Wellington's late-stage fund filters for $50M+ revenue and institutional backers
Michael Carmen · Michael Carmen – Late-Stage Private Investing at Wellington (EP.332) · Aug 10, 2023 · at 13:33
Michael Carmen, portfolio manager at Wellington Management, explains the initial quantitative and qualitative filters used to screen late-stage private investment opportunities.
0:00 / 0:10exact quote · 10.5s
720p mp4 · rendered on demand · StarZero watermark
“We're looking for companies that are north of fifty million dollars of revenues. We're looking for companies that have other institutional investors in the cap table at the time of our investment.”
quote is from the automated transcript, cleaned for reading: filler sounds and stutters are removed, nothing is rephrased. names can be misheard (the analysis reads context, assessments check outside sources). how →
More from Michael Carmen
Placing illiquid private assets in daily liquidity mutual funds is unsustainable
“That, that model of taking illiquid securities and putting them in daily liquidity vehicles maybe was not the best model for the longer term because it's just uncertain.”
95% of late-stage growth outcomes hinge on idiosyncratic execution, not macro
“When I look at all of the mistakes that we've made in the last eight, nine years, and all the successes that we've had in that same period of time, 95% of the time, if not more, it's idiosyncratic, is did we get the fundamentals right on the companies that we …”
It is extremely difficult to be a value investor in technology
“One of the things I think I learned was that it's really, really hard to be a value investor in technology”
Wellington sold nearly 90% of its eligible late-stage holdings in 2021
“We ended up selling in 21 close to 90% of everything that came up, and that included selling some secondary stock in companies that weren't even public, and that's all from my experience from the tech bubble.”
High-growth companies compounding at 50% benefit from delaying their IPO
“So my view is that as long as our companies are compounding at 3040, 50%, if it takes a year or two years or even three years, those companies are going to be two, three times larger, and unless valuations have just gone through the floor, we're probably going…”
Average software valuations retraced to six times sales by mid-2023
“What you saw since November of 21 to now is you've now retraced that entire move, and now the average software company is selling for six times sales, which is at the lower end of the range, and so now you're at a point that you can, again, underwrite to much …”