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If there was an "on-base percentage" for venture capital, what would it look like?
It might involve looking at a firm's exposure to the world's most consequential tech companies.
Not just an arbitrary mark at an exit, where they may or may not have taken liquidity, but the of those investments over time; using public markets as a sorting mechanism for quality.
For this ranking, we started with venture's greatest success stories, and worked backwards to find out who invested, when, and what fraction of their managed funds the investment represented.
The resulting list reflects the long-term performance of each firm's most successful portfolio companies, relative to capital deployed.
Other interesting features:
• Two firms in the top 10 were founded by the Draper dynasty (@shv and @DFJvc).
• Luke Nosek is a co-founder of two of the firms in the top 10 (@foundersfund and @gigafund).
• Founders Fund created more value than the bottom 22 firms put together, at $95.2B, primarily thanks to @SpaceX and @PalantirTech.
• If you rank by value alone, the top five firms are: Founders Fund ($95.2B), @sequoia ($82.6B), @Accel ($56.0B), @BessemerVP ($48.4B), @NEA ($33.0B).
• Seven out of the ten best performing funds were technically emerging managers, and four were debut funds.
(@iaventures I, @FirstMarkCap I, @Techstars Bullet Time I, @Lowercase I, Founders Fund II, @firstround II, Founders Fund III)
The top 10 firms are:
1 — Sutter Hill Ventures, founded by Paul M. Wythes and Bill Draper (William H. Draper III), in 1964
2 — Founders Fund, founded by Peter Thiel (@peterthiel), Ken Howery (@KenHowery), and Luke Nosek (@LukeNosek), in 2005
3 — IA Ventures, founded by Roger Ehrenberg (@infoarbitrage), in 2010
4 — Gigafund, founded by Luke Nosek (@LukeNosek) and Stephen Oskoui (@oskoui), in 2017
5 — Lowercase Capital, founded by Chris Sacca (@sacca), in 2010
6 — Pelion Venture Partners, founded by Jim Dreyfous (as Utah Ventures / UV Partners), in 1986
7 — Union Square Ventures, founded by Fred Wilson (@fredwilson) and Brad Burnham (@BradUSV), in 2003
8 — Benchmark, founded by Bob Kagle, Bruce Dunlevie, Andy Rachleff, Kevin Harvey, and Val Vaden, in 1995
9 — Bessemer Venture Partners, founded by Henry Phipps Jr. (as Bessemer Securities; VC arm formalized later), in 1911
10 — Draper Fisher Jurvetson, founded by Tim Draper (@TimDraper), in 1985
Read the write-up here:
blog.joinodin.com/p/the-top-50-v…
Read more about the methodology and get the full report here:
top50.joinodin.com
It might involve looking at a firm's exposure to the world's most consequential tech companies.
Not just an arbitrary mark at an exit, where they may or may not have taken liquidity, but the of those investments over time; using public markets as a sorting mechanism for quality.
For this ranking, we started with venture's greatest success stories, and worked backwards to find out who invested, when, and what fraction of their managed funds the investment represented.
The resulting list reflects the long-term performance of each firm's most successful portfolio companies, relative to capital deployed.
Other interesting features:
• Two firms in the top 10 were founded by the Draper dynasty (@shv and @DFJvc).
• Luke Nosek is a co-founder of two of the firms in the top 10 (@foundersfund and @gigafund).
• Founders Fund created more value than the bottom 22 firms put together, at $95.2B, primarily thanks to @SpaceX and @PalantirTech.
• If you rank by value alone, the top five firms are: Founders Fund ($95.2B), @sequoia ($82.6B), @Accel ($56.0B), @BessemerVP ($48.4B), @NEA ($33.0B).
• Seven out of the ten best performing funds were technically emerging managers, and four were debut funds.
