Sachit Sachdev

Halle Kaplan-Allen and I will be chatting with Ali Hamed tomorrow about sourcing LPs. You can RSVP here: https://lnkd.in/edYZhKrA Ali wrote this excellent tactical piece on networking that is well worth a read for anyone networking their way to capital: https://lnkd.in/eZ_2f_4x This event is presented by Sydecar, a frictionless deal execution platform for venture capitalists. By pioneering a standardized approach to private investing, they enable capital allocators to identify and back entrepreneurs who are changing the world. Their platform reliably handles back-office operations, automating banking, compliance, contracts, tax, and reporting so that customers can focus on making deals and building relationships.

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Summary: The article discusses tech mogul Vinod Khosla and his recent success as a prominent investor. Khosla's main focus is on AI and its potential impact on various industries. He also addresses concerns regarding AI regulation and competition with Chinese AI. Key takeaways: Khosla's recent $50 million investment in OpenAI has garnered attention and success. He is passionate about the potential for AI to disrupt and improve various industries. Khosla's focus on AI regulation and concerns about Chinese AI competition. Counter arguments: Some may argue that Khosla's intense focus on AI may overshadow other important areas of technology. Critics may question the sustainability of AI in certain industries and its potential negative effects on job displacement. #ai #artificialintelligence #tech #venturecapital #vc #startups

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As the Shasta Ventures approval deadline approaches, we're presented with a unique opportunity to observe the complexities and inherent conflicts in GP-led secondary transactions. This scenario sheds light on the considerable leverage GPs hold within the private equity infrastructure. According to the article, proposed continuation fund requires LPs to approve the transaction if they wish to roll their interests into the new structure—a stipulation that could be seen as putting undue pressure on LPs. This raises critical questions about the balance of power in private equity deals and the alignment of interests between GPs and LPs. What are your thoughts? Is it appropriate for GPs to demand such conditions for LPs to participate in a continuation fund? How do you see this impacting the broader private equity landscape and the perception of GP-led secondary transactions? Looking forward to hearing your insights and perspectives on this pivotal issue. #PrivateEquity #VentureCapital #InvestmentTrends #ShastaVentures #GPledSecondaries

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Dan Primack had some pointed criticism for #VC yesterday in his Axios Pro Rata newsletter (a daily must read IMO 😤). In short, the model doesn't work if it can't produce exits for LPs. Don't blame public markets (which are at all-time highs) for the lack of liquidity either. 📈 💸 Instead, this is a "liquidity drought of your making" where "...swinging for the fences on every pitch, rather than taking the single or double that's available" is the only way out when you invest at "sky high valuations." 😰 "A whopping 37% of "unicorns" are being held for at least nine years by VC funds, including 13% that are past the 12-year mark." 😳 ⌛ Is he right? Is VC at a dire inflection point? Or is Primack prematurely hitting the panic button? 🚨 https://lnkd.in/dts92pXr

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The Council's first SPV of 2024 is down in the books and oversubscribed. Running SPVs where we have pro rata or extra allocation in fund deals is a muscle we are building pretty late in the game as a firm. As a solo GP with a tiny team, it's crippling to think of the extra work required and risk of not meeting platform minimums to run an SPV. But 7 of our port co's have recently raised follow on funding where we had pro rata. These are awesome deals for our LPs, angel members, and syndicate community. We simply can't afford to let them slip through the cracks. These allocations are only becoming more valuable as our firm grows, so we must start NOW! Proud to say this one went off without a hitch and our syndicate community is small but THRIVING. Wish us luck as we keep building. Note our SPVs are now on Sydecar. The best way to get access is to know someone on The Council Fund team and be on our SPV email list. **What's an SPV?** An SPV is a Special Purpose Vehicle. It allows multiple angel investors to pool together into one larger investment into a company. This helps the founder keep paperwork and investor relations to a minimum (less names on the cap table = simplicity!). When people say they're investing with a "syndicate" or they are "syndicating a deal," SPV is the entity and process by which they do that. A "syndicate" is like a community of people that invest via SPVs together.

