Transcript

0:00
You can do almost anything through an SPVI think.
0:02
The beauty of an SPV is that there's a defined business
0:05
model, upfront and defined relationships that are specific
0:10
to a certain transaction in mind.
0:12
And once you affect that transaction, it's fairly there's
0:15
routine maintenance that follows.
0:18
Wouldn't you say that, you know, if the crappiest company still
0:21
goes public, that bodes well for the rest of the IPO market like
0:25
this? This company does not have that
0:28
great metrics and still got out. This was a much anticipated
0:33
decision, but I think it's the most important meeting they've
0:35
had in the past year and it does clarify and I think sets the
0:38
direction for the next three months.
1:04
All right, ladies and germs, we're here for our fourth
1:06
episode of our very bad podcast, Trading Places.
1:10
My partner in crime, Aman Virgie.
1:11
Aman, how are you doing? How you feeling about the market
1:14
today? I'm doing real, real good, Dave.
1:16
I know you are in the Far East this week, but I'm I'm here in
1:20
the US where we had the big caps knock at a record, the little
1:23
cap stock set a record. The bond market.
1:27
We've got the we've got some excitement in the bond market,
1:29
new highs and and some tech. Stocks.
1:31
Kinds of records. So I'm feeling great.
1:34
That's good. Yes, I am here in Vietnam for
1:37
our 42 Geeks trip to Southeast Asia.
1:40
So I am living in the future, 1615 hours ahead of you.
1:43
Something like that. I can't completely see the
1:46
future, but I would say it does seem like the IPO window is
1:49
open. Baby Yahoo, we have 3 or 4 IP OS
1:53
that have happened recently. I guess Netscope and StubHub and
1:56
Pattern are the recent IP OS and Klarna maybe last week.
2:00
All those seem to be going pretty good, right?
2:04
Pretty, pretty, pretty pretty pretty good.
2:10
Yeah. I think overall it's been a
2:13
pretty healthy market in the last couple of weeks.
2:15
We had Klarna and Figma were both IP OS that were happily
2:19
anticipated. I think both did well.
2:21
Fedma is holding at about a 25 times sales which is excellent.
2:26
They had a great first day pop, little bit of a down trade but
2:29
if certainly. Stabilize too Good 25 times sale
2:33
that? That seems a little crazy.
2:36
Yeah, I think they're they're all happy with how that how that
2:38
went, which is a nice indicator for the SAS pace.
2:43
Last week Netscope went public. This is one with about with the
2:46
cyber security company about 700 million in ARR.
2:50
They're priced at about 11 or 12 times sales and they've done
2:54
great. They've traded up since the IPO.
2:56
That's another positive in the space and I think confirmation
2:58
that for companies with solid growth, this one's not a
3:01
profitable company, but they do have ambitions I guess of free
3:04
cash flow positive metrics in the first half of 2026.
3:08
So if you're but then spitting distance of profitability and
3:12
growing and in an interesting space like cybersecurity, that
3:15
seems like a, that seems like a positive.
3:18
The one that didn't do rate was StubHub.
3:21
This is a company I know really well when I was at eBay 15 years
3:25
ago. Now we own StubHub and it's a
3:27
ticket marketplace that is a, it's an e-commerce business.
3:30
They, if you don't know them, they're primarily here in the
3:33
US, but they're a great place to go to get like secondary
3:35
tickets, concerts and sports events and stuff.
3:39
Aren't they a secondary marketplace?
3:41
They are. They are exactly.
3:43
They have this insight, too, that there are sellers and
3:46
buyers and that primary markets don't clear.
3:48
And hey, you had a great deal at a discount on the secondary
3:51
market, although sometimes you have to pay a premium for stuff
3:54
like, you know, Taylor Swift and hard properties.
3:57
They had priced their IPO last week at a price of 2350 per
4:01
share. That was about a 87 to $8
4:03
billion market cap. The deal got done, but they
4:06
priced down from they're now down from their IPO price.
4:09
As of Friday, they're down around 10%.
4:10
So they've been a little bit of an underperformer in the
4:14
aftermarket. There was some noise around this
4:16
IPO even going into it last week.
