“All these sorts of things that are quite frankly boring, monotonous, tedious, unglamorous, or not sexy, they are the sorts of things that can make or break whether a fund is good or not. Because you can be a great investor, but if the experience of the LP is awful, it doesn’t matter how good the fund is.
“Ultimately, somebody’s got to deal with you. They’ve probably got people to report to themselves. If you’re giving them a headache because you can’t do the aspects of it, then that’s where you’re going to lose LP appetite. That can tell apart who sees themselves as an investor and who sees themselves as a fund manager.” – Nicky Sugarman
Nicky Sugarman is a highly sought after advisor to both family offices and venture investors. Prior, he was also a partner at Stanhope, a $40B multi family office, running their private equity and venture practices. Moreover he, along with Jonathan Hollis at Mountside Ventures, launched the program for the emerging manager to learn the institutional lens.
[00:00] Intro [02:36] Nicky and LEGOs [05:24] LEGOs or cars [05:59] What Nicky’s dad taught Nicky [06:45] Why does the world need another fund accelerator? [08:35] The curriculum at the fund accelerator [10:21] The difference between a fund manager and investor [12:04] Thoughtful examples to the previous question [14:12] Diligence vs stalking [16:29] Nicky’s most used app [17:28] Why are mega cap funds necessary? [21:21] Why VC becoming PE is inevitable [24:48] The best types of LPs for multi-asset portfolios [26:33] Why do LPs speak in IRR, not multiples? [29:06] Understanding a GP’s valuation policy [33:46] Communicating news from GPs to LPs [36:03] How does Nicky know if a GP is in for the long haul? [38:33] Nicky’s favorite answers to how a firm scales [39:48] First critical hires at a VC firm [40:45] Ideal traits of a VC COO [41:38] How much should a good COO get paid? [42:50] Should people get paid at the 50th percentile? [45:28] How much should GPs pay themselves? [48:30] The one what-if that keeps Nicky up at night
“All these sorts of things that are quite frankly boring, monotonous, tedious, unglamorous, or not sexy, they are the sorts of things that can make or break whether a fund is good or not. Because you can be a great investor, but if the experience of the LP is awful, it doesn’t matter how good the fund is. Ultimately, somebody’s got to deal with you. They’ve probably got people to report to themselves. If you’re giving them a headache because you can’t do the aspects of it, then that’s where you’re going to lose LP appetite. […] That can tell apart who sees themselves as an investor and who sees themselves as a fund manager.” – Nicky Sugarman
On GPs answering questions on operational excellence… “The best answer I could ask from a GP is for them to be super honest and say, ‘These are the people I’ve leaned on to help me understand what best practices look like.’” – Nicky Sugarman
As an LP… “If you’re hearing [your portfolio news] in the news first, that’s a bad sign.” – Nicky Sugarman
Stay up to date with the weekly cup of cognitive adventures inside venture capital and startups, as well as cataloging the history of tomorrow through the bookmarks of yesterday!
The views expressed on this blogpost are for informational purposes only. None of the views expressed herein constitute legal, investment, business, or tax advice. Any allusions or references to funds or companies are for illustrative purposes only, and should not be relied upon as investment recommendations. Consult a professional investment advisor prior to making any investment decisions.
“Buying junk at a discount is still junk.” – Abe Finkelstein
Abe Finkelstein, Managing Partner at Vintage, has been leading fund, secondary, and growth stage investments focused on fintech, gaming, and SMB software, among others, leading growth stage and secondary investments for Vintage in companies like Monday.com, Minute Media, Payoneer, MoonActive and Honeybook.
Prior to joining Vintage in 2003, Abe was an equity analyst with Goldman Sachs, covering Israel-based technology companies in a wide variety of sectors, including software, telecom equipment, networking, semiconductors, and satellite communications. While at Goldman Sachs, Abe, and the Israel team were highly ranked by both Thomson Extel and Institutional Investor. Prior to Goldman Sachs, Abe was Vice-President at U.S. Bancorp Piper Jaffray, where he helped launch and led the firm’s Israel technology shares institutional sales effort. Before joining Piper, he was an Associate at Brown Brothers Harriman, covering the enterprise software and internet sectors. Abe began his career at Josephthal, Lyon, and Ross, joining one of the first research teams focused exclusively on Israel-based companies.
Abe graduated Magna Cum Laude from the Wharton School at the University of Pennsylvania with a BS in Economics and a concentration in Finance.
Vintage Investment Partners is a global venture platform managing ~$4 billion across venture Fund of Funds, Secondary Funds, and Growth-Stage Funds focused on venture in the U.S., Europe, Israel, and Canada. Vintage is invested in many of the world’s leading venture funds and growth-stage tech startups striving to make a lasting impact on the world and has exposure directly and indirectly to over 6,000 technology companies.