(@iaventures I, @FirstMarkCap I, @Techstars Bullet Time I, @Lowercase I, Founders Fund II, @firstround II, Founders Fund III)
The top 10 firms are:
1 — Sutter Hill Ventures, founded by Paul M. Wythes and Bill Draper (William H. Draper III), in 1964
2 — Founders Fund, founded by Peter Thiel (@peterthiel), Ken Howery (@KenHowery), and Luke Nosek (@LukeNosek), in 2005
3 — IA Ventures, founded by Roger Ehrenberg (@infoarbitrage), in 2010
4 — Gigafund, founded by Luke Nosek (@LukeNosek) and Stephen Oskoui (@oskoui), in 2017
5 — Lowercase Capital, founded by Chris Sacca (@sacca), in 2010
6 — Pelion Venture Partners, founded by Jim Dreyfous (as Utah Ventures / UV Partners), in 1986
7 — Union Square Ventures, founded by Fred Wilson (@fredwilson) and Brad Burnham (@BradUSV), in 2003
8 — Benchmark, founded by Bob Kagle, Bruce Dunlevie, Andy Rachleff, Kevin Harvey, and Val Vaden, in 1995
9 — Bessemer Venture Partners, founded by Henry Phipps Jr. (as Bessemer Securities; VC arm formalized later), in 1911
10 — Draper Fisher Jurvetson, founded by Tim Draper (@TimDraper), in 1985
Read the write-up here:
blog.joinodin.com/p/the-top-50-v…
Read more about the methodology and get the full report here:
top50.joinodin.com
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This article makes absolutely no sense.
Firstly, there’s a list of complaints and criticisms about PE which clearly apply at least as well to modern venture.
(Poor performance, weak liquidity, sloppy markup practices, etc.)
It makes a spurious case about VC outperforming er law as a smokescreen — ignoring the totally different distribution of returns.
An equally spurious case about persistence of performance, ignoring the fact that multistage firms have changed substantially over the last decade.
The idea that VC marks are more rational than PE marks is also comical. PE is far more rigorous about valuation — a term that few VCs even understand.
It makes no sense that a16z would choose to lash out at a more mature, better performing strategy in a way that highlights all of their own flaws so clearly.
The obvious explanation is that they want to consume a bigger chunk of PE allocation as they move further away from VC, and they’re making this move before the AI trade implodes.
Firstly, there’s a list of complaints and criticisms about PE which clearly apply at least as well to modern venture.
(Poor performance, weak liquidity, sloppy markup practices, etc.)
It makes a spurious case about VC outperforming er law as a smokescreen — ignoring the totally different distribution of returns.
An equally spurious case about persistence of performance, ignoring the fact that multistage firms have changed substantially over the last decade.
The idea that VC marks are more rational than PE marks is also comical. PE is far more rigorous about valuation — a term that few VCs even understand.
It makes no sense that a16z would choose to lash out at a more mature, better performing strategy in a way that highlights all of their own flaws so clearly.
The obvious explanation is that they want to consume a bigger chunk of PE allocation as they move further away from VC, and they’re making this move before the AI trade implodes.
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If you believe that many great startups begin on college campuses, you might wonder if college students are best placed to spot them.
Thus began the great experiment of @DormRoomFund, in 2012, led by @joshk.
The success of the program involved a high-trust alumni network, a h perspectives, and a foundation of @firstround's investing wisdom.
In our conversation, @nunzi46 talked about his time at Dorm Room Fund in 2016–2018, and how the experience helped him think about herd behaviour and biases in venture capital.
Other alumni of the program include:
@mntruell - Cursor
@WillManidis - Financier
@aleximm - a16z
@ClaireSmilow - BoxGroup
@TaliaGold - Bessemer
@shawnxu - Lowercarbon
Dorm Room Fund continues today, as an independent spinout led by @themollette, across 30 college campuses in Canada and the US, with about 60 students per year.
First Round remains an LP.
Thus began the great experiment of @DormRoomFund, in 2012, led by @joshk.
The success of the program involved a high-trust alumni network, a h perspectives, and a foundation of @firstround's investing wisdom.
In our conversation, @nunzi46 talked about his time at Dorm Room Fund in 2016–2018, and how the experience helped him think about herd behaviour and biases in venture capital.
