Transcript
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Tell me about AXA Venture Partners.
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It's one of the larger insurance groups in the
world created over 200 years ago and has
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expanded globally since across many, many
different countries, and they employ in the
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hundreds of thousands of employees.
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We do see a lot of noise out there as
especially when it comes to new managers coming
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to market saying they're gonna launch this new
strategy.
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The percentage of funds that we invest in based
on our funnel is below 5%.
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What's the number one mistake that emerging
managers make?
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We're in an asset class or a world where
ambition, ambition, and almost unnatural belief
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in being able to deliver something exceptional
is necessary.
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But as LPs, when we look at emerging managers,
I have to believe that what you're trying to
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accomplish, you can do.
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You're raising a $500,000,000 safe fund You're
saying you're gonna capture 25 percent plus
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ownership in the best seed companies coming out
of Europe, and you're gonna deliver 10x.
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And you've never done anything of the sort
before.
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Very difficult for me to hang my head on that.
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There's only been 28 funds out of raised first
time funds in 2024.
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What's driving that?
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Unbelievable and believable at the same time.
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Ian, I'm excited to chat today.
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Thank you,
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Jordan Nell, for the introduction.
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Welcome to Atomic's Capital Podcast.
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Thank you for having me.
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I'm very excited.
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I'm excited as well.
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So tell me about AXA Venture Partners, AVP.
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Tell me about how it relates to making LP
Investments.
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Yeah.
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Sure.
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So maybe it's worth giving you a little bit of
on on the whole platform to start with, and
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then I'll kind of dive a little bit into the LP
side.
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Not everyone is familiar with the AXA brand,
but it's one of the larger insurance groups in
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the world created over 200 years ago and, has
expanded globally since across many, many
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different countries, 50 plus, I think, and they
employ in the hundreds of thousands of
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employees.
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It's a massive organization, and it's it's one
of the biggest insurance groups globally.
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So that's our kind of seeding LP group that
helped us launch this platform about 8 years
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ago.
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And so, you know, behind us, we have a a lot of
investment and institutional know how of what
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it takes to build a a fantastic, alternatives
platform.
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As Access has done many different things in the
private equity and alternative space over those
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200 years, but they decided to seed us in 2015,
2016.
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We're global investors, US, the 2 coasts, but,
you know, US wide.
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We focus on Europe, and we focus on
particularly Western Europe and Nordics.
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So like France, UK, Nordics, and and, and back
are kind of the key areas we look at.
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And then we also invest in parts of Asia as
well.
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There's some in pretty massive markets in terms
of macro out there, China being 1, India being
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1.
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Yeah.
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What's the strategic reason for why AXIS
investing as an LP?
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It's it's a great question.
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The reason AXA decided to do this is because,
wow, they had successfully built an investment
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platform in the past.
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Where, there was a story of, of Guardian, which
is a large private equity play in Europe.
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They're, like, a $200,000,000,000 AUM fund
today that was used to be acts of private
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equity.
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They grew it and spun it out after, like, 15
years.
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Of that platform developing under AXA.
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And AXA remains one of its largest LPs today
and will always be around 2015, 14.
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It was time to launch a strategy that would
look at the tech space and help people on the
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ground from that strategic angle.
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Let's talk about your portfolio.
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You invest in US, Europe, Asia.
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What percentage of your GPs are in those
geographies?
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Yeah.
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So our our strategy is very much designed to be
you know, aligned with where we see the most
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opportunities in in in all those different
places.
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Right?
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So we think of the biggest markets in Venture
US forms over half of what we do, and that's
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probably reflective of the opportunity that's
available probably could be more.
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Europe is somewhere between 25 30%.
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And then if I group kind of Israel, you know,
and and and those parts of Asia I mentioned,
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and within that remaining, let's say, 15%,
there's all those, and we also do venture LP
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secondaries and co investments.
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And when you look to invest in a GP, what are
the characteristics of an ideal GP?
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K.
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If you can show capturing high ownerships in
the best companies as early as possible in the
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places that matter, then to us, that is proof
points that you're you're differentiated by,
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you know, by default because you're doing
something better than others to get to get to
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those opportunities.
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It's the outcome driving the conviction.
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Absolutely.
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Sameer Kaji from allocate shared a first time
fundraising activity for first time funds in
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2024, it's down over 90 percent from
13,400,000,000 in 2023 to 1.6000000000 in 2024.
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Yep.
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What are the main
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factors driving such a significant decrease in
funding for first time funds.