[00:00] Intro [03:18] Abe’s first investment [06:19] The definition of quality secondaries in 2003 [09:37] How did Abe know there would be capital to follow? [15:45] Valuation methodology in the 2000s [22:28] Minimum meaningful ownership for secondaries [26:17] Why did founders take Vintage’s call in Fund I? [30:41] The old-school way of tracking deal memos [32:06] Our job is to play the optimist [32:31] The headwinds of raising Vintage Fund I [36:32] Moving Vintage’s physical books to the cloud [39:06] How does Abe assign discounts to secondaries? [42:23] Proactive outreach vs reactive deal flow [46:18] What does Vintage do to stay top of mind? [49:49] What’s changed in the secondaries market since 2000? [55:32] Founder paranoia [57:56] What does Abe want his legacy look like?
“Buying junk at a discount is still junk.” – Abe Finkelstein
“Everything that’s going on in the market today, I actually feel people are overreacting to it because there are these ups and downs. Hopefully this current situation doesn’t get people too freaked out because these are the times you want to be investing in. People just don’t think that way. They see the blood on the streets and they run from it first, instead of going in.” – Abe Finkelstein
Stay up to date with the weekly cup of cognitive adventures inside venture capital and startups, as well as cataloging the history of tomorrow through the bookmarks of yesterday!
The views expressed on this blogpost are for informational purposes only. None of the views expressed herein constitute legal, investment, business, or tax advice. Any allusions or references to funds or companies are for illustrative purposes only, and should not be relied upon as investment recommendations. Consult a professional investment advisor prior to making any investment decisions.
Two friends independently pinged me for my reaction to two recentsocial posts while I was on vacation, and I felt so strongly about the below that I had to:
Respond to both of my friends while I was out, and
Write this blogpost after.
Caveat: I don’t tend to write time-and-place ephemeral blogposts, usually evergreen ones, but I feel this topic has been the soup du jour for the last few months, and I need to get it off my chest. I still think a lot of what I write below will stand the test of time, but some parts may not age as well five years from now.
I agree with most of what’s said. 99% of people don’t truly understand venture. They see one of two polar extremes. Either it’s the thing that will make them rich and it’s all amazing or it’s overhyped and way too risky. They’re both right and wrong at the same time. In the context of those investing in VC funds, most individuals and new LPs see venture through rose-tinted lens.
That said, what the world needs isn’t ‘do this’ or ‘don’t do this,’ but why and how. That requires education. Not an oversimplification of ‘VC good’ or ‘VC bad.’ There’s a lack of unbiased education right now, but public discussions of such is step one. We need to put illiquidity into perspective. Yes, it’s 17+ years. That’s 4, going on 5, Summer Olympics. Or one and a half zodiacs. That’s another 2-4 American presidents. And that’s over 50 Marvel movies and 34+ Marvel TV series, assuming they stay on pace with what they’ve been putting out in the last 2 years. That’s a long frickin’ time. Time enough for you to have a baby AND send them off to college before you get all the money gained back.
Illiquidity is also at an all-time high. Lots of funds are long in the tooth. LP expectations used to be 10+2. Fancy lingo for 10-year funds with 2-year extensions, opportunistically. Now that companies are staying private for 10-12 years, instead of the old 7-8 years, funds are now 10+2+2. In other words, 10-year funds, with a 2-year extension by GP decision, and another 2 years by LP advisory committee majority vote. But really, it’s starting to become 10+2+2+1+… You can guess where the rest of the numbers come from.
Secondaries are only really popular among the marquee names. For instance, SpaceX, Anduril, Stripe, and so on as of now. Everything else is sold at a discount. Which, 30-50% seem normal. But if a company has raised their last round pre-2021, I’ve seen 60-80% discounts.
GPs are also now expected to actively understand and manage exits. Most GPs don’t know how to. And neither are exits in venture a classically-trained subject. Before it was primarily, IPOs and M&As. Now, this includes secondaries. Ask GPs about their exit strategies. It doesn’t have to be foolproof, but they better have thought of it. And compare what they say to what their best-in-class private equity counterparts say. If there’s a lack of intentionality in the former, things may get really tough in the future.
Venture, sure as hell, is opaque. 75% of VC managers will tell you their top quartile. Who’s right? Who’s wrong? Samir Kaji recently wrote something that rings increasingly true today: “People forget that quartile rankings in VC never account or adjust for valuation methodologies used by the Gps in the sample set.”
People forget that quartile rankings in VC never account or adjust for valuation methodologies used by the Gps in the sample set. I just ran into two GPs.
1) One was very aggressive in marks, even when the last round was a SAFE and years ago.
Some GPs are liberal with their marks. Marks that put them in the best light. Some even accounting SAFEs as markups, which is bad practice. Pretty sure illegal too, but many new first-time GPs aren’t even aware of it. All that to say, in the first first 5-6 years of a fund, when nothing is noticeably obvious yet, it’s easy to game numbers.
