20VC Newsletter - Mar 31st 2024
20VC Newsletter - Mar 31st 2024
Here are the transcripts and top takeaways from 20VC episodes released this last week!
Monday’s episode with David Clark, CIO at VenCap International:
Download the full transcript here:
Here are my top 7 takeaways:
You Can Have Fund Returners on Billion Dollar Funds
Our data found 45 investments that returned a billion dollars to the fund.
Most of these have happened in the last 7-8 years.
The idea that you can’t get a fund returner from a billion dollar fund is simply untrue.
It is OK to Miss a Good Manager
You don’t have to get every great manager out there.
Understand your lane, be comfortable with it.
Recognize it is still relevant to deliver the expected performance from the asset class.
Venture Power Law and Same Names in Most of Them
1% of company exits generate the bulk of returns in the industry.
These companies always have the same investors.
We’d rather spend our time trying to access the best names than finding the needle in the haystack.
Only 1 in 50 Funds Does 5x
Around 1200 funds were raised between 2000-2014.
More than 50% haven’t returned 1x capital.
6.6% generated 3x net DPI.
2.6% generated 5x net DPI.
Venture is fucking hard.
Why Massive Fund Sizes Today Might Actually Be Too Small
I’ve had the same conversation 15 years ago about how big funds = no returns.
You have to compare fund sizes today with exit sizes in 10-15 years.
Tech outcomes in 15 years will be so much larger.
The Best Time to Invest is in a Firm's Hard Times
Even great firms go through difficult times.
Succession periods, financial crisis…
Current lack of liquidity is a good time to invest in LPs.
They need distribution coming back to make new commitments.
Why The Sequoia Evergreen Fund Made Sense
They only got criticisms because they implemented it when markets saw significant correction.
There are several companies that continue to compound at high levels after their IPO.
If you’re in those top 1% companies, you should ride it all the way.
Wednesday’s episode with Chris Dixon, Founder and Managing Partner at a16z crypto:
Download the full transcript here:
Here are my top 6 takeaways:
Why Incumbents Can Be Replaced
Google has 300,000 employees.
Only around 1000 of them are truly creating cutting edge products.
That’s the same amount of people innovating at Ethereum.
Two Winners of the Internet: Amazon & LVMH
There were two retails winners after the internet:
Amazon: Logistics & hyper efficiency.
LVMH: Boutique brands.
There is a barbell effect that’s also happening in venture.
Big funds: a16z, Sequoia, offering full stage support.
Small funds: Early stage managers with deep expertise.
Two Ways to Win in Venture: Heat Seeking & Truffle Hunting
Heat seeking: Winning the deal everyone is excited about.
Truffle Hunting: Find deals in spaces nobody is paying attention to.
Identify which one you are and lean into it.
AI Will Strengthen The Big Five Incumbents
The big five own 95%+ of the internet.
AI will accelerate that consolidation.
It rewards companies with large amounts of data and capital.
Pump and Dump is BS!
We’ve never done any speculation.
All of our funds are 10+ years & we hold 94% of our investments.
Selling your winners is the worst possible strategy in venture.
Most Like to Change in World of Crypto
Gray areas discourage entrepreneurs & encourage bad actors.
We need bright lines rules on what to do & not do.
We’re also advocating for longer lockups & better security audits.
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: Partner at Founders Fund Trae Stephens & CEO of Postmates Bastian Lehmann.
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