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There's only been 28 funds that have raised
first time funds in 2024.
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What's driving that?
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Unbelievable.
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Unbelievable at the same time.
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So so, you know, it's this a lot of what we can
say as LPs is is you can mirror with what you
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say as GPs.
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It's this phenomenon of flight to quality,
right, as markets retract and people become
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more risk off, they tend to gravitate towards
things that are easier to understand that are
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less risky.
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It's people trimming down their portfolios and
on the supply side and just, like, focusing on
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on the few relationships that matter and not
really paying attention to those risk riskiest
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opportunities out there, much like what you see
on the company side.
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Right?
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If you're not a company who's able to also
show, excellent metrics and you're just, like,
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one of the top 5 percent of of companies out
there, it's it's because it's very difficult
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for you to raise at the series b plus, right,
at the moment.
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And it's kind of the same thing at the fund
level or, let's say, between LPs and GPs, it's
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that same kind of dynamic.
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In that same suite's suite storm, the 5 largest
venture funds to your point have gone from a
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20% market share in 2023 and 21% 2022 to 45% in
2024, which is
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staggering considering there's 1000
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and 1000 and 1000 of
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of funds of
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venture funds in the market.
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Is is this quote unquote flight to quality,
which I would label a flight to brands, is that
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a sober and rational move, or is that an overly
conservative and incorrect posture?
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Is this people just being afraid of you know,
for their job, or is there some hyper
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rationality going on in the market?
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There's a bit of both there.
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I hate to take that easy answer, but, you know,
in in a lot of cases, as LPs, we do see a lot
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of noise out there, especially when it comes to
new managers coming to market saying they're
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gonna launch this new strategy and we we we,
you know, the percentage of funds that we
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invest in based on our funnel is below 5%.
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Right?
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So we we also filter through a lot of things.
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And you'd be surprised how many, funds out
there will say they're gonna they're pitching
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something that they're they're gonna they think
they're gonna do really well.
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And as people who have seen who have pattern
recognition on that side of the market, we see
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pretty quickly when a lot of things won't work.
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And so you know, although we think as LPs, we
are constantly having conversations with new
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managers, and we think it's very important to
keep a pulse on that side of the market going
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and investing in then recent recent funds is is
a great way to for for somebody who potentially
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doesn't spend that much time on venture or
maybe venture is a small part of their
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allocation, as an asset allocator, to index the
market and get exposure to a great proportion
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of the best opportunities that come through and
venture over the next cycle.
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But if all you do is venture capital like us,
it makes no sense because you really need to,
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balance out that part of your portfolio with
potential alpha generating opportunity that are
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gonna often be funds 1, twos, or threes.
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So depends on how much time you wanna spend on
venture.
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Venture is not an asset class to have one foot
in.
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It's it's definitely some it's somebody's full
time job or you should be even investing in a
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fund to fund.
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I would argue.
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I look at these
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multistage funds essentially as a different
asset class, essentially equivalent
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to a growth equity type exposure, which has
quicker returns from a DPI perspective, but a
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much more banded return profiles.
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A shorter time frame, banded returns, but
you're never gonna get a 10 x fund.
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It's just almost structurally impossible.
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And going back to this retreat from emerging
managers and also retreat from early stage
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investing, I do consider it largely irrational
for a couple reasons.
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1 is venture capital
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has proven itself as a great asset class going
back to the 19 seventies.
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The only reason to
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really change the thesis is for one of 2
reasons.
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One is if you have a macro, belief, on the
cycle of the market, if you think that we're at
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the top of the market, like, you know, some
people made a judgment call in 20 20, 2021.
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Of course, some people made that early in 2020
going back to 2017.
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If you really believe that venture is
overbought right now, then it does make sense
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to to not invest in a certain vintage.
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If you're not playing macro investor, you're
not trying to pick the the trough and the
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peaks.
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I think they're the only reason to really get
out of the asset class, which is essentially
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what you're doing if you don't invest in the
early stage, is if you believe that the future
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will not look like the past.
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Is the age of startups over, are we no longer
gonna get 10,000,000,001,000,000,000 startups?
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And I don't see any rational reason why that's
not the case.
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In fact, I see a thesis that would suggest that
companies, whether they get bigger or not is
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the question, but they are getting much more
efficient capital raising because of these
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forces, including AI.
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You now have these companies like Mid Journey
that are $10,000,000,000 valuation.