Other alumni of the program include:
@mntruell - Cursor
@WillManidis - Financier
@aleximm - a16z
@ClaireSmilow - BoxGroup
@TaliaGold - Bessemer
@shawnxu - Lowercarbon
Dorm Room Fund continues today, as an independent spinout led by @themollette, across 30 college campuses in Canada and the US, with about 60 students per year.
First Round remains an LP.
Mike Annunziata (@nunzi46) spent most of a decade on the LP side before making investments of his own.
He began at the Soros family office before moving on to the @Cornell endowment, where he learned how an institutional manager sets the bar for success.
Today, Mike is the , a boutique hard tech fund which grew out of his angel investing alongside @WillBruey. Their early commitments include companies like @RadiantNuclear and @VardaSpace — where Bruey is now CEO.
In this conversation, he describes why @CapitalAlso answers around ten questions about enterprise value before it looks at technical risk, and why fundraising works like selling a luxury good.
He and @credistick get into processes for controlling groupthink, his formative experience with @DormRoomFund, and the introduction that helped @foundersfund understand (and invest in) portfolio company @NorthwoodSpace.
They finish on Mike’s advice to emerging managers to get into business early, and why his vision for the next decade is a Golden Age of Robotics.
Going Solo is Odin’s series talking to small and emerging managers in venture capital. Subscribe to catch future episodes:
linktr.ee/goingsolowitho…
0:00 Intro to Mike and Also Capital
1:24 From the Soros family office to the Cornell endowment
5:24 Where the bar sits for a new fund
6:00 Clearing an endowment's opportunity cost
7:31 Learning seed investing at Dorm Room Fund
11:43 Controlling groupthink in investment decisions
13:28 Why the best deals are contentious
14:22 Stories from Dorm Room Fund
16:28 Varda and the origins of Also Capital
20:07 Diligencing deep tech as a non-engineer
23:15 Using AI in technical diligence
25:34 Raising Fund 1 and Fund 2
30:34 Origination: Atlas and Northwood Space
35:48 The best advice for emerging managers
38:26 What the world looks like in 10 years
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I wonder how much of VC's disillusion about public markets is a product of the fact that so many went out in 2020–2022 and got slaughtered.
...which was a fairly specific product of that era and the capital environment.
In general, across history, the IPO has been the ty and the driver of the largest returns by a significant margin.
Importantly, it also allows a company to stay in "founder mode" rather than just being sold-off to an incumbent — a feature that any "founder friendly" VC should value.
...which was a fairly specific product of that era and the capital environment.
In general, across history, the IPO has been the ty and the driver of the largest returns by a significant margin.
Importantly, it also allows a company to stay in "founder mode" rather than just being sold-off to an incumbent — a feature that any "founder friendly" VC should value.
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Dan Gray retweeted
The largest VC firms are more frequently backing the same companies.
This research measures how alike the biggest platform firms have become: whetherthey back the same companies, enter the same rounds and follow each other’s picks.
Looking at dollar-weighted activity, they since 2023.
Growing Enmeshment and the Rise of Venture Beta
@JoinOdin x @harmonic_ai
research.joinodin.com/#/paper/growin…
This research measures how alike the biggest platform firms have become: whetherthey back the same companies, enter the same rounds and follow each other’s picks.
Looking at dollar-weighted activity, they since 2023.
Growing Enmeshment and the Rise of Venture Beta
@JoinOdin x @harmonic_ai
research.joinodin.com/#/paper/growin…
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Dan Gray retweeted
The major opportunity: AI is expanding what can be built, and capital markets are expanding what kind of businesses they’ll fund.
With so much money competing to own what everyone already agrees on, we think Discovery offers the best risk/reward: more territory to explore, less the opportunity.
With so much money competing to own what everyone already agrees on, we think Discovery offers the best risk/reward: more territory to explore, less the opportunity.
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Dan Gray retweeted
Bridgit Mendler (@bridgitmendler) hadn’t started a venture-backed company before @NorthwoodSpace.
