The Exchanges

Q And Anupam, if you guys look at timelines, right, so from an, on average, from initial email to term sheet signed to DD done and final closing docs, what do you guys typically close in?

A Yeah, quite a wide range, safe rounds, pretty clean. We can do it in as little as a few days, and we have done it. And then in some cases where there's complex, you know, we have quite a few cross geography companies. So all our companies are US market focused, but we have quite a few companies that are building in places like India. We also have companies from places like, you know, Europe and other places. But sometimes those require more work and more legal review, and sometimes they may require changing the structure. Which the founders and you're planning to do. And those could take, you know, a few months to three months. That's a median is probably three, four weeks.

AI assessment note: “That's a median is probably three, four weeks.”

Q And then what about your source of capital? Single big LP pension fund endowment or no, you know, hundreds of, you know, smaller checks.

A Combination. So we have, uh, you know, a few institutions that are investors, which are bulk of the capitalists from those institutions. And then we have a bunch of individuals actually who are very well placed in the enterprise space. So a number of successful founders of companies that have had good exits and then seen executives at pretty much any enterprise company you can think of. So a lot of those folks have skin in the game and they're also a very helpful source for our founder, uh, you know, for our founder community and helping them navigate to product market fit and beyond. So yeah, it's a combination of institutions, which are sort of more, Reckoning and long-term and, you know, good support pillars for us. And then, uh, individuals who bring a lot of operating expertise with them.

AI assessment note: “Combination. So we have, uh, you know, a few institutions that are investors”

Q Well, what can a founder ask to try and deduce that from a VC fund? Obviously the VC fund is not going to say we're shutting down in six months. So how can a founder can try and like ask questions around that to get a sense?

A Yeah, I think this is the same question that you asked. I think that's, yeah, some founders ask us, and I think that's a good question to ask, who are your, you know, LPs, and how do you see the future of the firm, and things like that. I think that's probably relevant and a good question to ask and understand. And also, I think founders often, you know, when we invest, often also speak with other founders that we are investors in, for example. So I'd encourage founders to do that, but, you know, any fund they're looking to work with, just reach out to your networks, to other founders, That the firm has invested in and over time, uh, you know, those existing founders would probably have a sense as well of how the firm is doing and which way they're headed and how helpful they are.

AI assessment note: “who are your, you know, LPs, and how do you see the future”

Q Last question before we wrap up. There's a lot of non-dilutive players coming onto the space like FounderPath. We share a couple founders together, which we're enjoying supporting, but how does a VC like you view a non-dilutive, you know, capital partner that might already be on the balance sheet like FounderPath?

A I think that's great. Uh, you know, and it depends obviously on the specific platform, but the more non-dilutive funding that a company can get, I think that can be a good source, uh, as long as the founders understand the, you know, in case it's a loan or something, you know, what's, what's the payback period and, uh, is the company going to be profitable or have resources enough to pay back at that time? But outside of that, uh, it makes a, you know, a ton of sense. And also I'd say, you know, a venture capital is not, For everyone, I'd say, in fact, for a very small percentage of founders and companies, I'd say a lot of SaaS can be built without venture capital and should be built without venture capital. So someone could build a, you know, 30, fifty, hundred million dollar worth company and own maybe 80, 90% of it between the founder group or more and, uh, all power to them. I'd say venture capital only makes sense for a small set. And for that set also, uh, you know, non-deluded funding between rounds or after a round can really help enhance what they can do with the capital that they've raised in the form of equity.

AI assessment note: “I think that's great. Uh, you know, and it depends obviously on the specific platform”

Q million sort of Pro rata we just discussed. I think a lot of founders, when they meet a VC, they don't know how to ask questions like, hey, Mr. or Mrs. VC, if we crush it, right, how much are you reserving for us in the future? What are some really smart questions you hear founders ask you in terms of how you think about deploying capital into the future?

A Yeah, no, that's a really good point. I think, uh, great founders are very good at, uh, the discovery questions early on, and, you know, when I meet a founder, I always give them a opportunity to ask questions, and, uh, I'd say the, right, yeah, everyone should, uh, know, certainly before partnering, you know, what's the reserve strategy? How many overall deals? How many deals they're doing per year? How many deals per partner per year? How many deals does a, has a partner, uh, you know, how many boards is a partner on currently? Do they have time to spend, uh, with you? And then also I'd say the future, uh, uh, thing really comes into, I'd say, you know, everything is going fantastic. Uh, then the providers don't matter as much to founders, but oftentimes it's not very clear if things are going super fantastic or not. And there, especially in times like these, that becomes important to have someone who, uh, can continue supporting the company. And, uh, also I'd say seed has gotten deconstructed. So the, I'd say it's very rarely the case that a company just does one seed round and then, Go straight to series A. I mean, that of course does happen quite a lot, but in many other cases, the company ends up doing a seed to or a seed extension or pre-series A or pre-seed and seed. And, uh, so in that second seed round as well, uh, we can be pretty proactive, uh, where we see the comp…

AI assessment note: “what's the reserve strategy? How many overall deals? How many deals they're doing per year?”

Q I love that statement. Venture is a game of exceptions. Put some color on that. What are some recent exceptions you've analyzed?

A It's a, you know, what I mean by that is, uh, you know, in across a fund, you know, we are making, let's say, 22 to 25 investments. Uh, if we had one or two or three companies that, uh, were to exit for, you know, the billions of dollars, that's what really creates returns for our own investors. So we are really gunning for that. Of course, not all 22 or 25 companies will get there or even close, but we are, in every company, we are looking for that ability of that company and the vision of the founder Which would get them to a potentially, uh, you know, half a billion to a billion type exit, a hundred million, let's put it that way. So, uh, so that's, so if we see something where we think the probability of that is higher, I'd say a typical company maybe has, you know, five percent likelihood of getting there when we're investing, but if we see some company has more than that, so it's low in absolute terms, but it's higher than the rest and we're able to stretch, but I'd say, yeah, uh, we rarely do that. We try and just come in super early. We're happy to form a conviction before others, Before the deal is hard, before, uh, you know, other people are able to hang their hat on, before there's a lot of numbers, and we're able to, it's a vast majority, we have single-digit million valuation.

AI assessment note: “what I mean by that is, uh, you know, in across a fund”