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I think have never raised outside capital, that
would be unthinkable even 2, 3 years ago.
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So I think the returns are here, and I think
those that invest in this vintage are are gonna
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be rewarded.
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That being said, Unfortunately, there's a
principal agent problem inside of many LPs,
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which they're not
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paid to, to take a lot of risk.
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And also, even when they make the right
decision, those results aren't known for 4 or 5
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years.
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So oftentimes you have to deal with a lot of
headwinds for many years until your strategy is
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proven.
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Right?
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So I do think there's any rational, aspect to
this, but it is shocking when you look at an
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industry, it's essentially contracted by over
90%.
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It it it's worth discussing.
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But it's I wonder what those 28th was it?
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23 or something?
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28.
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Yeah.
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28.
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Of those 28, I wonder what the profiles of
those ones look like because, you know, you
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talked about persistency of returns, and I
couldn't agree with you more.
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In fact, I would say, you know, that phenomenon
is is ever present at every level of venture
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capital for sure.
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And when we pitch, you know, our our, when we
do our pitch to LPs for our fund to funds, it's
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like, if you can find the right people stick
with them over time and they're able to
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demonstrate repeat, you know, good strong
returns, the likelihood of that happening over
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time more and more is is is it more of the case
than anywhere else.
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And when you aim high at the highest level
quartile of returns within the asset class,
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then you have a winning strategy if you can if
you can get there, broadly speaking.
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And the first time funds, as we know, we've
seen the data.
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It's like they generate the most alpha, but it
it goes both ways.
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Right?
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So you can end up with terrible, terrible
returns.
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Maybe not in my time, but I've seen I've seen
data to show, like, 0 x funds in the past.
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You know, I don't know how, but it happens.
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And so, so I wonder what the profiles of those
28 look like.
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How many of those 28 are first time managers?
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First time managers.
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Yeah.
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Very, very few.
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Many of them may be spin outs from those same
multi multi platform funds.
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You mentioned when we were talking that you
over index on partnership.
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What what did you mean by this?
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Over index on partnership.
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It's it's it's even more in the topic we're
talking about with emerging managers and new
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funds and new managers.
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Where you don't have that much data to hang
your head on thinking very deeply and spending
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a lot of time on the people is is crucial.
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And I keep making the analogy of, like, how you
think about founders on the GP side and how we
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think about GPs is actually comparable.
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A lot of the managers we work with they will
the most important aspect of their diligence is
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to look at the people running the firm.
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You know, do they have confidence in the
entrepreneur's execution capability, ability to
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iterate and to create?
224
00:12:04,121 --> 00:12:04,720
And if that is a 5 out of 5,
225
00:12:13,865 --> 00:12:16,824
on every dimension, then everything else kind
of follows.
226
00:12:16,824 --> 00:12:20,024
And and for us as LPs, it's very much
comparable to that.
227
00:12:20,024 --> 00:12:21,464
Like, we like to have a map in our
228
00:12:21,464 --> 00:12:22,204
heads Ecosystems.
229
00:12:22,504 --> 00:12:23,485
Of the whole ecosystem.
230
00:12:23,544 --> 00:12:26,904
And once we know that, you know, we know where
they come from.
231
00:12:26,904 --> 00:12:31,029
We know what they've done in the past what
deals they've led, we if we don't if we don't
232
00:12:31,029 --> 00:12:34,889
know, we can reference those things with
founders, with other LPs, with other GPs.
233
00:12:35,029 --> 00:12:37,990
We get people in a room, and we spend a lot of
time with them.
234
00:12:37,990 --> 00:12:42,230
If it's a multi person partnership, we like to
see how they interact, how they think, how they
235
00:12:42,230 --> 00:12:48,164
complement each other, if they don't, And those
are all the intangibles, but they are so
236
00:12:48,164 --> 00:12:51,924
important in making an investment decision and
become almost the only thing that matter when
237
00:12:51,924 --> 00:12:55,365
the earlier you go into manager's journey
because you have less and less to hang your hat
238
00:12:55,365 --> 00:12:56,504
on into that's quantifiable.
239
00:12:56,644 --> 00:12:56,804
Right?
240
00:12:56,804 --> 00:13:00,790
If we see a track record of, like, you know, 4
x fund, 5 x fund.
241
00:13:00,790 --> 00:13:05,029
Maybe there's a great performance thing going
on there for a number of cycles, but then
242
00:13:05,029 --> 00:13:08,629
there's something about the team that's just
off and we we can't, you know, we can't get
243
00:13:08,629 --> 00:13:09,429
comfortable with it.