And even if a GP is in the top quartile, top quartile in VC sucks. Ok, it’s not THAT bad. Median definitely sucks in venture though. It’s really not worth putting money in an average VC. But you can put your money in the S&P 500 or the NASDAQ for the same vintage. Dollar-cost average in, once a year in the first four years. And hold it till Year 10. And in many vintages, your public indices will be between a 3X and 4X. Which is as good as most top quartile vintages. If not, it’ll only lag slightly, ever so slightly, behind. Which is a small price to pay for being a liquid asset. If you’re an LP in VC funds, out of thousands of funds, you need to be in the top 20 funds per vintage. Hands down. Not top quartile. And arguably top decile may not even cut it.
And the truth is, just by the numbers, most individuals and new LPs won’t have good access. When your mom, your cousin, that one drunk uncle from Thanksgiving, are all starting their own VC funds, we now and will continue to live in a world where knowing a VC will be as common as knowing someone who wants to start their own company. Whatever that may be. And to have a chance to be good at VC, the average VC must have both a non-redundant AND an economically important network AND knowledge advantage, to borrow a framework that Albert Azout recently said on my podcast. Most do not. Most will fail to compete with the super-scale firms. If you haven’t checked out Gib Dilner’s recent recording on kinds of firms in the ecosystem today, I highly recommend it.
What kinds of networks GPs need to be competitive in today’s market?
The truth is most large funds who will cannibalize smaller emerging managers don’t send their good deals to emerging managers. Although emerging managers do send their best deals to the large funds. Looks good for markups. Looks good at the annual meeting when they present to you. But clearly, this dynamic is unrequited. As such, it’s why I believe as an LP, you need to be in managers who go really, really early, where the large firms still cannot access or priced out of accessing. Managers who extend their thesis so that the net new checks coming out of their funds include seed and Series A (unless they can actively lead this and the next round):
Lose out on access above a $250K check. These days, even above a $100K check. Because large funds want the whole round. It’s how they can make their economics work.
Don’t have the war chest to provide the capital to founders so that they can weather the market. That said, a good friend of mine, Henry, created the Lean AI Leaderboard. It’s a great dashboard for companies who get to profitability with a lean team and often very little in external capital. And if they do, these companies are seed-strapped, meaning they raise a seed round with the goal of never raising another round again. For investors in these companies, the good news is that they retain most of their equity from entry. The bad news is that unless these companies have a clear exit path, your money as an LP doesn’t go anywhere. More so, most of the VCs investing invest on SAFE notes, with no maturity dates. On paper, revenue is up, but no markups and no exit path. After the $100M range, there are very few companies who would acquire any of these small players, especially after the AI craze. That said, it’s too early to tell. And I’m not sure I have the fortune cookie to tell you what happens next.
But also, as an FYI, if you’re investing in a large platform, don’t expect double-digit or even high single-digit returns, you’re likely going to get a solid 2.5-3X (optimistically), but it’s a stable machine. Still think if that’s the case though, you should be investing in buyout funds or private credit. If you don’t have access to those, just public equities.
Also, not every person needs to start a venture firm. Not every good investor needs to be a fund manager. Being a fund manager is tough. You need to worry about K-1s and reporting (yes, that’s chasing founders down for metrics even when you have information rights), fund admin, running a business, filing taxes, and knowing when and how to sell. It’s actually easier to be a great investor at another larger shop. It’s the same as not every smart person needs to start their own company.
All that said… I’m still bullish on venture. I think it truly is, one of the most promising asset classes we have available to us. And I mean venture in the raw, unfiltered first check, pre-seed play. Not the Series A+ play. At least for emerging managers. After the Series A, I can’t think of a sustainable way you won’t get outcompeted by the large ones. For true early stage exposure as first check, the large platforms often have no incentive to play. Given their large fund sizes, they’ve priced themselves out of that true first-check bucket.
Something that harkens back to a Chris Paik line. “Any company that is pure execution risk without any market risk is not a suitable venture investment.”
A few days later, another friend asked me if I saw this, and if I had any immediate thoughts. On LinkedIn, Pavel Prata had posted a reaction to Jared Friedman’s request for full-stack AI companies, saying that “80% of VC funds will be automated within 3 years.” To be fair, Pavel’s not wrong. Directionally, that is where the industry is heading. Having been to a few annual summits that VCs host so far this year already, every single — oh yes, I mean, EVERY SINGLE — one that I went to (I went to seven at the time of writing this post) talked about using AI to either or both source deals and/or qualify deals. Some also talked about supporting their portfolio using their digitally-twinned brain. Simply, AI is in.
That said, there were some things that Pavel suggested I disagreed with, or at least thought he was oversimplifying:
“Process 100X more deals.” While there are firms that make investment decisions algorithmically, and while I do see this working past-Series A (where we enter growth), in true early-stage investing fashion, the best investors invest prior to data. Prior to traction. Prior to anything obvious enough to track. And while you, as a firm, can probably see and filter 100X more deals. As a human GP with only 24 hours in a day, and building a portfolio of 30 investments across 3-4 years, I still go back to a piece of advice I received early on in my career. “You don’t have to invest in every great company, but every company you invest in must be great.”