4:18
They canceled it a couple of times in the in the run up just
4:20
because of macro events. And they're only witness their
4:23
first half growth rates were only 3% year over year.
4:27
It's a seasonable. Mac Grade No.
4:30
They had that. It's not a great growth rate and
4:33
you know, they were growing faster than in 2024.
4:35
They were 30% grower. But it's a tough business.
4:38
It's a seasonal business. You know, concerts and sports
4:40
events will create volatility in some of those revenue.
4:44
So I guess we'll see how they perform.
4:45
But this is not a great This one's not a great performer, but
4:47
might have been the weakest IP on the bunch anyway.
4:49
Yeah. But wouldn't you say that, you
4:52
know, if the crappiest company still goes public that that
4:56
bodes well for the rest of the IPO market like this?
4:59
This company does not have that great metrics and still got out.
5:04
Absolutely. The deal got done at a 6 billion
5:06
market cap. It is something like 3 times
5:09
sales for an e-commerce company. That's not bad, especially one
5:12
without growth profile. I think he'd be told the team
5:14
three years ago, hey, we can get this company public at a $6
5:18
billion market cap. You know, I think they would
5:20
have said that looks that looks like a win.
5:21
That's far more than what eBay sold them for in 2020.
5:25
So I guess that's the positive as the deal got done and if the
5:28
company performs, it should do fine in the long run.
5:30
Just a little bit of slow, a little bit of weakness in the
5:32
current trading metrics. So I guess we have Netscope that
5:35
was up, you know, maybe 1820%, think another IPO pattern was up
5:40
1011%, StubHub traded down, but generally seems like most of
5:44
these IP OS are going pretty well.
5:46
Yeah. And then figure was another one
5:47
that did great. You know, you and I talked last
5:50
week about what you need to get public in terms of revenue.
5:53
We'd say north of 500 million in revenue is kind of where the the
5:56
bar is really the median revenue for IPOs this year is over 800
6:01
million figures to really company with less than that in
6:05
revenue, I mean growing very quickly they're only they're.
6:08
Only high growth rate though. Very high growth rate.
6:12
They're at 100 million a quarter right now and growing 30% a
6:15
year. So they're they're within
6:16
spitting distance of those metrics, but not not quite there
6:18
yet. They got a great pricing at 10
6:21
billion in market cap and have traded up about 50% from the IPO
6:25
crisis. This is a it's an interesting
6:27
company, an interesting space. The blockchain lender started by
6:30
Mike Cagney, who was the Sofi founder.
6:32
This is a guy who knows. How to do about it?
6:35
Business lending and market faces and and connecting people
6:39
who want money with people who have money and it's done great.
6:42
So this one I think is another very positive signal for the IPO
6:45
market. Well, it certainly seems like
6:47
IP, OS are happening. I know for the last couple of
6:49
years, everybody was always like every two quarters, people were
6:51
like just two more quarters and the IPO window will open up.
6:55
But it finally seems like we've gotten there.
7:04
What else has been happening out there?
7:06
We had the TikTok deal kind of big news.
7:08
This has been going back and forth for quite some time.
7:11
But it sounds like the two deal makers in this particular deal
7:15
are President Trump and Premier XI or President Xi.
7:19
And I guess if those two guys think that the deal is going to
7:22
happen, I, I guess it's going to happen, right?
7:24
I don't know all the details of the deal.
7:26
It does seem like there's an outline for US ownership and
7:29
governance of the American part of TikTok and in our bike dance,
7:33
Valerie said, hey, that's a pretty interesting part of the,
7:36
you know, if you can buy bike dance and get a healthy business
7:39
and the US business of TikTok is not zero.
7:42
That's what we concluded last last time.
7:45
This is a really interesting company and I think the company
7:47
will have some US governance. Oracle seems to be in a in a
7:50
leadership position on the board and with control over data and
7:53
privacy and so that at least creates A investable company
7:57
that now will will benefit. Byte Dance will keep TikTok
8:01
operating in in America, which my 12 year old and 14 year old
8:04
daughters will love to hear. Well, I think they'll be
8:07
creating a new application is what I heard that will be run by
8:10
the US entity. So I don't know exactly how
8:13
they'll move all those users over from TikTok to this new
8:16
app, but it sounds like the same company will be somewhat
8:20
operating that app, although now in the US.