244
00:13:09,429 --> 00:13:13,590
So strategy and team and performance,
everything links back up to the team in that
245
00:13:13,590 --> 00:13:14,054
sense.
246
00:13:14,054 --> 00:13:18,774
If we can't get comfortable with that aspect of
the of the GP or the the opportunity, rather,
247
00:13:18,774 --> 00:13:21,514
it's it's very difficult for us to phone
conviction.
248
00:13:21,575 --> 00:13:26,294
You mentioned that there's sometimes 1 or 2
people driving the majority of a fund's
249
00:13:26,294 --> 00:13:26,794
performance.
250
00:13:27,174 --> 00:13:28,080
Talk to me about that.
251
00:13:28,240 --> 00:13:32,799
When we do diligence as LPs, you have a good
view of where the values are created in terms
252
00:13:32,799 --> 00:13:33,940
of deal attribution.
253
00:13:34,000 --> 00:13:39,040
So there might be 3 investment partners in a
firm, and you can see on paper that 60 percent
254
00:13:39,040 --> 00:13:43,424
of the funds values have have come from that
single partner a lot of the time is just
255
00:13:43,424 --> 00:13:43,924
tenure.
256
00:13:44,464 --> 00:13:46,804
Some partners have been involved with the firm
longer.
257
00:13:47,264 --> 00:13:51,105
Therefore, they've had more chance to to to
make more investments and, therefore, by just
258
00:13:51,105 --> 00:13:54,865
by the fact that they've been there longer,
they've had more more opportunities and more
259
00:13:54,865 --> 00:13:56,029
value attributed them.
260
00:13:56,029 --> 00:13:58,290
So it's it's a question of tenure in some
cases.
261
00:13:58,509 --> 00:14:02,690
In some cases, it's it's it's a little bit more
nuanced, but you get the role question.
262
00:14:02,750 --> 00:14:07,570
So, you know, take a situation where you have 3
GPs.
263
00:14:07,950 --> 00:14:11,955
One of them is super deal focused, just likes
investing.
264
00:14:11,955 --> 00:14:13,975
That's all they do, and they do a good job at
it.
265
00:14:14,355 --> 00:14:18,274
The other partner, second partner might have
50% of that time doing deals, but they also
266
00:14:18,274 --> 00:14:23,154
happen to be great firm builders and great at
hiring people, training people, and being a
267
00:14:23,154 --> 00:14:23,975
culture carrier.
268
00:14:24,299 --> 00:14:27,820
Not something you can see on paper, but if you
look at it on paper first, you're like, oh,
269
00:14:27,820 --> 00:14:28,799
what's going on here?
270
00:14:29,100 --> 00:14:32,779
You have a conversation with with with the with
the group and you try and figure that out.
271
00:14:32,779 --> 00:14:35,740
In some cases, it's like, you know, sometimes
it really is clear.
272
00:14:35,740 --> 00:14:38,559
Everybody's putting the same amount of time and
effort into investing.
273
00:14:38,715 --> 00:14:44,075
And it also happens that 1 of or 2 of the 5 or
6 or whatever the number is, they're the ones
274
00:14:44,075 --> 00:14:46,435
that are actually driving the value
eightytwenty rule.
275
00:14:46,435 --> 00:14:50,715
So and that's a little bit more, you know, of a
difficult conversation to be had with with with
276
00:14:50,715 --> 00:14:51,514
the with the manager.
277
00:14:51,514 --> 00:14:52,795
Why is that a difficult discussion?
278
00:14:52,795 --> 00:14:57,759
Let's say you have a 6 GP team and 1 or 2 other
people are driving a lot of the returns.
279
00:14:57,759 --> 00:14:59,040
It's a good performing fund.
280
00:14:59,040 --> 00:15:00,080
Is that not okay?
281
00:15:00,080 --> 00:15:04,960
I've been involved in certain situations like
that where it's not 95 and 5, like you said,
282
00:15:04,960 --> 00:15:09,695
but it's more like It's starting to look a bit
more like 60, 40, or 70, 30, or something like
283
00:15:09,695 --> 00:15:09,855
that.
284
00:15:09,855 --> 00:15:10,175
Right?