“Maintain relationships with 1000+ founders.” I have my doubts here. Until I start seeing people build long-term friendships and happiness with AI, I’m still a strong believer that people trust people. And this rapid scaling of AI only further proves that. It’s hard to scale trust. To scale intimacy. There might be a world where this does happen one day. But I don’t think this is three years away. That said, I do think that you as a solo GP or a small team can support your portfolio as if you were a fully-staffed 20+ person team within three years though.
“Deploy capital 5X faster.” There are some things in life where faster isn’t necessarily better. Like performing a surgery. Or simply, music. No one needs to listen to My Heart will Go On on 5X speed. Venture is one of them. While it’s unclear whether Pavel means shorter deployment periods or faster decision-making, to address both, shorter deployment periods may indirectly lead to more companies getting funded. Or more capital going to the same companies. We don’t need either. An LP shouldn’t index venture, nor should more capital go into companies where the preference stack exceeds the valuation of the companies or making companies financially impossible to 3-5X any of the companies’ investors. Faster decision-making may make sense if it’s a competitive round, but true venture is betting on the non-obvious. Most non-obvious bets don’t need capital 5X faster.
To be fair, I do agree with the vast majority of where Pavel thinks the venture industry will go.
Stay up to date with the weekly cup of cognitive adventures inside venture capital and startups, as well as cataloging the history of tomorrow through the bookmarks of yesterday!
The views expressed on this blogpost are for informational purposes only. None of the views expressed herein constitute legal, investment, business, or tax advice. Any allusions or references to funds or companies are for illustrative purposes only, and should not be relied upon as investment recommendations. Consult a professional investment advisor prior to making any investment decisions.
“The more you can create that context in the family owner’s manual, the more important it is and the more it is NOT the ‘in-case-of-emergency’ file. Because the in-case-of-emergency file is going to say I’m an LP in Fund VII from so-and-so and my withdrawal rights are such and such. Or here’s the document. You go figure out what my withdrawal rights are, if I have any.” The owner’s manual teaches future generations what to prioritize and why. – Josh Kanter
Josh Kanter is the family office principal at Josh Kanter Wealth Advisory Services. He is also the founder & CEO at leafplanner, a comprehensive solution on planning for the 100-year time horizon for a family office, birthed out of his own need with his own family of creating an everlasting institution.
After decades as a lawyer, he went on to focus on his family business where he also currently serves as President of Chicago Financial, Inc., a single family office overseeing a complex organization of trusts, investment and philanthropic entities for a multi-branch and multi-generational family.
[00:00] Intro [04:01] Art, sculptures and Jun Kaneko [12:30] The inception of Walnut Capital Corp [15:36] How Josh defines creativity [17:03] Creating the “freedom trust” [17:56] Where did the name leafplanner come from? [20:03] How did Josh get involved in the family venture business? [23:22] Top lessons from being startups’ legal advisor [25:48] Lessons as an investor and LP [27:57] Investing in America’s biggest fraud [30:01] The origin of leafplanner [38:15] How do you start a family owner’s manual [40:03] The importance of prioritization and context in the manual [45:35] How do you make a owner’s manual searchable? [49:50] The five kinds of capital (intellectual, human, social, financial, spiritual) [53:15] What is the role of luck in Josh’s life? [54:31] Josh’s primary vice when saying no [56:51] Post-credit scene
“You’ve got great founders. That doesn’t make them great CEOs.” – Josh Kanter
“I may not be the CEO of this company at some point. If I am not the person to take this forward, then let’s bring in the person who is. Success is more important than my ego.” – Josh Kanter
“The more you can create that context, the more important it is and the more it is not the ‘in-case-of-emergency’ file. Because the in-case-of-emergency file is going to say I’m an LP in Fund VII from so-and-so and my withdrawal rights are such and such. Or here’s the document. You go figure out what my withdrawal rights are, if I have any.” – Josh Kanter
On cloud storage providers like Box, Dropbox, Google Drive and so on: “Every one of those systems relies on the brain that built the architecture of how you organize them. So I use Box. I have 225,000 documents in Box. Those 225,000 documents are organized on how Josh’s brain works, so the folder structure [etc.].” – Josh Kanter
“Financial capital should be looked at merely as a tool to grow the other capitals: [Intellectual, human, and social].” – Josh Kanter
Stay up to date with the weekly cup of cognitive adventures inside venture capital and startups, as well as cataloging the history of tomorrow through the bookmarks of yesterday!
The views expressed on this blogpost are for informational purposes only. None of the views expressed herein constitute legal, investment, business, or tax advice. Any allusions or references to funds or companies are for illustrative purposes only, and should not be relied upon as investment recommendations. Consult a professional investment advisor prior to making any investment decisions.
“This is one of the big issues of a bunch of data work on venture is insights from some periods don’t mean anything or are not translatable to present time. It’s really frustrating. So we go back to people, reputations, and experience.” – Narayan Chowdhury
Ritujoy Narayan Chowdhury is the co-founder and Managing Director at Franklin Park, where he focuses on private equity investment opportunities, monitoring clients’ portfolios and conducting industry research. He also plays a key role in the development and implementation of Franklin Park’s technology platform, and regularly interacts with clients on investment and portfolio matters.