8:23
And seems like the new entity will have 7 board members, six
8:28
of which are going to be Americans.
8:30
I, I don't know exactly how everyone's involved there, but
8:32
it sounds like Oracle and a few others are going to be driving.
8:36
Well, your kids will be happy I guess.
8:38
Yes. And Oracle and the Ellison's and
8:42
some of the key investors will have governance rights as well,
8:44
which I think is a, it's a good outcome for the for the company
8:47
for sure, probably for the 180 million consumers here as well.
8:51
I think one other news item that I just saw, and I don't know
8:54
that this is completely for sure because Elon Musk was denying
8:59
that this was the case, but sources say that XAI is raising
9:04
$10 billion, a $200 billion valuation.
9:08
That's that's up from just 150 billion not too long ago.
9:13
In fact, this entire company almost didn't really exist more
9:16
than a year ago. It went from less than 10
9:19
billion to 100 billion to 150 billion and now 200 billion.
9:23
Certainly seems like Elon has been working hard to put a a
9:26
competitor open AI together. Yeah, I don't know much about
9:30
how that deal is going to get structured.
9:31
I guess that these denying it then the the decals are light.
9:34
That seems like a huge valuation though for a company that is
9:38
still still very, very early and how it's going to apply and
9:41
monetize. But you know, if it's part of
9:43
the X platform and it's and it's got, you know, and it's got the
9:46
ability to use that data and those customers, that's, that is
9:49
a huge plus. I guess people like like to bet
9:52
on Elon, seems like he's done pretty well with companies in
9:56
the past. So I don't know what I bet.
9:58
I want to bet against Elon on this one, but I guess we'll wait
10:01
to see kind of if there's any numbers to base that valuation
10:05
on in the future. I don't think we know much about
10:07
the revenue of that entity or that those combined entities
10:10
right now. I guess anything else going on
10:12
in the market? There was a rate cut last week.
10:16
Yeah, We can talk a bit about what the Federal Reserve did
10:19
last week. This was a much anticipated
10:21
decision, but I think it's the most important meeting they've
10:24
had in the past year and it does clarify and and I think sets the
10:29
direction for the next three months pretty clearly as well.
10:32
the Fed did cut rates by 25 basis points.
10:36
They have a Federal Open Market Committee that meets this 12
10:40
voting members on it, and they voted 11 to one for a 25 basis
10:43
point rate cut. One of the members, the new one,
10:46
Steve Moran, voted for A50 basis point rate cut.
10:49
And I think most importantly, there's a change in direction
10:51
and language from what the Fed talks about.
10:53
Normally they talk about the labor market and they talk about
10:56
inflation and those being intentioned, the Fed is a dual
10:59
mandate to have as many jobs as as possible, full employment.
11:03
And so when you see weakness in the labor market, that's usually
11:05
a sign that they want to cut interest rates and then they
11:08
want to keep price stability. What does price stability mean?
11:12
It doesn't mean 0% inflation. Over the last 15 years, it's
11:16
been interpreted to be 2% inflation as the target.
11:19
So inflation is running above that.
11:21
And they emphasize that that's usually a sign of, oh, we're not
11:23
going to, we're not going to cut rates.
11:25
Well, in the last meeting, they basically reemphasized, hey,
11:28
inflation is relatively high. It's above the target of two
11:31
percents, but doesn't seem to be going any higher.
11:35
And they deemphasize language that inflation was a risk.
11:38
And then they talked a bit more about the labor markets and, and
11:41
prior meetings that said the labor market had been solid, had
11:43
been robust and they dropped all that language.
11:47
And so I think what they did is acknowledge that over the past
11:50
two months they there's been a slow down in jobs being created
11:53
in the US. They've been some significant
11:56
revisions to what we thought were the number of jobs created
11:59
in the US over the past 24 months.
12:01
That's all been revised down by almost 2 million jobs.
12:04
So they cut rates. Jerome Powell call it a risk
12:06
management rate cut and suggested going on a go forward
12:09
basis. We'll still, you know, we'll
12:10
look at the next two months. If you the Fed also provides a
12:13
survey of what all their members think for the next two months
12:16
look like. They call it a dot plot survey.