285
00:15:10,175 --> 00:15:14,815
You can see there's a great dynamic between
people and everybody's got their niche and
286
00:15:14,815 --> 00:15:19,100
whatever, you know, whether it's internal,
whether it's a external, like if it's brand
287
00:15:19,100 --> 00:15:23,519
building, if it's, you know, running the firm,
there might be a lot of things grooving there,
288
00:15:23,580 --> 00:15:28,320
and there's no, there's no disagreement between
the existing partnership.
289
00:15:28,700 --> 00:15:31,965
But you as an LP kind of sometimes people don't
even notice these things.
290
00:15:31,965 --> 00:15:34,764
You'd be surprised, like, LPs don't necessarily
figure this out.
291
00:15:34,764 --> 00:15:37,904
So you might be the only one in the room kinda
going, yeah.
292
00:15:38,524 --> 00:15:40,365
We've noticed something on paper here.
293
00:15:40,365 --> 00:15:41,485
It looks kinda weird.
294
00:15:41,485 --> 00:15:42,125
What do you think?
295
00:15:42,125 --> 00:15:46,340
It's a sensitive discussion because it's a
people's business at the end of the day.
296
00:15:46,340 --> 00:15:49,779
And if people get along and they like working
working with someone else, it's not as easy as
297
00:15:49,779 --> 00:15:50,740
you're saying, like, hey.
298
00:15:50,740 --> 00:15:51,700
Get rid of this person.
299
00:15:51,700 --> 00:15:51,940
Right?
300
00:15:51,940 --> 00:15:54,580
How often do you see incentives reassigned in
those cases?
301
00:15:54,580 --> 00:15:58,735
If you look at role in tenure, those are kind
of the 2 most common you know, dimension
302
00:15:58,794 --> 00:16:00,634
history, which you could look at this
situation.
303
00:16:00,634 --> 00:16:00,794
Right?
304
00:16:00,794 --> 00:16:05,855
So the most common situation I've seen is you
get a a firm that's been around.
305
00:16:05,995 --> 00:16:11,149
Maybe some of the original partnership is is is
getting on with their age and they're coming
306
00:16:11,149 --> 00:16:15,870
closer to to retirement age and their role as
their tenure expands, their rule changes over
307
00:16:15,870 --> 00:16:16,370
time.
308
00:16:16,829 --> 00:16:20,509
In a lot of times, you see these situations
where, you know, become less active on the
309
00:16:20,509 --> 00:16:24,595
investment side and they tend to move more into
these, like, you know, intangible roles where
310
00:16:24,595 --> 00:16:28,754
you have more of a chairman like, position or
advisor, etcetera, right?
311
00:16:28,754 --> 00:16:33,154
You'll see situations where 1st generation
partners will hang around because it's their
312
00:16:33,154 --> 00:16:33,475
firm.
313
00:16:33,475 --> 00:16:36,115
They started it, and they're not fully
transitioning out.
314
00:16:36,115 --> 00:16:39,899
And sometimes the economics are not shared way
between them and the new generation.
315
00:16:39,899 --> 00:16:40,059
Right?
316
00:16:40,059 --> 00:16:43,980
And those are that's a that's something that we
we don't particularly like.
317
00:16:43,980 --> 00:16:47,659
But if you're, you know, if you're responsible
and you have enough, you know, you you have
318
00:16:47,659 --> 00:16:52,965
enough, clarity in what's going to happen, you
make that transition as clear and, well
319
00:16:52,965 --> 00:16:54,804
structured as possible early on.
320
00:16:54,965 --> 00:16:57,764
So in that case, you should see change over
time.
321
00:16:57,764 --> 00:17:01,605
Then there are situations where if we take the
extreme example where someone's just not
322
00:17:01,605 --> 00:17:08,190
contributing anything, or contributing less, is
rare that you see firms, like, you know, say,
323
00:17:08,190 --> 00:17:08,349
hey.
324
00:17:08,349 --> 00:17:12,509
Let's take away some of the economics from
those people and reallocate it to some of the
325
00:17:12,509 --> 00:17:15,230
others that are doing a better job off of the
partnerships we work with.
326
00:17:15,230 --> 00:17:18,984
They're very much a kind of urine or your out
type of culture, and if you're not a core part
327
00:17:18,984 --> 00:17:22,585
of the team and you're not carrying your weight
or more than your weight to some extent, you're
328
00:17:22,585 --> 00:17:23,865
very quickly gonna get pushed out.
329
00:17:23,865 --> 00:17:26,184
And that's that's just the that's just the
nature of the game.