Prior to Franklin Park, Narayan worked with Hamilton Lane and Public Financial Management. He is a CFA Charterholder and a member of the CFA Institute. Narayan received a B.A. in Mathematics and Economics from Bucknell University.
[00:00] Intro [02:27] Why my parents moved to the US [03:43] Narayan’s dad [08:54] The friction that Narayan has with his team [11:59] Why current analyst training creates bad habits [15:00] What Narayan does when his family goes to bed [16:37] When did Narayan first start playing with code? [17:34] Narayan’s entrepreneurial origins and how much he got paid [19:54] “Never sit alone at lunch” [22:54] The Mike Maples story [25:48] When Narayan realized VC is very different from PE [30:05] The difference between underwriting VC and buyout [34:28] What do you do when you’ve pigeonholed yourself in one industry? [37:02] How do you know if a GP is a core part of an alumni network? [38:32] A 2025 micro trend of misleading operating metrics [43:40] How has VC changed in the past few decades? [53:58] What do most people underappreciate about hockey?
“Every moment that [my daughter] is here and I’m not with her is a moment we’ll never get back.” – Narayan Chowdhury
“Every action should not be a wasted action, should not be duplicative, should be the best use of a person’s time. So any tool that we build that is contrary to that should be reevaluated constantly.” – Narayan Chowdhury
“What do you do when you don’t know anything, you haven’t met anybody, you have no context, the human brain starts inventing rationale.” – Narayan Chowdhury
“Never sit alone at lunch.” – Alan Patricof
“Looking backwards on track records in venture can be very scary decisions. It could be that the prior funds were completely passive throw-ins on a cap table where they were following some social cues in a ZIRP environment and perhaps they got lucky. Whether they were part of a giant outcome [or not], it sort of meaningless for the future because neither the syndicate nor the founder really know who that person ever was. And so, the go-forward benefit of that investment decision is zero versus ‘We were the trusted investor for that founder.’ Not all prior track records are the same. We have to go back to why, going forward, are founders going to seek out or accept those dollars.” – Narayan Chowdhury *ZIRP: zero interest-rate policy
“I’d rather go bankrupt than lose this AI race.” – Larry Page
“The problem is that the barriers to entry on that strategy [to deploy a lot of capital] are pretty low. And you get killed – death by a thousand cuts – when you’re not the only one trying to flood the market with capital and outcompeting on price.” – Narayan Chowdhury
“This is one of the big issues of a bunch of data work on venture is insights from some periods don’t mean anything or are not translatable to present time. It’s really frustrating. So we go back to people, reputations, and experience.” – Narayan Chowdhury
Stay up to date with the weekly cup of cognitive adventures inside venture capital and startups, as well as cataloging the history of tomorrow through the bookmarks of yesterday!
The views expressed on this blogpost are for informational purposes only. None of the views expressed herein constitute legal, investment, business, or tax advice. Any allusions or references to funds or companies are for illustrative purposes only, and should not be relied upon as investment recommendations. Consult a professional investment advisor prior to making any investment decisions.
“The bigger you get, the more established you get, the more underwriting emphasis goes into how this team operates as a structure rather than is there a star?” – Matt Curtolo
Matt Curtolo, CAIA is a seasoned private markets investor and allocator with over two decades of experience at leading financial institutions. Throughout his career, he has been directly responsible for allocating more than $6 billion in commitments to private market investments and maintains relationships with hundreds of general partner relationships across the full spectrum of private capital strategies.
Most recently, as Head of Investments at Allocate, a venture-backed fintech startup. Matt built the investment capability from the ground up, broadening access to top-tier venture capital opportunities for the private wealth market. Prior to this, he served as a senior leader at MetLife, serving on the investment committee, co-managing their global alternatives portfolio and leading the firm’s US Buyout portfolio. Earlier in his career, Matt led all private equity activities as Head of Private Equity at Hirtle Callaghan, a large independent outsourced Chief Investment Officer (oCIO). Matt’s foundational experience was gained at Hamilton Lane during its early growth phase, before it became the world’s preeminent private markets allocator, in research, investment and client-facing roles. Matt currently holds several advisory positions that span start-ups, asset management firms and fund of funds. He also manages his own advice practice, providing GPs with strategic guidance on strategy, fundraising and investor relations.