12:19
And it seems like they think will be another rate cut in
12:22
October and another one in December.
12:23
So we'd expect probably two more rate cuts to get the Fed funds
12:27
rate into 3 1/2 range, which is, you know, which is a good sign,
12:31
I think for, for people who are, who are long tech stocks as
12:35
we'll talk about in our evaluation corner when
12:37
industries come down. That's a, that's a very positive
12:40
thing for tech evaluations in particular.
12:42
Any any in any kind of valuation having stable and and falling at
12:47
its rates is probably a a bullish sign.
12:50
Well, it seems like maybe Trump is getting what he wants in
12:53
terms of lower rates, whether whether Jerome Powell still has
12:56
a job or not next year, we'll see.
12:58
But seems like Trump for the moment is winning that battle.
13:01
I guess that you're correct, it is good for the IPO market.
13:05
So I, I still worry about the rest of what's going on with the
13:09
country. And you know, we totally be
13:11
having some headwinds that we're facing in the future.
13:14
We'll see. I think the growth is.
13:16
Is really important. So as long as that holds, the
13:18
economy is is growing and you've got stable rates and that are
13:21
falling. That's that's the magic that's a
13:23
secret sauce. So I think that is a positive
13:26
tail when going into the fourth quarter for stocks.
13:39
Hi, folks. Welcome to another episode of
13:41
Trading Places, a very bad BC secondary podcast.
13:45
Today we have a very good CEO with us, Nick Talreja from
13:48
Sidecar. Nick, welcome to the show.
13:50
Thank you, Dave. It's a pleasure to be here.
13:52
Good to see you again. SPVS and Sidecar are definitely
13:55
in the news lately. Give us a little bit of your
13:57
background. I practiced law for about 9
13:59
years. I worked primarily with VCs and
14:02
and emerging companies over my. Career.
14:04
My condolences. That's really tough job.
14:07
Yeah, I was at a firm called Cooley in Palo Alto for some
14:10
time and I got to know a bunch of really great founders.
14:13
Ended up starting my own law firm, worked very closely with,
14:16
with about 30 founders that I fell in love with.
14:19
As you know, founder stories can be very infectious.
14:22
Founders are great storytellers. And I would find myself, you
14:26
know, wondering more about their journeys than my own as an
14:28
attorney. And as an attorney, you don't
14:30
get a lot of upside in your client success.
14:32
I would start to invest behind some of my clients.
14:34
You know, I would talk to my friends back in New York.
14:36
I, I'd spend some time in New York and they would say, hey,
14:38
you're always talking about these, these companies you're
14:40
investing. Can I, can I join you?
14:42
Can I invest in these companies too?
14:43
And I was like, yeah, absolutely, totally should do
14:45
this. And I would, I would raise
14:47
capital from friends and invest in companies.
14:49
And at that time, I needed an SPV.
14:52
And as an attorney, it was easy for me to just put together LLC
14:55
agreement, subscription agreements, DocuSign stuff, work
14:58
with a a friend at First Republic Bank and get the wheels
15:01
rolling. But it dawned on me that that
15:03
whole process is not that easy for a lot of people in the
15:06
world. Yeah.
15:06
Long story short, I needed, I needed an SPV tool for, for my
15:10
own, my own sort of side hustle, if you will.
15:11
The business I was starting as AVC didn't exist, Angel list
15:15
existed, but they had a market like, like approach at the time.
15:18
And I didn't really want to take my LP's to our marketplace.
15:20
It just seemed counter to my, my ambition.
15:22
So I just kind of wondered, hey, what if I built something here
15:24
for myself to, to raise capital from friends moving into
15:27
companies I care about? Would that be something other
15:30
people might use? And as I started to, to work on
15:32
that, you know, with, with my Co founder, David, we kind of
15:36
realized that, hey, there's a, there's a broader vision here.
15:40
The entirety of private markets operates through sponsors, and
15:45
sponsors create vehicles, partnerships, SPVSLLCS right
15:49
across every asset class. And this entire world is
15:52
primarily structured through law firms who have their own forms
15:56
that stipulate how funds are created and have to be managed.