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Two Key Themes Driving US Private Market Activity 👀 👇 1️⃣ Liquidity Dynamics With exit and IPO activity remaining relatively muted and constrained, leading to record-high VC company inventory across each stage, the VC 12-month distribution yield has continued to plummet to 5.1% in 2Q24, near a historic record low 📉 Similarly, private equity distribution rates have experienced a precipitous fall from 34% in 2021 to just 15% in 2023 as median holding periods remain at record highs for the industry 🔒 These liquidity pressures have led VC & PE GPs to increasingly turn to secondary sales and continuation funds as a means of turning a release valve for LP distributions and strategic portfolio and fundraising considerations 🔂 For example: 👉Lightspeed selected 10 assets, primarily in enterprise tech, to move into a new continuation vehicle. This mix includes companies years away from IPOs, smaller stakes, and assets transitioning out of top-performing funds 👉Insight Partners closed a $1.3 billion second continuation fund, involving select investments across six funds, providing liquidity options to LPs through secondary buyers HarbourVest Partners and Lexington Partners 👉Shasta Ventures attempted to move nearly all its holdings from its last fund into a continuation fund, although LPs ultimately rejected it due to pricing concerns These continuation funds have merits beyond liquidity relief; they've also performed relatively well, earning a median of 1.4x multiple on invested capital, on par with secondary funds and higher than the median 1.2x from buyout funds 🌤 2️⃣ Early-Stage AI/ML Activity Despite the lingering persistence of liquidity constraints and some signs of cautious investor sentiment, US VC investment activity reached $55.6 billion in total deal value during 2Q24 – representing a more than 30% jump from the quarterly average over the past year 💰 There was notable momentum in the early-stage pocket of the market, with deal size, valuation, count, and total value all exhibiting quarterly strength and growth. Much of this has been driven by early-stage AI/ML activity 💪 During 2Q24, US VC investment activity in AI horizontal platforms reached $10.1bn compared to $6.7bn for AI vertical applications, the former of which has seen a notable rise in average deal size and valuation. As a result, horizontal platform activity is on pace to exceed that of vertical applications for the first time in history, signaling a maturing industry and market focus on underlying AI/ML infrastructure 📈 #Technology #VentureCapital #PrivateEquity #Investments #PrivateMarkets #Markets #Money #Investing

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Summary: This article discusses various topics related to startups and venture capital, including the unique approach of DVx Ventures, the impact of AI on the world of SaaS, and the recent news surrounding Jack Dorsey's departure from Bluesky. Key takeaways: DVx Ventures, a VC firm, follows an unconventional process of building startup ideas within their firm and then finding leadership teams. The impact of AI on SaaS is a growing focus, as seen by the recent investment in generative AI by New Enterprise Associates. The departure of Jack Dorsey from Bluesky raises questions about the future of this startup and the impact of his investment. Counter arguments: Despite the growth in AI-focused investments, the bar for startups to land Series A funding has also risen, potentially making it more difficult for emerging companies to secure funding. While there has been an increase in venture capital funding in the crypto sector, some startups and VC firms are still feeling the impact of the downturn in funding. #venturecapital #vc #startups #tech #fundraising

