The Exchanges

Q What are you seeing in terms of the data of this time back to market for companies?

A I would say it blew us away, what we saw, what the data showed, but let's focus again on companies, software companies going from B to C. It'd be interesting to just throw a poll out there. What is the sort of median timeline? And the median timeline that Omni came to was about 15 months. So Omni closed its round in August. The median C is happening 15 months after that. So that would mean for Omni we're back in market later this year raising capital. But when you overlay valuations and markups alongside those timelines is where things get pretty interesting. So within six months of the B is where we see the highest median markups. Biggest valuation increases are happening within six months of your B. There still are strong valuations in months seven through 18, but not as strong as the first six months, but good markups really up through 18 months after your B, and then we see a pretty precipitous drop off after that 18 month marker. So that was going back to speaking to how this data changes behavior. When you think about raising a series B round and the runway and operating forecast and framework that you're trying to put in place, how are you actually going to spend the series B dollars? Understanding just the data timelines and when The best markups are, are happening, and when your window is to strike again is really, really valuable. And then I think what a lot of founde…

AI assessment note: “the median timeline that Omni came to was about 15 months.”

Q When you go from being a lawyer to starting effectively a tech company to gather all this information, what resources did you need and have you built out at Omni to take this idea that you saw as a need from a lawyer and bring it to fruition as a tech company?

A Yeah, I'm laughing because probably objection number one that Tony and I would receive early days across the board from investors was, you guys are a bunch of lawyers. You don't know technology. And a big credit to Glenn Anderson, our initial angel investor who got behind us, who really backed the founders. He, I think at its core believed that Tony and I could creatively figure this out and bring solutions to the market. And now I think now that the company's a bit more mature, I think our legal backgrounds actually are, are a shining point of us Being able to excel, but we were fortunate to find our technical co-founder and CTO Rob wise about eight months into the company. And Rob now has the largest team at all. He's got about 50 engineers and product folks on his team, but Rob is really the technical genius and visionary behind what we're doing. So from the very first moment we met Rob and him getting up to speed into what we're doing, brought a lot of good data vision and strategy into how we plan to build out this platform.

AI assessment note: “we were fortunate to find our technical co-founder and CTO Rob wise”

Q So we've gone through like how a venture capitalist would use it, how an operator would use it, and how about an investor in like a venture fund?

A Yeah, it's, I think in a lot of ways, our product and our team is just drawn to do more for our existing clients. Let's say an investor portfolio looks like today's, they tend to have a lot more than just direct investments into companies. There's a secondary portfolio. Some firms are investing into other firms as LPs. And so as we started working with a more diverse set of investors in the market, we had this really nice opportunity to do more for If you take a fund to fund, for example, most fund to funds do have some sort of direct investment strategy alongside their fund strategy. So Omni initially started with servicing their direct strategy, but we were really getting pulled by the clients to analyze their fund positions. And what you have with allocations and investments into private managers is a really similar problem, similar opportunity. You have complex legal agreements that sit behind the relationship between an LP and a GP. And so what Omni is doing is bringing its legal analytical playbook that we brought to the venture world and bringing that into the LP arena. So we will be analyzing core foundational fund documents, structuring, analyzing, validating that data and making it available for LPs. So they can really understand their individual economic and legal relationship with managers, but can then also start to do more portfolio wide and ultimately market wide…

AI assessment note: “So we will be analyzing core foundational fund documents, structuring, analyzing, validating that data”

Q And so that was the first week you were on the job. So how did you go from there to eventually deciding to form a company to do something about it?