330
00:17:26,184 --> 00:17:30,045
So in that case, it's more a interrupt
situation than reorganizing incentives.
331
00:17:30,660 --> 00:17:31,160
Congratulations.
332
00:17:31,460 --> 00:17:33,220
10 x capital podcast listeners.
333
00:17:33,220 --> 00:17:36,759
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334
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335
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338
00:17:49,515 --> 00:17:50,402
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339
00:17:50,402 --> 00:17:50,509
What's the number one mistake that emerging
managers make that you wish merging managers
340
00:17:50,509 --> 00:17:50,532
would not make?
341
00:17:50,532 --> 00:17:51,054
It's the overpromising under
342
00:17:53,914 --> 00:17:54,414
delivering.
343
00:17:58,769 --> 00:18:01,589
It's when people don't rightsize their fund to
their strategy.
344
00:18:01,730 --> 00:18:03,730
That's and that speaks a lot of things.
345
00:18:03,730 --> 00:18:03,890
Right?
346
00:18:03,890 --> 00:18:10,369
I mean, I think we're we're in a asset class or
a world where ambition and vision and almost
347
00:18:10,369 --> 00:18:14,470
unnatural belief in in in being able to deliver
something exceptional is is necessary.
348
00:18:15,224 --> 00:18:22,585
But as LPs, when we look at, emerging managers,
like, I have to believe that what you're trying
349
00:18:22,585 --> 00:18:24,184
to accomplish, you can do.
350
00:18:24,184 --> 00:18:29,250
So I'd almost advise emerging managers that are
thinking of launching something new is like,
351
00:18:29,410 --> 00:18:34,369
try to be as conservative as you can for your
first funds so you can under promise and and
352
00:18:34,369 --> 00:18:38,609
over deliver much better story coming into fund
2 and fund 3 and sometimes 4.
353
00:18:38,609 --> 00:18:40,049
You know, I'll give you an extreme example.
354
00:18:40,049 --> 00:18:42,230
You're raising a $500,000,000 seed fund.
355
00:18:42,535 --> 00:18:46,375
You're saying you're gonna capture 25 percent
plus ownership in the best seed companies
356
00:18:46,375 --> 00:18:51,414
coming out of Europe, and you're gonna deliver
10x, like, and you've never done anything of
357
00:18:51,414 --> 00:18:52,234
the sort before.
358
00:18:52,295 --> 00:18:54,134
Very difficult for me to hang my head on that.
359
00:18:54,134 --> 00:18:57,820
And number one question you're gonna get from
an institutional LP when you're out to raise
360
00:18:57,820 --> 00:19:02,619
your second, third, 4th fund, sometimes it
takes that long as they get to know you is
361
00:19:02,619 --> 00:19:07,100
they're not constantly gonna ask you, have you
done what you said you were gonna do and have
362
00:19:07,100 --> 00:19:12,464
you executed on that So the consistency of
messaging with execution is the most important
363
00:19:12,464 --> 00:19:12,785
thing.
364
00:19:12,785 --> 00:19:18,464
I remember seeing a deck last week where some
logos on a page, people saying they've invested
365
00:19:18,464 --> 00:19:21,505
in X company that, you know, category defining
company.
366
00:19:21,505 --> 00:19:25,220
Everybody knows I go back to my data, then I
see that their name isn't actually next to that
367
00:19:25,220 --> 00:19:25,539
company.
368
00:19:25,539 --> 00:19:26,579
It's somebody else's.
369
00:19:26,579 --> 00:19:28,820
And it's perhaps a little bit more nuanced than
that.
370
00:19:28,820 --> 00:19:33,380
Maybe there's a, you know, person was involved,
but not so much situation and there's it's
371
00:19:33,380 --> 00:19:34,759
worth digging maybe.
372
00:19:35,204 --> 00:19:42,964
But, I think I I am also surprised to see how
often, managers don't realize how much data we
373
00:19:42,964 --> 00:19:47,765
have and see and have seen through time to be
able to triangulate things and to to really
374
00:19:47,765 --> 00:19:49,440
assess whether what they're telling is true.
375
00:19:49,679 --> 00:19:55,440
So to summarize, I would say it's like under
rather than overpromising, I'm delivering, do
376
00:19:55,440 --> 00:20:00,399
the opposite and just be as clear and
transparent and honest as possible about your
377
00:20:00,399 --> 00:20:04,720
track record and what you've done in the past,
and that will act in your favor in so many
378
00:20:04,720 --> 00:20:05,220
ways.