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Interesting post by Howard (Lee) Mosbacker IV, PhD on changing VC thinking in non Silicon Valley ecosystems. And yes, things have got to change. Howard argues that we need an active secondary market for VC positions at Series A rather than wait for those companies to become Decacorns. I completely agree... to an extent. Those secondary markets already exist, however. They are called stock markets. Hear me out. The VC world is so obsessed with Decacorn NASDAQ listings, that they've forgotten what built our industry. CISCO, Nvidia, AMD, Adobe, Amazon, Intel, all IPOd at sub $500m valuations. Companies are now being advised to wait until they have $500 Million in ARR before listing. This is madness. To be fair, U.S. Securities and Exchange Commission rules and our litigious culture make a US IPO at a sub $1B valuation extremely difficult. Costs in the US are too high. Other global stock markets don't have that problem. For instance, on the LSEG (London Stock Exchange Group) AIM market companies regularly IPO doing $10-20m in ARR growing 30% a year. IPO costs are 30% vs US costs, the US has more class action shareholder lawsuits in a year than the LSEG (London Stock Exchange Group) has had in a decade. IN 2021, the LSEG (London Stock Exchange Group) had ~160 IPOs with an _average_ valuation of $100million. There's similar great small cap programs at the ASX, TSX Group and Euronext. The problem isn't the lack of a secondary market. The problem is that US VC's and board members don't look beyond the US to IPO. Maybe we should think outside of the box on this a little. BTW, I buy post Series B secondaries at Practical Venture Capital, and project manage small cap IPOs as a side hustle. You know... BYOL ( Bring Your Own Liquidity ) What would your fund's returns look like if you could get liquid at Series B?

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Latest episode of #Origins --> Elizabeth "Beezer" Clarkson and I peel back the layers of endowment investing with Joanna Rupp,CFA, Managing Director of Private Equity at the University of Chicago. Joanna is an incredible LP with over 20 years of experience at the University's Office of Investments. She shares her holistic approach, diving into everything from manager selection to investment strategies for both large and small funds. Also --> Joanna and Beezer evaluate me and my new fund... the pros and cons and what I have to prove in the yrs to come...   Links to listen below

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As the venture capital landscape evolves, a surprising trend is emerging: small VC funds are consistently generating better returns than their larger, more established counterparts. This David vs. Goliath scenario in the investment world is reshaping our perceptions of fund size and success. As per PitchBook’s data, we can see that smaller funds have been consistently outperforming larger funds in IRR. In the last decade even the bottom quartile of smaller funds have delivered higher IRR than large ones is contrary to the high risk - high reward concept. A couple of reasons that provide smaller funds an edge over their larger counterparts are:- - Given the smaller AUM, it provides flexibility to pivot and adapt to market changes.  - Since most of the smaller funds focus on early-stage investments, which helps them enter in high-potential startups at more favorable valuations. Thus providing better returns during exit The current economic climate, characterized by higher interest rates and lower valuations, has made the venture capital environment more challenging. Yet, it is in these times that small VC funds are proving their mettle, demonstrating that when it comes to venture capital, bigger isn’t always better. As we look to the future, it’s clear that small VC funds will continue to play a pivotal role in the venture ecosystem. Their ability to deliver outsized returns is not just a stroke of luck but a result of deliberate and strategic investment choices. #VentureCapital #InvestmentTrends #VC #StartupFunding #Innovation

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Inspired by Zubair Naeem Paracha and nudged by Ahad Shaikh, I took a look at the Rasan IPO. Detailed thoughts in my substack post and quick summary below. Rasan IPO Implications: 💹 The strong interest in the initial subscription and subsequent continued rally signal positive prospects for tech founders in the GCC. Local markets are bullish on homegrown tech and may offer attractive valuation multiples in comparison to international exchanges.   Company Background & Performance: 💼 Rasan operates as a digital insurance aggregator, focusing on motor and health insurance, alongside financial and data analytics solutions.   Rasan has shown robust growth with over 450% revenue increase from FY20 to FY23, strong unit economics with gross margins (~60%), and net margins around 20%.   IPO Pricing and Valuation Metrics: 🤑 Rasan debuted at SAR 37, and has reached highs of SAR 67, implying a market cap of ~ USD 1.3 billion, up from the original offer valuation of USD 750m.   The implied Price/Sales of ~20x may seem overpriced at face value, however, the rapid digitization in KSA + population demographics, underutilization of tech in insurance and potential to expand into other fintech verticals may still present a compelling opportunity.   Comparables Other Regions & Closing: 🚀 Compared with global peers, Rasan's efficient fiscal operations at tremendous top line growth rates is impressive.   US public Insurtechs (digital insurance not aggregator) i.e. Lemonade, Oscar etc. have faced downward price pressure as IPOs were overpriced in previous years. Policy Bazaar is a better comp against which Rasan seems like a solid small cap growth stock. PB has a P/S of ~23x which is attributed to record breaking investor interest in Indian markets and a massive TAM in the local market. PB is ahead in terms of scale yet Rasan seems to be operating more efficiently from a margin standpoint. If you got into Rasan at the original IPO price, you have already enjoyed some strong gains but there could be more to come if you hold long term. The tailwinds of economic growth, focused investment on non-oil diversification and the push to build local exchanges in the region coupled with continued growth at the company's current margin profile may yield 2x-3x return over the next 3-5 years.