Mike Annunziata (@nunzi46), Managing Partner of @CapitalAlso, backed the ground station problem her team was solving, and SpaceX engineers in his network agreed with that view. rthwood to @foundersfund and @a16z, that support took the pitch from “former Disney Channel star starting a space company” to “where do I wire?”
Full episode of Going Solo out now.
Mike Annunziata (@nunzi46), Managing Partner of @CapitalAlso, backed the ground station problem her team was solving, and SpaceX engineers in his network agreed with that view. rthwood to @foundersfund and @a16z, that support took the pitch from “former Disney Channel star starting a space company” to “where do I wire?”
Full episode of Going Solo out now.
From an old dentist’s office in Palo Alto to this in less than 3 years
Legendary stuff happening at @NorthwoodSpace
Excited for @CapitalAlso to continue supporting @bridgitmendler and her exceptional team of ground nerds
A generational company in the making
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A curious finding, as the dataset is extended to cover more M&A transactions:
While the methodology makes a real effort to control for scale, the focus on IPOs is likely to preference larger funds that require larger exits to drive DPI.
Despite that, debut funds and funds up to $25Moverrepresented in the top 10%.
The abruptness with which that Fund I edge falls away illustrates how bad most LPs are at deciding which managers will get to raise a Fund II.
Research indicates this is likely down to focusing on incremental (and potentially frothy) marks rather than making rational (bust costly) qualitative judgements about the underlying investments.
While the methodology makes a real effort to control for scale, the focus on IPOs is likely to preference larger funds that require larger exits to drive DPI.
Despite that, debut funds and funds up to $25Moverrepresented in the top 10%.
The abruptness with which that Fund I edge falls away illustrates how bad most LPs are at deciding which managers will get to raise a Fund II.
Research indicates this is likely down to focusing on incremental (and potentially frothy) marks rather than making rational (bust costly) qualitative judgements about the underlying investments.
The Top 50 VC Firms
Ranked by the long-term value created by primary investments per dollar at risk.
The top 10:
1. @shv
2. @foundersfund
3. @iaventures
4. @gigafund
5. @Lowercase
6. @Pelion_VP
7. @usv
8. @benchmark
9. @BessemerVP
10. @DFJvc
Read more: blog.joinodin.com/p/the-top-50-v…
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He is correct.
And yet, he has also played a major role in spawning a VC management class with an unhealthy influence on innovation.
See Pournelle’s Iron Law of Bureaucracy.
And yet, he has also played a major role in spawning a VC management class with an unhealthy influence on innovation.
See Pournelle’s Iron Law of Bureaucracy.
Marc Andreessen revealed how Harvard Business School was built on a broken 1941 theory, and how it's now collapsing...
Andreessen co-founded Netscape in 1994 and a16z in 2009.
He has sat on Meta's board since 2008.
He has spent 30 years backing founders and watching managerial pattern traces back to one book: James Burnham's The Machiavellians (1941).
Burnham argued every great company had been founder-run.
Henry Ford ran Ford. Bob Noyce ran Intel.
Today, Elon Musk runs Tesla, SpaceX, and Starlink.
Then, he said, something broke.
Between the 1880s and the 1920s, a new philosophy replaced the founder. It was called managerialism.
The professional manager would now hold a portable skill, usable across any business.
The consequences were:
- Harvard Business School
- Stanford Business School
- Management as a universal skill
- The 1970s conglomerate
"That assumes the managers are going to do a good job," Andreessen says.
For 30 years, they haven't.
Managers can run something static, he says. Soup is soup. A bank is a bank. A car is a car.
But when the industry changes, the manager freezes.
Look at SpaceX.
"Imagine being a professionally trained manager, trained at a top management school, working for a rocket launch company, competing with SpaceX."
Then Elon's rockets started landing on their butt.
"Your management skills ... what good are they at that point?"
Andreessen's conclusion:
"You're much more likely to build something important in the 21st century if you start with the founder and train them on management."
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The replies to this post are a good reminder that most people, even VC-adjacent, do not understand the use of financial models.
