The Exchanges

Q at your very cool property on West Adams in LA, and when I was talking to you beforehand, she and you were both talking about how you got allocation in the companies and essentially won them over because you have such tight partnerships and ways to do strategic things. So can you walk through some of the ways that you're strategically a value add, actually like a value add investor?

A Before I speak specifically about the value add, The best value add is no value add. My opinion is that you want long-term passive capital, which is what the best capital is. Second best is that is that then you add, you add value. So, so, um, we have two million customers. We actually did some data enrichment. So now we know like a lot about the customers. And so, um, and so we did, we've done a bunch of partnerships. Like the one that was most successful is ramp. We went out to our, we actually only went to half to half our customers, went out to a million customers and, and ramp. It was sort of perfect because it was sort of well known, but not, hadn't really hit the public awareness about a year ago. And, um, and we said, look, we invested in ramp. One of the ways that we, we underwrite companies is we use the companies at, at, at Fundrise. And so like literally every one of our Team members has a ramp card and there's like, oh my God, so much better. It's so much better than Amex. It's like crazy. And we just went out to our customers and said, we use this product. We're not getting paid to say this. We're invested in this company. Genuinely is the best product. And I think we were the most successful ramp partnership ever.

AI assessment note: “Like the one that was most successful is ramp. We went out to... a million customers”

Q invested into it, but outside of this, like, I don't hear my family talking about getting access to this, although my dad's always like, how do I get access to Android or SpaceX? And I'm like, well, I could tell you now, but before it wasn't something that was talked about. So how do you get access to these companies and how do they allow you to then list them?

A Well, so the fun is listed, not the companies. And, and so when the, like a lot of venture, there's a lot of luck to it and a lot of timing. And so back when we launched in 20, 22, um, you know, that was Vantos raising their series B. Actually, I get introduced to them from the acquired guys. That's how I got into Vanta. And back in then, like back in, uh, 20, 22, the stock market had collapsed. It was late 22, maybe it was early 23 stock market collapsed. Sentiment about tech and private tech was very negative. And so when we invested in, um, Anthropic and Andrel in sort of, what was that like middle of 20, 23, it was so out of favor. Some of the companies you named, and I'm not supposed to say which ones, um, we bought from distressed funds who were, who were having to sell in early to mid-twenty-twenty-three. So there was like this, um, this downturn. I mean, Silicon Valley bank blew up in April. And so again, there's a lot of luck and some, and some opportunistic hustle on our part, but it was just not what People thought was the smart move. And then, and then like a lot of times at that moment, a lot of vultures came out, a lot of like fangs came out and people were trying to take advantage of the situation. And my whole view was that I'd rather be like a good longterm partner. I'm not trying to like chisel anybody. And so we ended up being the best bidder, the best invest…

AI assessment note: “we bought from distressed funds who were having to sell in early to mid-twenty-twenty-three”

Q just correct itself. Like we just like turn on the switches. We do some things, click the buttons and like, it's back to normal. Like, do you think it's possible to keep on doing that? We do, by the way, have over 37 trillion in deficit. So there's a lot of debt piling up alongside that, but like, Will it actually ever break, or will we always bolster the system?

A Yeah. Like, I don't know. I mean, it's, it's, it's kind of crazy to me cause I've been through a bunch that we keep it. We're able to, the last 15 years we're able to like keep dodging the bullet. Like we're like the matrix or something. Um, so what, well, yeah, so like I, you know, those types of things are contingent. So you could tell, you could, you could, I like to do scenario planning. So you could see a scenario where, um, there's a shock, there's political dysfunction, and as a result, there's no bailout. Right, so mostly what's happened is the government's been able to bail, they bailed out Silicon Valley Bank, they bailed out, you know, the, you know, during the COVID, there's, there's, there's like, um, an ability for the government and the Federal Reserve to compensate for this, and that, and essentially they've, they've, we've, the government's ended up taking on these deficits to have absorbed the losses, right, privatized gains, and, and, um, with publicized Losses, I would say, or, um, subsidize them, and so, I mean, it's contingent on, on politics, and it's, you know, like, it's hard for me to imagine that, like, the political system will rally together to solve a crisis now, but maybe it'll rise to the occasion.

