when I was managing outside capital. And I think, my gosh, it took me 11 years. To return two X the money. And that means I've returned two and a half billion dollars.”
Chamath: Social Capital compensates team based on compounding book value
“An internal permanent pool of capital. I have no legal requirement to actually mark. Okay. But the reason we do it is because we want to track nav nav and book value. Okay. And, you know, I compensate my team based on how well we compound book value.”
Palihapitiya: Social Capital files SEC paperwork for SPACs D, E, and F
“No, yeah, they're filed with the SEC now.”
Chamath: Social Capital added $1.7B to its balance sheet in 2019
“I generated one, I put 1.7 billion on the balance sheet last year.”
Palihapitiya: Annual venture capital inflows grew from $25B-$30B in 2011 to $120B in 2021
“When I started social capital, there was probably 25 to thirty billion dollars a year flowing into venture just in 2011. Fast forward a decade, we have like a hundred and twenty billion dollars a year going into tech and it's going up like crazy.”