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🚀 2023 was a record year for the secondary market with $103B in closed transaction volume. 📈 The secondary market is still in its early days if you consider that VC and PE funds are holding almost $4T in unexited assets. With LPs pulling back new allocations from all but the largest, most reliable funds, it is no surprise that Apollo Global Management, Inc. forecasts the secondary market to double or even triple in size by 2027. 🔑 As LPs want to manage their private markets portfolio dynamically, secondaries represent an exit path for PE and VC funds that cannot be ignored. Having a liquidity strategy should be part of every GP's toolbox to generate distributions for their Limited Partners.

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As private markets secondary strategies increasingly raise and deploy capital globally, India, one of the larger and more liquid markets, with increasing foreign and domestic private market interest, is primed for secondary market investments from global, Asian-regional and what I see as more India-focused secondary fund managers, across venture capital through private equity. GP-led deals have also increased, with global players such as Pantheon, Neuberger Berman, StepStone Group, HarbourVest Partners, Adams Street Partners, CF Private Equity, Schroders Capital, AlpInvest Partners all executing or evaluating India deals. That being said, we are still seeing challenges in liquidating positions with many of the India funds raised between 2005 and 2011, where performance as well as heavy currency devaluation have impacted saleability. Who are the players you see active in the LP secondary market in India? Who will raise India-focused secondary funds for VC and PE? I would look forward to reconnecting with leading India-focused capital markets advisor Avendus. The growth and development of the India private capital markets opportunity is nothing short of remarkable. #india #alternativeassets #secondaries #privatemarkets #privateequity #venturecapital #Asia #capitalmarkets #fundmanagers #liquidity #distributions #institutionalinvestors

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Spot-on article in TechCrunch about the revival of the venture capital SPV market and all the deals swirling around by intermediaries / wheeler-dealers who have or gain access to VC's and other direct allocations to companies such as Anthropic, Groq, OpenAI, Perplexity, and #ElonMusk's xAI. It feels like the '20/'21 era and the article quotes my friend Jack Selby - ""it boggles my mind that just a few years after the excesses of the 2020 and 2021 period, when people were essentially investing blindly into SPVs, with fees on fees on fees, into vehicles that were totally opaque, people are doing that all over again with everything that is a shiny toy: AI.”" I have come across several people wheeling-dealing start-up SPVs in #Miami. Instead of narcotics at the bar, it is SPV access into the "hot" AI start-ups. SPVs are generally formed by investors who have direct access to the shares of these startups and then turn around and sell a part of their allocation to external backers, often charging significant fees while retaining some profit share. In many cases, the VCs will offer access to the SPV to their existing #limitedpartner investors, but they also may use brokers to offer access to a much larger universe of potential investors. The same AI startup may have multiple SPVs on their cap table, representing lots of small investors. While SPVs may be a suitable mechanism for buying shares of hot companies not available to investors by any other means, some investors warn that it comes with high risk. Unlike venture funds, backers of SPVs don’t receive direct information on the companies. Sometimes, but rarely, SPVs are created in association with primary rounds of companies still in fundraising mode. That means that the small investors can get in on a startup, or a coveted private company, at the same time the major investors do. I know of many family offices in the Americas, Asia and the Middle East evaluating and investing in these SPV vehicles of high-potential, high-risk companies. Just make sure, amongst many things, that you understand the limitations of the information flow and governance, and trust the SPV arranger. I still get mocked for passing on these types of opportunities. I think I am getting old and prioritizing middle-market #privateequity and #EBITDA generative-businesses. #privatemarkets #alternativeassets #venturecapital #ai #startups #capitalmarkets #spv #fundmanagers #familyoffices #fees #openai #anthropic #information

