The Dao of Investing in VC Funds | Jay Rongjie Wang | Superclusters | S4E8

jay rongjie wang, jay wang

“The first layer is setting up your own strategy. The second layer is portfolio construction. How do you do your portfolio construction based on the strategy you set out to do? And then manager selection comes last. Within the portfolio construction target, how do you pick managers that fit that ‘mandate?’” – Jay Rongjie Wang

Jay Rongjie Wang is the founding Chief Investment Officer of Primitiva Global, where she runs a family-backed Multi-asset Strategy. She also works extensively with emerging VC managers, and sits on the Selection Committee of Bridge Funding Global.

Jay’s background uniquely combines software engineering (at the world’s largest fintech platform) and institutional investing (at top funds including Fidelity and Sequoia), as well as general management (3x executive in tech startups). Jay has lived in 5 different countries across 9 major cities, giving her a global perspective.

Jay obtained her B.A and M.Sci in Physics from Cambridge University and M.B.A from INSEAD. In 2023 she was listed as an Entrepreneurial Pioneer Under 35 by Hurun Wealth.

You can find Jay on her socials here:
LinkedIn: https://www.linkedin.com/in/wangrongjie/

And huge thanks to this episode’s sponsor, Alchemist Accelerator: https://alchemistaccelerator.com/superclusters

Listen to the episode on Apple Podcasts and Spotify. You can also watch the episode on YouTube here.

Brought to you by Alchemist Accelerator.

OUTLINE:

[00:00] Intro
[04:12] Life atop a Daoist mountain
[10:27] Qigong and tai chi
[12:21] What is dao?
[19:18] The weapon that Jay specializes in
[21:08] Why did Jay leave the Daoist temple?
[24:24] The motivations behind Jay’s career shifts
[30:05] The difference between underwriting a VC fund and a fund-of-funds
[33:08] How does Jay get to know a fund manager?
[36:31] The 3-layer process for building an allocation strategy
[38:01] Picking the initial asset class
[45:29] How much Jay allocates to venture
[48:43] What does “reasonably diversified” mean?
[49:15] Figuring out the portfolio construction model
[54:59] At what point do you stop maximizing for portfolio returns?
[56:57] How Jay calculates a 200X target return on direct investments
[57:53] Data on returns as a function of portfolio size
[1:01:42] The biggest challenge once you’ve picked your strategy
[1:04:40] Selecting the right fund managers
[1:14:17] The difference between guqin and piano
[1:18:42] Intuition versus discipline
[1:24:08] Post-credit scene
[1:27:47] Thank you to Alchemist Accelerator for sponsoring!
[1:28:48] If you enjoyed this episode, it would mean a lot if you could share it with one friend who’d also get a kick out of this!

SELECT LINKS FROM THIS EPISODE:

SELECT QUOTES FROM THIS EPISODE:

“If you have the deal flow and you have the energy and have the skills to construct your own portfolio, then funds-of-funds obviously are more complimentary than necessary.” – Jay Rongjie Wang

“The first layer is setting up your own strategy. The second layer is portfolio construction. How do you do your portfolio construction based on the strategy you set out to do? And then manager selection comes last. Within the portfolio construction target, how do you pick managers that fit that ‘mandate?’” – Jay Rongjie Wang

“The later the stage you go, […] capital becomes more anonymous, and […] the more you converge to public market returns.” – Jay Rongjie Wang

“I only put the regenerative part of a wealth pool into venture. […] That number – how much money you are putting into venture capital per year largely dictates which game you’re playing.” – Jay Rongjie Wang

“Your average median of a fund-of-funds is higher than a venture capital fund, and the variance, the standard deviation, is lower. So it is possible for a VC fund to have 40%, 50%, or higher IRR. It’s much, much less likely for a fund-of-funds to achieve that, but also the likelihood of losing money is much, much lower for a fund-of-funds.” – Jay Rongjie Wang

“The reason why we diversify is to improve return per unit of risk taken.” – Jay Rongjie Wang

“Bear in mind, every fund that you add to your portfolio, you’re reducing your upside as well. And that is something a lot of people don’t keep in mind.” – Jay Rongjie Wang

“Once you have a strategy, the hardest thing for me is to stick to that strategy because you just meet those amazing managers, amazing funds all the time.” – Jay Rongjie Wang


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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.