Ravi Viswanathan, founder of NewView Capital, discusses testing his thesis with industry peers before spinning out a secondary portfolio from NEA.
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“I tested this with a lot of my peers and found that this was not just unique to NIA. This was really, this dislocation was happening across venture, which also made sense.”
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More from Ravi Viswanathan
AssertionNot checkable as stated
Venture secondaries are only 0.3% penetrated, representing a $100B opportunity
“Venture is 0.3% penetrated. So in that market, our estimation, we've done some analysis, 50 to a hundred billion, just In what we're doing.”
Ravi ViswanathanJul 13, 2023▶ 14:18Ravi Viswanathan – Venture Secondaries and Growth Capital at NewView (EP.327)
Insight
Traditional venture operating partners lack full status and check-writing power
“Probably the biggest difference is they're not full partners, and sometimes they're not in the full partner meetings, and they don't have the check writing capability in that if there's a follow-on or some financing, they have to go back to the partner group o…”
Ravi ViswanathanJul 13, 2023▶ 31:58Ravi Viswanathan – Venture Secondaries and Growth Capital at NewView (EP.327)
Insight
Traditional venture capital operates on an 'IPO or bust' ethos
“Since the dawn of venture capital, it's been IPO or bust. You're going to have these, we call them needle movers, these iconic companies that really define venture capital and define venture capital firms. The quest is about that versus we've got really good c…”
Ravi ViswanathanJul 13, 2023▶ 12:48Ravi Viswanathan – Venture Secondaries and Growth Capital at NewView (EP.327)
Insight
Unlike VC, buyout private equity thrives on multi-tiered secondary sales
“On the flip side, if you go to the buyout world, it's this evolution of man, the lower middle market folks. Get companies, and they sell to the middle market folks, sell to the large cap folks, and you have that virtuous cycle. And actually, you have situation…”
Ravi ViswanathanJul 13, 2023▶ 15:15Ravi Viswanathan – Venture Secondaries and Growth Capital at NewView (EP.327)
Disclosure
Early venture secondary LPs expected steep discounts for high-quality assets
“Two pushbacks from new LPs. One, this was such a foreign concept. They'd never seen such a big venture secondary that wasn't a closeout fund or something else. That was one. The second is they were trading in discounts that were far greater than the discount f…”
Ravi ViswanathanJul 13, 2023▶ 17:47Ravi Viswanathan – Venture Secondaries and Growth Capital at NewView (EP.327)
Insight
Scaling past $10M ARR requires replacing hero sales with operational machinery
“Where you really need to institutionalize. You're going from a hero sale to more systems and processes. You probably need a CRO or a COO. Need a lot more metrics focused, and you need that machinery and that instrumentation layer to get formed.”
Ravi ViswanathanJul 13, 2023▶ 23:38Ravi Viswanathan – Venture Secondaries and Growth Capital at NewView (EP.327)
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