They assume that because a model seems complex, the goal must be precision — as if granular (and often trivial) detail helps with forecasting the future.
This invites criticism along the lines of "this is a pointless exercise", or "this is missing detail" — both of which completely miss the point.
In reality, the objective is accuracy (the output is close to the outcome) rather than precision (accounting for every possible line item).
For that purpose, the key inputs are the influential assumptions about the future. These are blunt instruments, where being directionally correct is enough / being exactly correct is impossible.
In @shaunmmaguire's case, those assumptions relate to:
- How many GWs of compute SpaceX has online in 2027–2028
- How revenue per GW (rev/GW) and CapEx per GW evolve
- How Starship launches ramp
- When the first orbital-compute satellites fly.
If you don't read a model through the lens of the assumptions being illustrated, and why, it is not going to be a productive exercise.
AKA, always read the methodology.
They assume that because a model seems complex, the goal must be precision — as if granular (and often trivial) detail helps with forecasting the future.
This invites criticism along the lines of "this is a pointless exercise", or "this is missing detail" — both of which completely miss the point.
In reality, the objective is accuracy (the output is close to the outcome) rather than precision (accounting for every possible line item).
For that purpose, the key inputs are the influential assumptions about the future. These are blunt instruments, where being directionally correct is enough / being exactly correct is impossible.
In @shaunmmaguire's case, those assumptions relate to:
- How many GWs of compute SpaceX has online in 2027–2028
- How revenue per GW (rev/GW) and CapEx per GW evolve
- How Starship launches ramp
- When the first orbital-compute satellites fly.
If you don't read a model through the lens of the assumptions being illustrated, and why, it is not going to be a productive exercise.
AKA, always read the methodology.
Over the last week I built a bottoms up SpaceX financial model through the end of 2028
The numbers that came out are insane
There are wide error bars given how quickly things are changing but I wanted to distill something complicated into something that can at least be debated
nt advice!!!
** Sequoia is a major SpaceX shareholder
*** Past performance is not indicative of future results
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Dan Gray retweeted
“Robots everywhere!”
More on that and other hot takes in my chat with @credistick and @JoinOdin 👇
It’s been 7 years since starting @CapitalAlso with @WillBruey and @Cfsocc, but we’re still having just as much fun as when we started
More on that and other hot takes in my chat with @credistick and @JoinOdin 👇
It’s been 7 years since starting @CapitalAlso with @WillBruey and @Cfsocc, but we’re still having just as much fun as when we started
Mike Annunziata (@nunzi46) spent most of a decade on the LP side before making investments of his own.
He began at the Soros family office before moving on to the @Cornell endowment, where he learned how an institutional manager sets the bar for success.
Today, Mike is the , a boutique hard tech fund which grew out of his angel investing alongside @WillBruey. Their early commitments include companies like @RadiantNuclear and @VardaSpace — where Bruey is now CEO.
In this conversation, he describes why @CapitalAlso answers around ten questions about enterprise value before it looks at technical risk, and why fundraising works like selling a luxury good.
He and @credistick get into processes for controlling groupthink, his formative experience with @DormRoomFund, and the introduction that helped @foundersfund understand (and invest in) portfolio company @NorthwoodSpace.
They finish on Mike’s advice to emerging managers to get into business early, and why his vision for the next decade is a Golden Age of Robotics.
Going Solo is Odin’s series talking to small and emerging managers in venture capital. Subscribe to catch future episodes:
linktr.ee/goingsolowitho…
0:00 Intro to Mike and Also Capital
1:24 From the Soros family office to the Cornell endowment
5:24 Where the bar sits for a new fund
6:00 Clearing an endowment's opportunity cost
7:31 Learning seed investing at Dorm Room Fund
11:43 Controlling groupthink in investment decisions
13:28 Why the best deals are contentious
14:22 Stories from Dorm Room Fund
16:28 Varda and the origins of Also Capital
20:07 Diligencing deep tech as a non-engineer
23:15 Using AI in technical diligence
25:34 Raising Fund 1 and Fund 2
30:34 Origination: Atlas and Northwood Space
35:48 The best advice for emerging managers
38:26 What the world looks like in 10 years
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A great anecdote from this conversation is the story of @bridgitmendler and @NorthwoodSpace, and how it relates to the art of origination in VC.
