Opinion
Grefenstette: China venture capital is the world's least crowded trade right now
“Right now it's the least crowded trade in the world is China venture.”
Disclosure
Dietrich Foundation's massive venture allocation features a heavy China and India focus
“Our focus on China and India, it's a big chunk of our 52% that's venture.”
Opinion
Grefenstette: Venture pricing is most distorted in early-stage AI startups
“The pricing is probably most distorted in the early stage about AI, because you look at these companies, and of course, no one has a crystal ball, but you're looking at something and saying, hey, this could potentially be a trillion-dollar outcome. The bet is …”
Assertion Supported
Grefenstette: 80% of founders pitching a16z use cheap open-source Chinese LLMs
“I think Andreessen came out recently and said, 80% of the founders that come to them are using open source Chinese LLMs, because it might be 70, 80% as effective, efficient, but it's a 10th the cost.”
Assertion Supported
Unconstrained mean-variance optimization pushes institutional portfolios entirely into private assets
“And anytime you use the mean variance optimization model, unconstrained, it pushes you entirely into privates, because that's the historical return profile.”
Disclosure
The Dietrich Foundation operates entirely without an investment committee
“Yeah, he put in the controlling trust document the fact that he wanted the trustees to delegate investment authority to the CIO and CEO of the foundation. That's unusual. We do not have an investment committee.”
Insight
Separating asset allocators from governance oversight enables necessary boldness
“Career risk aversion drives a lot of behavior, and Bill felt to the extent you could put some distance between the asset allocator and the oversight or governance group, you had a shot at allowing the CIO to be more bold, because Bill always said, boldness is …”
Disclosure
Dietrich Foundation has held zero direct U.S. index exposure since 1997
“We have not had a direct exposure to the U.S. S&P. 500 or any U.S. Index since 1997, ok?”
Insight
Public equity offers lower expected returns as the price of liquidity
“I think private equity is true equity return, and public equity is a discounted or a lower expected return.”
Disclosure
Dietrich Foundation's total portfolio exposure to China peaked at 38% in 2020
“We peaked at a total portfolio exposure in China of 38% in late twenty-twenty, which is a big number. Today, as we sit here, we're about 19 or 20%.”
Insight
Multi-billion VC funds need 50% concentration in few winners to 4x
“When they see a company they've backed in the seed in Series A, they will lean in hard on the subsequent Rounds to the point where at the end of portfolio construction, they might have 40, 50% of the fund in three or four companies. That, to us, is exactly how…”
Opinion
Grefenstette is skeptical of LP claims that co-investments beat underlying funds
“So I'm skeptical of those who have large co-investment programs who claim they're outperforming the underlying fund managers, because it's hard, and if they're doing a better job than their GPs, they should bring their GPs in and give them some instruction.”
Assertion Not checkable as stated
A European GP waterfall requires 5.6x gross to deliver 3x net
“We have a European GP. We actually are underwriting right now. We really like the firm, but the way the waterfall is calculated and the fact that the GP is actually charging some fees to the portfolio companies, they need to generate a 5.6 X gross to hit a thr…”
Assertion Open · timeframe Feb 2027
Grefenstette: Dietrich Foundation allocates an outlier 52% of total NAV to venture
“Dietrich Foundation is 1.6 billion in total assets, and we have pretty unusual allocation where about 90% of our assets are in private strategies. Venture capital alone is around 52% of the total NAV right now, which is quite the outlier”
Assertion Not checkable as stated
Grefenstette: Some institutional endowments have 5% of total NAV in SpaceX
“Maybe they have, maybe five percent of the total NAV is in SpaceX. And this is the actual case for some institutions out there.”
Assertion Supported
Grefenstette: VC capital calls exceeded distributions by $200B since 2022
“Since 2022, liquidity has been negative cash to LPs of about two hundred billion capital calls in excess of distributions.”
Assertion Supported
Grefenstette: 40% of US unicorns have not raised capital since 2021
“It's 40% of the, call it 1000, Private unicorns in the U.S. Have not raised capital since 2021, I think, or 22.”
Prediction Open · timeframe Dec 2031
Grefenstette: New limited partners entering venture in 2020 face tough vintages
“There are a lot of new entrants, new LPs who came in to venture in, unfortunately, 20 and 21. These are gonna be tough vintages.”
Opinion
Grefenstette: Tourist limited partners retreating from venture is healthy for the ecosystem
“Some of those tourists are gonna go to the sidelines for a while. That would be very healthy for the ecosystem.”
Disclosure
Grefenstette: Dietrich Foundation re-backs returning venture GPs who autopsy past mistakes
“Some LPs won't give them a second chance. We have done that where we have said to a GP, okay, we all know this is what went wrong here, and we can do the autopsy. And then we still supported them when they came back to the market because we think they're going…”
Insight
Grefenstette: Small early-stage VCs hold structural relationship advantages over mega-funds
“That's where Sean's comment earlier about the personal connective tissue between the GP and the founder, the special founders, is why there will always be an advantage of the small early stage investor because, and I want to pick on anyone like Andreessen, but…”
Opinion
Grefenstette: Solo capitalists suffer from lacking internal partners to challenge their decisions
“The higher probability problem when solo capitalists is they don't always have another adult to challenge them, and that's a huge criticism of the model.”
Insight
Grefenstette: European founders aggressively seek US venture capital firms by Series A
“A lot of the conclusions we've reached is that you might be able to find some early stage GPs locally there, but as soon as a company hits the Series A, those founders are looking for U.S. Firms.”
Insight
Grefenstette: Venture managers cannot reliably identify fund breakout winners at first check
“You have 30 positions in the VC fund, and only a couple are going to outperform the entire fund. I know the GP isn't good enough to identify what those companies are at the point of first check.”