[00:00] Intro [04:24] What town did Matt grow up in? [04:37] Why is that town significant from a sociological perspective? [08:43] Why is Matt fascinated with the Detroit Lions? [11:08] What is it like cheering for the underdog? [13:02] How does Matt break down deal attribution in partnerships? [18:04] GPs’ karmic bank account [21:29] What is the kindest thing anyone’s done for Matt? [23:24] How did tennis enter Matt’s life? [26:35] Historical examples of VC management/leadership structures [29:33] Underwriting track record between senior and junior investors [32:23] How Matt approaches diligence after reading the data room [39:30] How do you know when you’ve asked enough questions? [42:37] The three classes of questions for GPs that influence investment decisions [45:34] Remote culture [50:16] Cadence of in-person gatherings in remote teams [52:48] The two (and a half) types of conversations to always host in-person [58:37] The last great idea Matt had on a walk [1:02:05] The legacy Matt wants to leave behind [1:04:37] Post-credit scene
“Partnerships are incredibly hard to evaluate because not only are you evaluating each of the individual’s capabilities independently, but is it a one plus one equals three situation?” – Matt Curtolo
“The bigger you get, the more established you get, the more underwriting emphasis goes into how this team operates as a structure rather than is there a star?” – Matt Curtolo
“Data gives me questions, not answers.” – Matt Curtolo
“The dopamine you get from planning something versus the actual experience itself are wildly different.” – Matt Curtolo
Stay up to date with the weekly cup of cognitive adventures inside venture capital and startups, as well as cataloging the history of tomorrow through the bookmarks of yesterday!
The views expressed on this blogpost are for informational purposes only. None of the views expressed herein constitute legal, investment, business, or tax advice. Any allusions or references to funds or companies are for illustrative purposes only, and should not be relied upon as investment recommendations. Consult a professional investment advisor prior to making any investment decisions.
“Networks are more persistent than performance.” – Albert Azout
Albert Azout is the Co-Founder and Managing Partner of Level Ventures, a technology investment firm built on software and data science and invests in both entrepreneurs and venture capital managers, including the likes of Air Street Capital, Emergent Ventures and Work-Bench, just to name a few. Prior to Level, Albert has been a serial founder, starting analytics businesses and even a social media company before Facebook.
[00:00] Intro [02:36] The origin of Albert’s blog [04:45] How did Albert first start coding? [07:43] Albert’s interest in networks [13:10] Entrepreneurship around Albert [16:27] What is collaborative filtering? [22:18] How complexity economics affect the networks of VCs? [27:14] Fear and greed regimes [28:51] Telltale signs that inform the kind of regime you’re in [30:31] Why it’s the wrong time to be investing in defense tech [34:53] What are most LPs missing about GP networks? [37:31] How is Level Ventures looking at networks differently? [44:42] Archetypes of GPs that Albert likes [46:43] The 3 advantages GPs need to have [55:02] How does Albert balance over- vs under-diligencing? [57:15] Albert’s view on luck [57:47] Albert the “consciousness expert”
“You have to have an understanding of the regime you’re in for you to make good decisions as an investor.” – Albert Azout
“Price reflects the inefficiencies of the market.” – Albert Azout
“What really matters is what you’re hearing around you. When you hear overly coherent narratives, that’s a big thing for me. And it happens in subcycles as well. […] But when people are behaving and making decisions based on narratives that are overly coherent, that’s a big sign. That’s a very social problem.” – Albert Azout
“What you want to see in a venture company which you’re looking for huge outliers, is you want to see increasing returns to scale. You want to see demand-side feedback loops, where you have very low marginal costs of distribution. And that requires mostly winner-take-all, or winner-take-most kinds of markets.” – Albert Azout
“You want to be pre-narrative. You want to position your capital in an area where the supply of capital increases over time and where those assets will be traded at a premium.” – Albert Azout
“Networks are more persistent than performance.” – Albert Azout
“Venture is simple but hard.” – Albert Azout
“We look for GPs who have one, a network advantage and two, a knowledge advantage – both of which have to be not redundant and economically important. And the third thing is the fund strategy itself. There’s a lot of nuances but there are two things that are important. One is that it has to be an outlier. […] It has to have the right construction for us. […] My second point is more important. It involves game theory, which is the competitive dynamics in the market. ” – Albert Azout
Stay up to date with the weekly cup of cognitive adventures inside venture capital and startups, as well as cataloging the history of tomorrow through the bookmarks of yesterday!
The views expressed on this blogpost are for informational purposes only. None of the views expressed herein constitute legal, investment, business, or tax advice. Any allusions or references to funds or companies are for illustrative purposes only, and should not be relied upon as investment recommendations. Consult a professional investment advisor prior to making any investment decisions.
“What I hear from LPs is that the market is important. And of course, the market IS important. And I think that that’s true. But if you truly believe in venture as a purist, then all of it is irrelevant because at any point in time, someone will come and have this unique insight. And the timing is against them. The world is against them. They’re in the wrong place at the wrong time, and yet, they have this unique insight at this point in time. They have the opportunity to invest at this point in time. And so, just because the timing is wrong doesn’t mean you shouldn’t be backing them. Because they might be right. And you might be missing out on the best opportunity in your lifetime.”
Asher Siddiqui is a global tech investor, M&A dealmaker, and venture fund builder with over 25 years of hands-on experience across venture capital, entrepreneurship, and more than $15B in executed M&A transactions.
He began his career as a software engineer and entrepreneur in the US and UK before spending a decade leading M&A and corporate venture at Etisalat Group (now e& Group), one of the world’s largest listed TMT investment groups. There, he led acquisitions, exits, and strategic transactions across multiple continents.