@nunzi46 was the earliest investor in Northwood, and helped later investors understand the scope of the problem space, including neers at @VardaSpace and @SpaceX.
The ability to recognise outlier opportunities and pull them into the venture-backed universe is why smaller firms like @CapitalAlso play a critical role as VC's discovery layer.
More on this topic in my article for @JoinOdin:
blog.joinodin.com/p/the-origins-…
@nunzi46 was the earliest investor in Northwood, and helped later investors understand the scope of the problem space, including neers at @VardaSpace and @SpaceX.
The ability to recognise outlier opportunities and pull them into the venture-backed universe is why smaller firms like @CapitalAlso play a critical role as VC's discovery layer.
More on this topic in my article for @JoinOdin:
blog.joinodin.com/p/the-origins-…
Mike Annunziata (@nunzi46) spent most of a decade on the LP side before making investments of his own.
He began at the Soros family office before moving on to the @Cornell endowment, where he learned how an institutional manager sets the bar for success.
Today, Mike is the , a boutique hard tech fund which grew out of his angel investing alongside @WillBruey. Their early commitments include companies like @RadiantNuclear and @VardaSpace — where Bruey is now CEO.
In this conversation, he describes why @CapitalAlso answers around ten questions about enterprise value before it looks at technical risk, and why fundraising works like selling a luxury good.
He and @credistick get into processes for controlling groupthink, his formative experience with @DormRoomFund, and the introduction that helped @foundersfund understand (and invest in) portfolio company @NorthwoodSpace.
They finish on Mike’s advice to emerging managers to get into business early, and why his vision for the next decade is a Golden Age of Robotics.
Going Solo is Odin’s series talking to small and emerging managers in venture capital. Subscribe to catch future episodes:
linktr.ee/goingsolowitho…
0:00 Intro to Mike and Also Capital
1:24 From the Soros family office to the Cornell endowment
5:24 Where the bar sits for a new fund
6:00 Clearing an endowment's opportunity cost
7:31 Learning seed investing at Dorm Room Fund
11:43 Controlling groupthink in investment decisions
13:28 Why the best deals are contentious
14:22 Stories from Dorm Room Fund
16:28 Varda and the origins of Also Capital
20:07 Diligencing deep tech as a non-engineer
23:15 Using AI in technical diligence
25:34 Raising Fund 1 and Fund 2
30:34 Origination: Atlas and Northwood Space
35:48 The best advice for emerging managers
38:26 What the world looks like in 10 years
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Dan Gray retweeted
Mike Annunziata (@nunzi46) spent most of a decade on the LP side before making investments of his own.
He began at the Soros family office before moving on to the @Cornell endowment, where he learned how an institutional manager sets the bar for success.
Today, Mike is the , a boutique hard tech fund which grew out of his angel investing alongside @WillBruey. Their early commitments include companies like @RadiantNuclear and @VardaSpace — where Bruey is now CEO.
In this conversation, he describes why @CapitalAlso answers around ten questions about enterprise value before it looks at technical risk, and why fundraising works like selling a luxury good.
He and @credistick get into processes for controlling groupthink, his formative experience with @DormRoomFund, and the introduction that helped @foundersfund understand (and invest in) portfolio company @NorthwoodSpace.
They finish on Mike’s advice to emerging managers to get into business early, and why his vision for the next decade is a Golden Age of Robotics.