379
00:20:05,494 --> 00:20:11,335
When it comes to deal attribution, how many VCs
could be attributed to one deal?
380
00:20:11,335 --> 00:20:15,575
It's a good question because you get you'll get
situations where and it's within our even our
381
00:20:15,575 --> 00:20:19,654
own portfolio or managers will say, hey,
actually, deal attribution, we don't really do.
382
00:20:19,654 --> 00:20:22,460
It's like, we if somebody sources a deal, we
all jump on it.
383
00:20:22,460 --> 00:20:23,679
And often it's the analyst.
384
00:20:23,980 --> 00:20:29,119
So sometimes you have to take that view that
it's a firm wide effort, and that can be fine.
385
00:20:29,579 --> 00:20:35,325
But in the case where it is usually clearly
defined and there's someone designated to it,
386
00:20:35,724 --> 00:20:39,804
it's usually a and, again, like a lead in and,
you know, what do you call it?
387
00:20:39,804 --> 00:20:41,825
Like a lead and sub lead, I guess.
388
00:20:42,284 --> 00:20:44,544
I would say 1 or 2 people at most.
389
00:20:44,605 --> 00:20:46,704
3 becomes a little bit convoluted.
390
00:20:46,764 --> 00:20:47,884
It's like, how does that work?
391
00:20:47,884 --> 00:20:48,204
You know?
392
00:20:48,204 --> 00:20:52,289
But at the end of the day, the way to do it
from our the way we do it is, like, we look at
393
00:20:52,289 --> 00:20:54,869
who's on the IC at that point in time who makes
the decision.
394
00:20:55,250 --> 00:21:00,470
And often there's a partner that's leading that
deal with somebody's help, maybe a principal,
395
00:21:00,690 --> 00:21:05,174
maybe there's another partner who's acting as a
second point of contact, but usually, you know,
396
00:21:05,255 --> 00:21:07,335
it's 1 or 2 people taking the vote at the end
of the day.
397
00:21:07,335 --> 00:21:08,455
That's how we think about it.
398
00:21:08,455 --> 00:21:10,455
What do you look for in a fund too?
399
00:21:10,455 --> 00:21:14,695
So you obviously don't have DPI typically when
somebody's raising a fund too.
400
00:21:14,695 --> 00:21:17,015
What's your diligence like for a fund too?
401
00:21:17,015 --> 00:21:20,980
It's that's that's one of the trickier ones,
right, because as you say, you get to fund 2.
402
00:21:20,980 --> 00:21:25,779
And depending on the strategy, if we're talking
about, you know, seed, even series 8 to some
403
00:21:25,779 --> 00:21:30,500
extent, and anything below that, it takes
companies more than a fund cycle to to show any
404
00:21:30,500 --> 00:21:33,884
kind of traction, at least on the fundraising
side of things.
405
00:21:33,884 --> 00:21:34,044
Right?
406
00:21:34,044 --> 00:21:38,944
So you might, in that case, you know, you're
still looking at the intangibles.
407
00:21:39,085 --> 00:21:40,365
You're still focused on team.
408
00:21:40,365 --> 00:21:42,924
You're still focused on the execution part.
409
00:21:42,924 --> 00:21:47,440
So perhaps the markups are not the interesting
things, but it's like Can you see the
410
00:21:47,440 --> 00:21:48,500
ownerships there?
411
00:21:48,960 --> 00:21:53,039
Can you see that the the entry points make
sense and that they are aligned with what was
412
00:21:53,039 --> 00:21:54,340
said in the pitch initially?
413
00:21:54,640 --> 00:21:59,444
And then you have a long conversation with the
people who made the deals or who did the deals.
414
00:21:59,605 --> 00:22:03,704
About those companies and you try and dig into
the underlying fundamentals of those companies.
415
00:22:03,845 --> 00:22:04,964
You're based in London.
416
00:22:04,964 --> 00:22:08,024
How often do you meet with your GPs in other
countries?
417
00:22:08,244 --> 00:22:08,484
Yeah.
418
00:22:08,484 --> 00:22:12,649
So, you know, being based in London is is
actually quite a strategic advantage I would
419
00:22:12,649 --> 00:22:13,149
say.
420
00:22:13,690 --> 00:22:18,169
So it's the it's the biggest biggest tech hub
in in Europe by by large margin, at least in
421
00:22:18,169 --> 00:22:19,390
terms of venture activity.
