20VC Newsletter - July 7th 2024
Here are the transcripts and top takeaways from 20VC episodes released this last week!
Monday’s episode with Matt Clifford, Co-Founder at Entrepreneur First:
Download the full transcript:
My 7 lessons:
Diminishing Returns is Real and The Opportunity for Founders
We’re seeing value flattening with more data & compute to language models.
Startups shouldn’t compete for building bigger LLMs.
The real opportunity for founders is finding the next S curve.
China Are One of the Most Paranoid When it Comes to AI
The CCP prioritizes stability above all else.
AI Companies in China have to send random data samples to the government.
It makes Brussels look like a soft touch.
AI Takers or AI Makers**
AI is going to be the defining tech of our generation.
Countries need to make a choice: they could be AI makers or AI takers.
AI takers still use AI, but they’ll be shipping dollars to countries that make them
Why the UK is the Best Place to Build AI Companies**
We have the least regulation in any other AI-significant country.
We have extraordinary talent from Oxford, Cambridge, Imperial & UCL
DeepMind, Anthropic & OpenAI all have offices here.
I Raised More Money in Michigan Than I Did in London: UK Pension Funds Should Be Ashamed
One of my biggest investors is a state pension fund in Michigan.
I pitched a comparably sized plan in the UK & they had ZERO allocation for venture.
More UK entrepreneurs are keeping their companies private for longer & the benefits need to come from venture investments.
Why the EU AI Act is a Mistake
The legislation was written by a bunch of old dudes in Brussels.
They’re trying to anticipate the future & label a bunch of things as high-risk.
This is an enormous burden for companies trying to innovate.
How does AI Change the Future of War?
Cheap AI tech will change the relative power of offensive & defensive weapons.
100 inexpensive & smart explosive drones could take on a $BN aircraft carrier.
We have to think about these problems & get ahead of them.
Wednesday’s episode with Avy Eyal, Co-Founder and Managing Partner at Entrée Capital:
Download the full transcript:
My 6 key takeaways:
How We Turned $15M into $1.5BN
We invested around $15M into Monday across rounds.
Ultimately the distribution from Monday was around $1.5BN 🤯
Our next 10 successful investments did not equate to the gain on Monday.
@m2jr @shaunmaguire @honam @stevejang what have been your lessons on the power law nature when looking at your portfolio?
Why Not Everything Needs to be a Homerun
We have angel and core deals.
Angel deals are small checks with optionality to increase it.
Bunch of these could bring you a 1x return, while the ballpark ones give you extra multiples.
The Three Step Strategy to Selling Positions that has Made Millions*
We had a principle at Entrée:
When the price per share of the current round is 6-8x, sell a third.
When we get to pre IPO or IPO, sell a third.
When the IPO lockup expires, sell everything.
We’re private investors, our competence is getting the business to a place where there’s liquidity.
What Do We Need to See to Double Down in a Company?
Many times we won’t have perfect conviction in a company.
We would do an angel check into the company.
If the company proves the data points, we’ll try to lead the next round.
Love to hear your thoughts on when to double down @epaley @dunkhippo @jason
The #1 Element Founders Should Look for in a Series A Investment**
The fund doing your A should be able to lead your B.
You don’t know where the world will be 2-3 years from now.
You want investors that can continue even when the chips are down.
Love your thoughts on this @chadbyers @dafrankel @pitdesi
Signaling is Real and the Institutionalisation of Venture
Funds like a16z & Sequoia have become massive funds.
They have different multiple & IRR targets.
It’s very easy for them to write that early check.
Love your thoughts on this @jasonlk @dscheinman
Let us know what your big takeaways from this week’s shows were in the comments below!
Thank you for reading, and don’t miss the great guests we have next week:
Pat Grady, Partner @ Sequoia
Ara Mahdessian, CEO @ ServiceTitan
Mark Roberge, Co-Founder @ Stage 2 Capital