Going Solo is Odin’s series talking to small and emerging managers in venture capital. Subscribe to catch future episodes:
linktr.ee/goingsolowitho…
0:00 Intro to Mike and Also Capital
1:24 From the Soros family office to the Cornell endowment
5:24 Where the bar sits for a new fund
6:00 Clearing an endowment's opportunity cost
7:31 Learning seed investing at Dorm Room Fund
11:43 Controlling groupthink in investment decisions
13:28 Why the best deals are contentious
14:22 Stories from Dorm Room Fund
16:28 Varda and the origins of Also Capital
20:07 Diligencing deep tech as a non-engineer
23:15 Using AI in technical diligence
25:34 Raising Fund 1 and Fund 2
30:34 Origination: Atlas and Northwood Space
35:48 The best advice for emerging managers
38:26 What the world looks like in 10 years
He began at the Soros family office before moving on to the @Cornell endowment, where he learned how an institutional manager sets the bar for success.
Today, Mike is the , a boutique hard tech fund which grew out of his angel investing alongside @WillBruey. Their early commitments include companies like @RadiantNuclear and @VardaSpace — where Bruey is now CEO.
In this conversation, he describes why @CapitalAlso answers around ten questions about enterprise value before it looks at technical risk, and why fundraising works like selling a luxury good.
He and @credistick get into processes for controlling groupthink, his formative experience with @DormRoomFund, and the introduction that helped @foundersfund understand (and invest in) portfolio company @NorthwoodSpace.
They finish on Mike’s advice to emerging managers to get into business early, and why his vision for the next decade is a Golden Age of Robotics.
Going Solo is Odin’s series talking to small and emerging managers in venture capital. Subscribe to catch future episodes:
linktr.ee/goingsolowitho…
0:00 Intro to Mike and Also Capital
1:24 From the Soros family office to the Cornell endowment
5:24 Where the bar sits for a new fund
6:00 Clearing an endowment's opportunity cost
7:31 Learning seed investing at Dorm Room Fund
11:43 Controlling groupthink in investment decisions
13:28 Why the best deals are contentious
14:22 Stories from Dorm Room Fund
16:28 Varda and the origins of Also Capital
20:07 Diligencing deep tech as a non-engineer
23:15 Using AI in technical diligence
25:34 Raising Fund 1 and Fund 2
30:34 Origination: Atlas and Northwood Space
35:48 The best advice for emerging managers
38:26 What the world looks like in 10 years
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Analysis from @deedydas below, looking at which founders are most likely to get a funded by a “tier 1” VC.
The most predictive feature is having previously worked at a “tier 1” firm.
Research looking at 85,099 unique startups, of which 1,759 were established by entrepreneurs e, illustrates why this is flawed:
VC experience helps a founder raise more capital — but there’s no benefit to outcomes when compared to other founders that raised a similar amount.
i.e. The fundraising advantage is driven by connections and insider status, not meritocratic selection.
events.bse.eu/live/files/614…
The most predictive feature is having previously worked at a “tier 1” firm.
Research looking at 85,099 unique startups, of which 1,759 were established by entrepreneurs e, illustrates why this is flawed:
VC experience helps a founder raise more capital — but there’s no benefit to outcomes when compared to other founders that raised a similar amount.
i.e. The fundraising advantage is driven by connections and insider status, not meritocratic selection.
events.bse.eu/live/files/614…
Which startups are most likely to get an investment from top tier VCs?
I looked at ~60 attributes across 5000 startups and these were the 15 strongest.
#1 is being from a top tier fund. MBA is a negative signal
Full list of signals below:
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Dan Gray retweeted
Heard from so many VC LPs this week. “The math doesn’t math”.
An LP with a mature VC program is in this scenario:
- At or over allocation to VC / Growth. Why? The NAV of their VC/Growth portfolio has grown 100%+ YTD because of lots of cap calls, few distributions and markups. Their public NAV is likely up +10% YTD (if indexed) and the PE/RE/Credit is flatish. The VC Growth numerator has wildly outpaced the denominator.
- They don’t know how to plan for distributions because of public lockups and some big GPs still holding onto spacex.
- 75%+ of their VC/Growth funds are raising right now.