422
00:22:19,450 --> 00:22:23,529
We're pry quite well placed as well between US,
Europe, obviously, and Asia.
423
00:22:23,529 --> 00:22:27,515
So all the different places we like to invest,
we can be on a daily communication with all
424
00:22:27,515 --> 00:22:29,214
three of those places, which is nice.
425
00:22:29,595 --> 00:22:32,714
And, and because it's such a hub, you know,
people come through here a lot.
426
00:22:32,714 --> 00:22:37,595
So we we get to see people leaving just being
here, but we also come out to the US, you know,
427
00:22:37,595 --> 00:22:43,179
two to four times a year minimum So we tend to
see people in Europe at least once a quarter,
428
00:22:43,640 --> 00:22:49,160
and we tend to see people in the US once a
quarter or two, three times a year on average.
429
00:22:49,160 --> 00:22:53,674
So, you know, going back to all the points I
said before, because team is such an important
430
00:22:53,674 --> 00:22:56,174
aspect to underwrite when we do everything we
do.
431
00:22:56,555 --> 00:23:00,315
For us, it's crucial to spend face time with
people in formal settings and informal
432
00:23:00,315 --> 00:23:00,815
settings.
433
00:23:00,875 --> 00:23:03,355
Both are very important to building those long
term relationships.
434
00:23:03,355 --> 00:23:06,414
So we do we do make sure to do that more than
once a year.
435
00:23:06,474 --> 00:23:11,250
What would you like our audience to know about
you, about Axxa, about anything else you'd like
436
00:23:11,250 --> 00:23:11,809
to shine a light on.
437
00:23:11,809 --> 00:23:14,470
I mentioned venture secondaries at some point
in this conversation.
438
00:23:14,930 --> 00:23:17,569
It's a part of the market we've been focused on
since day 1.
439
00:23:17,569 --> 00:23:22,289
It's very immature relative to private equity
secondaries as a as a part of the at of the the
440
00:23:22,289 --> 00:23:22,789
markets.
441
00:23:23,005 --> 00:23:27,505
But it's really grown a lot over the past 12,
18 months, I would argue.
442
00:23:27,565 --> 00:23:29,644
And there's a lot of attention being placed on
it.
443
00:23:29,644 --> 00:23:33,404
I don't go a single day without hearing like,
oh, another $1,000,000,000 fund dedicated to
444
00:23:33,404 --> 00:23:34,765
venture secondaries has been raised.
445
00:23:34,765 --> 00:23:34,924
Right?
446
00:23:34,924 --> 00:23:40,740
So it's an interesting one because we are
seeing people transact more and more in that
447
00:23:40,740 --> 00:23:41,798
space for various reasons.
448
00:23:41,798 --> 00:23:41,834
Some of
449
00:23:41,834 --> 00:23:41,943
them structural and fundamental, like companies
450
00:23:41,943 --> 00:23:42,034
staying private longer that's persisting.
451
00:23:42,034 --> 00:23:42,143
So, therefore, exits are more scarce.
452
00:23:42,143 --> 00:23:42,930
IPO window shut ish
453
00:23:52,424 --> 00:23:56,745
and large M and A opportunities or transactions
aren't happening in in frequent numbers, right,
454
00:23:56,745 --> 00:24:00,184
with the regulatory side of things that make
that more difficult, etcetera, etcetera.
455
00:24:00,184 --> 00:24:05,164
So people are looking for new ways to to to
create liquidity for themselves, for their LPs,
456
00:24:05,529 --> 00:24:06,170
so on.
457
00:24:06,170 --> 00:24:10,329
So in addition to just like reaching out, we're
very open to to have a conversation with
458
00:24:10,329 --> 00:24:14,250
anyone, you know, within the within the
ecosystem we work in, whether it's a new fund
459
00:24:14,250 --> 00:24:18,410
you're raising, or if it's, like, just wanting
to talk about how we look at things, talk about
460
00:24:18,410 --> 00:24:22,255
managers, but also secondaries, I think, is a
is a place we're spending a lot of time.
461
00:24:22,255 --> 00:24:22,414
It's
462
00:24:22,414 --> 00:24:26,335
been a pleasure to have you on and, look
forward to sitting down soon in in London or
463
00:24:26,335 --> 00:24:27,108
New York City.
464
00:24:27,188 --> 00:24:27,908
Me too.
465
00:24:27,908 --> 00:24:28,728
Thanks, David.
466
00:24:29,988 --> 00:24:34,008
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