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Excited to share Marathon Venture Capital's investment in Eva Magnisali's DataForm Lab! Construction is large enough to be measured in GDP terms, yet remains a laggard in the adoption of automation. Our buildings are still constructed manually! Offsite manufacturing, i.e. assembling buildings in factories, provides the perfect canvas for putting automation to work – still, however, robots are nowhere to be seen... Eva studied architecture and robotics, and worked with design firms, developers and industry vendors, realising first hand what's keeping the industry stuck in the past. Then she got to work... Dataform Lab's software platform translates designs to production drawings and machine code, along with optimising processes and scheduling, essentially offering a modern operating system for construction factories. The company already works with some of the most prominent offsite manufacturers worldwide. Today it announces the completion of a GBP 1.1m Seed round led by Marathon. Eva and her team are on a mission to drive automation in offsite manufacturing. If you are excited about working at the intersection of technology and construction, get in touch! Building construction has been slow and expensive for far too long. Our next homes and schools may come from fully-automated factories, delivered at a fraction of today's time and cost. Keep an eye on Dataform Lab! https://lnkd.in/dVVfnudS

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Are VCs becoming efficient?  🧐 The growth of a venture firm is usually dependent on assets under management, and with venture fundraising slowed down, venture firms are hiring less. The largest vc firms hired a net 124 investors in 2023 while others departed to start their startups, join as operators, switch firms or launch their own funds. Firms like Greycroft cut several investors last year, departures that it attributed to a pivot toward AI. Could it be right-sizing of the industry, the new normal, or a new trend unfolding...would love to hear your thoughts? Read the article from @pitchbook below 👇🏼

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The Wall Street Journal has an incredibly insightful op-ed from Paul Ryan (Political Office of Speaker Paul D. Ryan (WI-01)). Normally you hear #crypto advocates in terms of why it is a more stable store of value than even the formerly defacto standard of the United States Dollar. Obviously post FTX and Sam Bankman-Fried that idea held no standing. Of note though given the Former Speaker of the House's apporach is demonstrating sound financial and economic arguments highlighting facts about Saudi Arabia and China's postions and numbers one and two of our own foreign debt is that both are showing less appetites for our own dollars. Therefore, in terms of international competitiveness and national defense, adopting this standard could help increase our competitiveness and that of our country domestically and internationally. What do you think? #management #venturecapital #privateequity #capitalmarkets #cryptocurrencies

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Funds are getting funded! Dry powder is growing...when do we expect VC investment to pick up?! 👀 Last week alone saw significant activity in announcements: SVC invested $30M into General Atlantic’s PE fund, Golden Gate Ventures launched a $100M MENA-focused fund, Investcorp closed a $570M fund, and Wadi Jeddah introduced a new VC fund. Just a few examples from the numerous announcements flooding in. This surge in fund announcements prompted us to look back at last year's data. Thanks to MAGNiTT’s directory, we identified a 74% year-on-year increase in MEA-based funds being funded in 2024! (as of 20th May 2024) Yup, 74%! Since Q4'23, we've observed a growing trend of regional funds raising financing along with international investors establishing regional funds. Though the trend indicates that we’re bound to see more such funds later in the year, it’ll be interesting to observe when and how they get deployed.  At MAGNiTT, we predicted that this won't translate into investments until Q4, after the historical summer lull. But I am curious to know your thoughts on this? Get insights on investment and LP activity in emerging markets through a subscription: https://lnkd.in/dJrCd3fm #InvestmentFunds #VentureCapital #PrivateEquity #MENAInvestments #EmergingMarkets #InvestorTrends

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