A I think working with such amazing clients, entrepreneurs, and investors definitely kept me drawn in longer than I was expecting. So I had a really great run and enjoyed my experience, but I think I was hitting that point in a corporate associates career path where you sort of hit a fork in the road. Do I want to put my head down and pursue partnership and stay on that track or are there other things I do and where I was fortunate to meet my co-founder Tony at Wilson Sonsini. And so It was right around that period where I was thinking about got partnership. I've got other ways to sort of leverage my experience. And Tony and I ultimately came together and said, Hey, lawyers have this incredible purview on the market and the various interests of all of the stakeholders that play in this market. And we've got some pretty interesting ideas about how we could make these markets better, more efficient, the need for data. And so it was right around, I chalk it up to We had some pretty good ideas around that time, but also me personally, I was sort of ready to take that leap outside of law. I was at the right place in my career, had recently gotten married, didn't have kids yet. And so it was kind of this right mix of risk appetite and hadn't gotten used to the golden handcuffs too much as a lawyer. And so it was the right time to jump out, bootstrap and go all in on this really cool an…

AI assessment note: “it was kind of this right mix of risk appetite and hadn't gotten used to”

Q So what was the kernel of the idea that you wanted to solve?

A The primary pain point, going back to that first week on the job at Wilson and just being really shocked at how deals came together, how complex and ugly it is to get transactions together, and ultimately there was this void of information and data. But over the course of my time in that world as a lawyer, I would constantly come back to endless use cases in my day to day, working, counseling investors, counseling entrepreneurs, Looking at a transaction where I had seen 80% of that fact pattern before, and I would love to access data points in a database to bring into a conversation. So an investor's looking at it, let's say I'm working with a series A firm, and they're looking at a particular investment. How it works today is neither the investors, the company, or the service providers, law firms included, have any sort of data-driven approach or tool set to bring into these transactions. And I'd always thought I'd I've seen this back pattern before. I've done hundreds of deals. Isn't there a database I could look to to bring that into the conversation? So that was a lot of the, I think the opportunity that Tony and I had seen was all of this capital there, the growing sort of interest in size of the venture ecosystem, but also this huge void and lack of data. And part of the unlocking that for Tony and I was we had to go to the source Truth, which is what we analyze at Omni, …

AI assessment note: “The primary pain point... ultimately there was this void of information and data.”

Q So let's walk through the use cases of maybe a couple of those different groups of clients. So the first is the venture capitalists. How do they use Omni?

A So it's a great question. What we do for all of our clients is really the same. We focus on underlying legal records. So for what that means for a typical venture fund, and let's just take a multi-billion dollar firm on Sand Hill Road. They likely have maybe a couple hundred active companies in the portfolio. These are companies that are still raising capital, maybe have not become public yet. And then if it's a large enough institution, they have prior vintages of firms and they have legacy companies that have exited or dissolved or whatever the case may be. However, that company may have ended up. So what you have is a venture fund has all of these companies, whether they're legacy companies or active companies. And Sitting behind all of those companies are likely multiple rounds of venture financings, each of which have their own set of five to 600 pages of dense, complex closing agreements. So we're working with those firms, and we go through all of that information, all those legal agreements, and we are structuring and analyzing and validating that data inside of those agreements. So really specifically for the venture firms, we're looking at their direct investments into companies and the underlying legal documentation that's associated with those investments.

AI assessment note: “we go through all of that information... and we are structuring and analyzing and validating”

Q Are there anything catching your eye on the fund side? So as a fund investor looking at venture.

A Absolutely. Yeah. This was another thing that, uh, unless you've been exposed and know the venture world really well, as I was a young attorney coming into this world, this concept of pro rata rights was always, it was initially sort of confusing for me that investors had this sort of contractual right or through a relationship with a founder, they had this ability to kind of maintain their ownership percentage in the company. And we're looking really closely at that set of rights that go around with pro rata investing. And the question I have that I'm really interested to look into is what do the pro rata misses cost managers? So if I'm a series C, a series A firm, and let's say I either have, I have contractual rights to invest in the B, but because of my fund dynamics or my LP base, I can't actually come up with capital to exercise that pro rata amount. Before I have a relationship with the founder, I'm given an allocation in the subsequent round, but for some reason, again, for fund dynamics or other reasons, I actually can't maintain my ownership or defend that ownership in the company. I'm really focused on, if you look across a typical portfolio of seed or A investments, earlier stage investments, what do those pro rata misses actually cost a manager? And what type of economics could be associated with that? What are some of the absolute returns or just growth that you'r…

AI assessment note: “we're looking really closely at that set of rights that go around with pro rata investing”

Q How about in the transactional activity that you see in, there are some trends that are sort of obvious to investors, right? There's faster speed of fundraising, valuations are higher. I'm curious from your lens, what you see as some of the most important trends.