In 2016, Asher joined the global leadership team at 500 Startups in San Francisco, helping scale the platform to $2B+ AUM, with a portfolio that includes 35+ unicorns and 160+ centaurs.
Since then, he has helped launch and scale several institutional VC firms—including Race Capital, Lumikai, Sukna Ventures, Zayn VC, and Humanrace Capital—and serves on the advisory boards of funds such as FootPrint Coalition Ventures, Merus Capital, and The Treasury.
To date, Asher has made 100+ venture investments (both direct and LP), raised hundreds of millions in LP commitments, mentored hundreds of emerging VC managers globally, and advised countless founders.
[00:00] Intro [03:36] Why doesn’t Asher like the saying ‘The sky’s the limit?’ [07:20] The launch of CNBC Africa [15:25] How do two competing personalities create one of the largest media empires in the world? [17:39] Combining vision and execution [21:22] Asher’s framework for executing on a vision [31:00] Why Asher was the youngest Global Head of M&A of a major telecom business [43:57] What sets a great investor apart from a great fund manager [45:27] Roleplaying a GP thinking about secondaries [51:44] What do most LPs underestimate and overestimate [58:24] Most telling predictors of outperforming GPs [1:07:13] The best wine and food for each situation [1:12:25] Asher’s Vinod Khosla story
“The best opportunities are the opportunities that aren’t obvious to anyone.” – Asher Siddiqui
“Execution is nothing without a vision, and vision is nothing without execution.” – Asher Siddiqui
“If only there was an Olympic sport called daydreaming, then Asher will be a gold medalist every time.” – Asher Siddiqui’s mom
“What was less relevant was the number; what was more important was the process.” – Asher Siddiqui
“If you ask the baseline obvious questions, you get the obvious responses.” – Asher Siddiqui
“You have to be thinking about exits because if you’re so laser-focused on building your portfolio and not thinking about exits, then maybe you’re a great investor, but not a great fund manager.” – Asher Siddiqui
On investors selling secondaries… “You may choose to take some off the table. And this is a market risk, not a specific lack of belief in the founder. I cannot tell you what the right answer is. What I can tell you is what I’m interested in backing are fund managers that are in the pursuit of truth, and they’re making the best judgment calls in the pursuit of truth that they can at this point in time, based on the data they have available.” – Asher Siddiqui
“There is no right or wrong answer. Because you may get it right this time – you may get it wrong this time – what matters is-… This is Fund III, right? What about Fund VI or Fund VII or Fund VIII? Are you building a culture for you to continue to build a team that has this culture to continuously follow and pursue this pursuit of truth for the best outcomes based on the process that you have, as opposed to just shooting from the hip and gut instinct, which is great while you’re around. But when you retire and your firm’s going on, you’ve basically created a culture where people shoot from the hip and maybe the people who come after you are not as good as you.” – Asher Siddiqui
“Exiting a position in a company to return DPI to LPs is not a reflection of your stance on the company, but your stance on the market.” – Asher Siddiqui
Why LPs should go to annual meetings… “I’m looking for a minimum of one insight that I can take away, and I’m hoping to ask one intelligent question that will stand out as a credible LP in the minds of the GP.” – Asher’s Swedish pension allocator friend
“What I hear from LPs is that the market is important. And of course, the market IS important. And I think that that’s true. But if you truly believe in venture as a purist, then all of it is irrelevant because at any point in time, someone will come and have this unique insight. And the timing is against them. The world is against them. They’re in the wrong place at the wrong time, and yet, they have this unique insight at this point in time. They have the opportunity to invest at this point in time. And so, just because the timing is wrong doesn’t mean you shouldn’t be backing them. Because they might be right. And you might be missing out on the best opportunity in your lifetime. And that’s what is beautiful. That it is a people game.
“So, when I hear people talk about scaling venture, what the fuck are you talking about? Venture is not scalable. There are things that you can scale. There are processes that you can scale. But ultimately, you still have to rely upon finding those people and finding them at the right time – and the right time could be the ‘wrong’ time – but finding them when they find that opportunity and when they see that meaningful insight. I’ve heard people say it’s not thesis-driven; it’s market-driven. No, I disagree. I think it’s both of those. But actually it’s individual-driven if you can find that person.” – Asher Siddiqui
Stay up to date with the weekly cup of cognitive adventures inside venture capital and startups, as well as cataloging the history of tomorrow through the bookmarks of yesterday!
The views expressed on this blogpost are for informational purposes only. None of the views expressed herein constitute legal, investment, business, or tax advice. Any allusions or references to funds or companies are for illustrative purposes only, and should not be relied upon as investment recommendations. Consult a professional investment advisor prior to making any investment decisions.
One of my favorite Hunter Walk lines, and one I cite quite often is: “Never follow your investor’s advice and you might fail. Always follow your investor’s advice and you’ll definitely fail.”
Investors are more likely to drive a company to the ground than otherwise. Founders listen to the advice of people they deem to be more senior and more experienced than them, as if they were written into the Bible. The cold, hard truth for people who give advice is that:
Not all advice is created equal and most advice is situational.