AI assessment note: “you could see a scenario where, um, there's a shock, there's political dysfunction”

Q As we wrap up, what are you most looking forward to in the next year for VCX?

A Oh man, I would love to write, um, if we could write a massive check into a, into one of these rounds, one of our advisors was the CFO of, um, Schwab, and he asked me, like last week, after VCX went public, he said, you know, you invested in like nine of these top tech, you know, companies. Was it luck? I was like, nine? So people still wonder like, you know, like you're only as good as your next hit. And so I think we need to like, we need to write some big checks in these, into these great companies and validate the model because this could, you know, like these crossover ideas, they're not, I mean, they could fail because it's a bubble and you invest poorly. All you have to do is do a bad job and the whole thing is, it goes down in flames. And if, but if we can validate it, then I think that it would become normalized. It becomes so normalized that it becomes like not an innovation, becomes invisible. And that's, that's how you succeed in technology where technology is no longer considered technology. And so this is a financial technology innovation. And we, if we do it right, it just becomes totally standard, like trading, like, like trading. Trading is a, is a technological innovation. People don't think of it as technology. Mutual funds, passive investing, money markets, all these things are, are, are, were, were like these cutting edge ideas. You probably heard this thin…

AI assessment note: “I would love to write, um, if we could write a massive check”

Q And so what does that mean? I mean, it's a basket, it's a closed-end fund. Maybe first define a closed-end fund, how this works, and then how that shift actually, like, that delta and increase in value affects or doesn't affect the portfolio.

A Yeah, I mean, the, the big idea was, and has been for us for the last 15 years, is to democratize private markets, and so the, the last few years, AI has become, um, potentially, like, the, the, the end of technology in a way, like, we're at the knee of the exponential, and so the need to democratize access to these companies, investing in, in these, these AI companies was more important than ever, and so we created what was The first public venture fund. So it's a venture fund like any other venture fund, typically venture funds are closed-end funds. This fund was registered with the SEC so that anyone can invest in it. And so we, um, have a, Fundrise has this platform where you can show up and invest it at, at 10 dollar minimum. So it's 10 dollars to, to get in to the fund. And, um, you know, hundreds of thousands of people invested into it. And as, as we raised into it, we deployed. So you're raising and deploying. And a closed-ended fund means that when, when, um, as opposed to an open-ended fund, a closed-ended fund is when it's closed, essentially, when you're buying it in the public markets, it's your, the fund is, shares in the fund is trading rather than shares in the inside of the underlying asset portfolio. Um, so let me just get a little technical for a minute. So ETFs, which are normally how people invest in, um, and funds now, When you're investing in ETF, you're …

AI assessment note: “A closed-ended fund means that... the fund is, shares in the fund is trading”

Q they're split between, but I asked him, because SaaS companies, they used to trade at a premium. There was a whole premium for SaaS companies, but if you look, they're all down, like, I wouldn't say all down, but there's some that are significantly down, And sometimes it has to do with the new Claude release, but what are you seeing with these SaaS companies and how are they vulnerable?

A I mean, this is the challenge being public is that what public market wants is like, um, a, they call durable revenue stream that's growing at a high rate. And so they thought SaaS was essentially like, um, like a bond, like in terms of super low risk. With a really high growth rate and they were priced high growth, low risk. And then the market overnight repriced that to high risk, low growth, and they just got devastated. And this is the problem with public markets is that they're, they're, you know, they, they just swing. So I'm sure that they're going to swing back. It's to some extent, just like, I mean, if you remember this late last year, everyone in public markets thought that the, that the AI Boom was a bubble and the data centers were going to be like overbuilt. And, um, I think if any of the AI companies have been public, they would have been getting decimated. But, and now, you know, essentially Anthropix recent releases with Claude and then Codex and stuff has proven that was totally wrong. So that volatility, that like that short term sentiment, it's just such a negative to building a business. That, I mean, I get not to like make our pitch, but like what you want is have access to public markets without the volatility. And so this bridge that we're creating, you know, with these other companies is how you can bring the investors in to democratize ownership, but n…

AI assessment note: “I get not to like make our pitch, but like what you want”