- Their IC is worried about bubbles, credit markets and being further overweight into any further market downturn. It’s the end of the year, so no one wants to make big decisions. At the same time, these LPs (having spent time in VC/Growth) know that all of the best stuff has NOT been done yet (so early on diffusion, the chatGPT moment in science/health/Physical AI)
- This is going to lead to some tough decisions. GPs should plan accordingly. Helping LPs make the case to boards on why now/what next and understand cash flow planning is important at the moment.
An LP with a mature VC program is in this scenario:
- At or over allocation to VC / Growth. Why? The NAV of their VC/Growth portfolio has grown 100%+ YTD because of lots of cap calls, few distributions and markups. Their public NAV is likely up +10% YTD (if indexed) and the PE/RE/Credit is flatish. The VC Growth numerator has wildly outpaced the denominator.
- They don’t know how to plan for distributions because of public lockups and some big GPs still holding onto spacex.
- 75%+ of their VC/Growth funds are raising right now.
- Their IC is worried about bubbles, credit markets and being further overweight into any further market downturn. It’s the end of the year, so no one wants to make big decisions. At the same time, these LPs (having spent time in VC/Growth) know that all of the best stuff has NOT been done yet (so early on diffusion, the chatGPT moment in science/health/Physical AI)
- This is going to lead to some tough decisions. GPs should plan accordingly. Helping LPs make the case to boards on why now/what next and understand cash flow planning is important at the moment.
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Consider @wquist’s description of VC as a process of funding cheap experiments with huge potential upside.
It requires the humility to admit that, initially, nobody knows what’s going to work. Failure rates are always high.
So, a bunch of companies get a small Seed investment, and each faces a similar set of challenges, constraints and hardships.
This is Darwinian capitalism. The weak fall away without inflicting much cost, while the best founders keep raising.
It is therefore beneficial to everyone that the base of seed investments, and seed investors, is broad and diverse.
The belief that a particular firm can “kingmake” a startup with capital or resources will only mask weakness and distort this process — raising the cost of failure, restricting entry.
Venture capital is a process of discovery. The lion’s share of capital should go to founders who earn it, not to those anointed by the hubris of investors.
It requires the humility to admit that, initially, nobody knows what’s going to work. Failure rates are always high.
So, a bunch of companies get a small Seed investment, and each faces a similar set of challenges, constraints and hardships.
This is Darwinian capitalism. The weak fall away without inflicting much cost, while the best founders keep raising.
It is therefore beneficial to everyone that the base of seed investments, and seed investors, is broad and diverse.
The belief that a particular firm can “kingmake” a startup with capital or resources will only mask weakness and distort this process — raising the cost of failure, restricting entry.
Venture capital is a process of discovery. The lion’s share of capital should go to founders who earn it, not to those anointed by the hubris of investors.
@cwamidonith the general point (be additional / fund oddities / do real VC) but this particular framing supposes the first crop in a consensus space are necessarily the best, which is partially a mega-fund psyop and is very often untrue.
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“You'll own nothing and be happy.”
sam: local inference is a terrible allocation of scarce resources
“a lot of people want local inference, and somehow they assume that the problem is solved now because we have open-source models, we're going to be able to run them on our computers, and so we're not going to need ta centre
but from a global allocation perspective, actually it's quite terrible to have everybody, like, have a bunch of the world's limited supply of DRAM sitting in their own computer and being used five percent of the time
you want maximum utilisation in the cloud if you're trying to deal with this very supply-constrained environment
somehow many people's intuition is the opposite of that”
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Courage is also more difficult to show LPs.
Founding Architect of the Thiel Fellowship @DStrachman:
"Peter Thiel has this great quote, 'Courage is in shorter supply than genius.'"
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Dan Gray retweeted
many regions in the US already produce better multiples on invested VC capital than startups in SF/NYC/LA (DC is incidentally #1, per pitchbook), while the vast majority of capital gets concentrated into SF-centric firms and mega funds (e.g. established firms raised 88% of all LP )
(fwiw talent is spread across the planet, not just the US)
(fwiw talent is spread across the planet, not just the US)
Talent is spread evenly across the country.
Capital still isn't.
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