A I'll share with you what I'm kind of dogfooding internally that I think is a lot of fun. One of the, I think, The pretty just staggering trends that we're seeing is over the last decade, there's pretty linear growth in terms of the size of these rounds. Like how much capital is coming into a series B company? What's the total round size? There's a pretty linear growth over the last decade, but right around COVID is when you see this like exponential spike. And so what you'd see is growth rounds B and beyond the size of those rounds, even over the last couple of years has just exponentially grown. As compared to more of a linear trend. So that probably would also check out with things you could read in the paper. There's a ton of capital coming into the privates and in particular into the growth rounds. So it's in some way a function of just the supply and demand elements of these private markets. But the reality is over the last couple of years, you have growth rounds that dwarf what it would have looked like even five years ago.

AI assessment note: “growth rounds B and beyond the size of those rounds... has just exponentially grown”

Q So where do you take the business from here?

A We're mission focused right now on analyzing and being the leader in the legal and data infrastructure behind these private market transactions. And for us, our view of the world is that we want to provide the infrastructure, sort of the data rails behind the entire waterfall and flow of capital from LP allocator to manager to company. We want to map out that legal and economic relationship. And then from that creates this amazing platform where you have unique value propositions of products for each of those stakeholders. I think the ability to provide data market analytics and benchmarks to the entire ecosystem and other stakeholders that are not necessarily directly in these deals, but service providers, other individuals, it creates this just really amazing ecosystem and platform that we have a vision to realize and create.

AI assessment note: “we want to provide the infrastructure, sort of the data rails behind the entire waterfall”

Q And then what do they do with that information?

A Yeah, so it's everything from what I would consider basic workflow support that can sit inside the back office of a firm. So think of a general counsel, for example, that's looking and assisting with managing a portfolio of a hundred active companies. At any given time, that individual might get questions from the front office about how did we structure the board and XYZ deal from two weeks ago. I sort of want to take that structure and mirror it here. To get that answer now, the general counsel is going to have to either thumb through agreements, pick up the phone and call outside counsel. It's a very manual, a lot of friction to get that answer. And with Omni, because we've gone in now and structured all that data, they can get those types of inquiries and answers to those inquiries with a couple of keystrokes, and it's very straightforward. So I think how venture firms use that data I would say the product and the data base has matured to a point where we do address pretty specific and unique workflows within individualized roles at a firm. There are countless, you know, examples of firms needing to access information about prior investments and also wanting to do portfolio-wide analytics and aggregation. How have we ever invested across a Series A company in San Francisco in fintech? What do the terms look like? What are the economics? What does the option pool look like? F…

AI assessment note: “basic workflow support that can sit inside the back office of a firm”

Q What was that moment of inspiration that allowed you to go start the company?

A I don't think I ever had a plan to stay in law for that long. I loved the experience, and I definitely could not do what I'm doing today had I not had that experience, but I spent about four or five years in that world, and so to your question, it was about a less than a week on the job, and I had just graduated law school, was joining one of the best tech law firms, working with some of the best companies, and I was just blown away what, in my experience, Coming on how I observed millions and millions of dollars transacting and changing hands. Like I really couldn't believe that was how it was done. And so it was really probably within the first week of being an attorney in the corporate world, doing private deals and just seeing all of the complex agreements that come together, the various interests that are represented. It was just shocking to me that that's how money moved in the private markets.

AI assessment note: “within the first week of being an attorney in the corporate world, doing private deals”