Your advice is more likely to be useless than useful in the aggregate supply of advice.
Advice should always be taken with a grain of salt. And oftentimes, certain pieces of advice is overweighted given the brand of the person giving it (who is right vs. what is right) and/or given the number of times the advice is given.
I’m lucky enough to be asked to be an advisor to a small number of funds, startups, and non-profits. Nothing to ever be worth bragging about. In fact, sometimes I wonder why I have a seat at the table. Nevertheless, lucky to share a drink with people smarter than me. I also realize that I’m a work in progress, and love to learn, just for the sake of learning. I’m not the famous person in the room, nor am I the most experienced person in the room.
So…
I always preface my advice with “Take this with a grain of salt, and this is purely my opinion – one among many others. I trust you to make the final judgment call of what makes the most sense.”
I give the unorthodox opinion. If I don’t have one, I don’t share any advice. I will caveat that I play in the early stages of company formation, when organizations are more so the pirates than the navy. When things are non-obvious, and need to fight to have a seat at the table. And given that the company and/or fund’s job is to question the status quo, I believe it is my job is to enable the founders to consider unorthodox paths. The minimum I can do is suggest that even if my advice is wrong, there are more paths than the one or two options we have in front of us. Or as Mike Maples writes in his book Pattern Breakers, “breakthroughs require pattern breaking.”
All in all, is my advice better than yours? Or anyone else’s? Who knows? But at least it’s different.
Stay up to date with the weekly cup of cognitive adventures inside venture capital and startups, as well as cataloging the history of tomorrow through the bookmarks of yesterday!
The views expressed on this blogpost are for informational purposes only. None of the views expressed herein constitute legal, investment, business, or tax advice. Any allusions or references to funds or companies are for illustrative purposes only, and should not be relied upon as investment recommendations. Consult a professional investment advisor prior to making any investment decisions.
“Some of the best investments, as we look back in history, were never obvious at the moment the investments were made. You may not have to be contrarian, but you have to have a variant perception than the rest of the market. Maybe you saw the team differently. You saw the space growing differently. That, to us, inherently, is a single decision maker-type thought process at the earliest stage, when it’s less about metrics. It’s more about how you evaluate the talent and the team.” – Sean Warrington
Sean Warrington leads private market investing at Gresham Partners, a $10 billion multi-family office based in Chicago. Known for being a transparent and user-friendly LP, he and the Gresham team aim to simplify the fundraising process — offering single-check investments, a streamlined diligence process, and prompt, candid feedback to GPs.
[00:00] Intro [03:29] Who is Jeff French? [05:26] The metrics for success for a junior LP [07:20] The 3 chapters of Sean’s evolution as an LP [11:05] Sean’s first investment [14:44] When GPs put LPs on strict timelines [16:53] One archetype of GP that Sean is excited about [19:37] What it looks like to be thoughtful when growing AUM [23:16] What most LPs don’t understand about solo GPs [25:58] What happens when a GP leaves a partnership [27:33] The definition of LP/GP alignment [30:47] Reference archetypes and how to find them [35:32] How to manage bandwidths in a small team [38:58] Frameworks for taking calls [42:26] How much does Sean travel? [43:25] Why coffee chats don’t work [45:30] What Sean’s changed his mind on about investing [47:12] What did Jason Kelce’s retirement mean to Sean? [49:36] Post-credit scene
“If you’re 60-70% of the time picking good managers, I think you’re pretty good at this industry.” – Sean Warrington
“Frameworks are not foolproof. What they’re designed to do is help us focus on places where we can get to an eventual yes.” – Sean Warrington
“We don’t want a slow no. A slow no is bad for everybody.” – Sean Warrington
“Some of the best investments, as we look back in history, were never obvious at the moment the investments were made. You may not have to be contrarian, but you have to have a variant perception than the rest of the market. Maybe you saw the team differently. You saw the space growing differently. That, to us, inherently, is a single decision maker-type thought process at the earliest stage, when it’s less about metrics. It’s more about how you evaluate the talent and the team.” – Sean Warrington
“One thing LPs are bad at remembering is we are exceptionally diversified investors. For us, to have anything even be 1% – even a manager being a single percent of the overall pool of capital – is very difficult to do. Many times we’re talking about basis points.” – Sean Warrington
“The big risk that LPs don’t appreciate… There’s this view that these two- and three-person teams coming together create this better judgment. What they’re not factoring in is that these are somewhat forced marriages. These are people who may or may not have long histories together. They may not have great bedside manner when they’re in the thick of it.” – Sean Warrington
Stay up to date with the weekly cup of cognitive adventures inside venture capital and startups, as well as cataloging the history of tomorrow through the bookmarks of yesterday!
The views expressed on this blogpost are for informational purposes only. None of the views expressed herein constitute legal, investment, business, or tax advice. Any allusions or references to funds or companies are for illustrative purposes only, and should not be relied upon as investment recommendations. Consult a professional investment advisor prior to making any investment decisions.