15:59
What if we could standardize A meaningful share of how vehicles
16:03
are created? Maybe we start with the SPV in
16:05
venture and then take it to other asset classes.
16:07
What could that world look like when more people get into the
16:10
business, get off the bench and become capital allocators?
16:12
With the price of structure transactions go down.
16:14
So as a result, fees go down for for those ultimately paying
16:18
them, which are LP's on these deals.
16:20
And without mean that transactions below a certain
16:22
value are now worth it, they actually can make these deals
16:26
happen. And could we enable that world?
16:28
And that was something we fell in love with and we started
16:30
Sidecar in early 21. So for the past 4 1/2 years
16:33
we've served over 1500 sponsors and venture capital structure
16:39
about 3500 SPV's across primary deals, secondary deals, multi
16:44
asset deals where you can, you can launch now a very a very
16:47
basic turnkey fund on CYCAR to cross invest in a portfolio of
16:50
assets. And we've learned a lot from
16:52
that as far as how receptive the community has been to a
16:55
standardized approach to structuring transactions and
16:58
also about how much you can automate and how much you can
17:00
decrease fees to make the private markets look more like
17:04
the public markets and efficiencies.
17:06
And we're still very early in our journey.
17:08
I still think there's a lot of work to be done in venture
17:10
capital alone. And I know that's something that
17:12
you're very interested in seeing come true.
17:15
But we're also looking at private equity, private debt and
17:18
other asset classes as other frontiers for us to bring the
17:20
same type of innovation too. So that's that's the journey in
17:24
a nutshell. How do you view yourself, you
17:27
know, compared to just a traditional fund formation
17:29
structure? And can people use, you know,
17:31
your platform to run their funds?
17:33
At least my experience has been when we create a fund that was
17:36
an expensive and lengthy process, you know, 50 to
17:39
$100,000 to create a fund, maybe even more, you know, fund
17:42
formation documents, which are, you know, often 7500 pages,
17:45
maybe even longer. I doubt many VCs actually even
17:48
understand what their funds formation docs say.
17:53
And then, you know, on the other hand, you've got a process where
17:55
you can set up an SPV you know, literally in in minutes and
17:58
hopefully get started for people what?
18:01
What's the difference between a formal fund and your platforms
18:04
SPVS? Or is there a difference?
18:07
That's a that's a great question to ask recovering attorney Dave.
18:12
How can you get those fund formation docs down for like
18:14
2020 pages and less than $10,000?
18:18
There is a way, however, and Hallelujah.
18:21
Buddy, Hallelujah. We've attempted to bring that
18:24
reality to today via via our Fund Plus product.
18:27
But I will say this as you raise that first, second, third fund
18:32
as AGP, it is not just what you want to see in convenience as
18:38
the fund manager that will dictate the forms you use or how
18:42
you negotiate things. It's going to be your
18:44
institutional LP's and they're the real stakeholders, right?
18:48
So they will have all kinds of side letter requests.
18:51
And let's say they're based in Canada, they may have special
18:53
tax provisions and whatnot that will just force that you are
18:57
working with an attorney to understand those terms, which
18:59
will then likely mean you need a more complex fund administrator
19:03
on the other side to interpret all that complexity.
19:05
And you will want to talk to a human to understand all of that
19:08
because you just don't want to get into uncharted territory
19:11
through just software, at least not yet, right?
19:13
I think we're we're not yet there, but there is.
19:16
I think that is likely the future is just not today.
19:18
We've picked our lane as SP VS and Co investment vehicles
19:22
largely because what we've seen is that that is a that is a
19:25
pillar of this ecosystem where people don't really want to
19:30
negotiate too much. The terms are relatively fixed
19:32
and standard and what people really care about is price
19:35
efficiency and time efficiency. So we view that as our right to
19:38
win and we are not trying to fight the battle right now on
19:42
winning Andreessen score fund because I think that is largely
19:46
still a manual services type of hand holding business and we
19:49
really want to be a higher margin software driven business.
19:52
So we just picked the lane of Co investment vehicles.
19:55
Well, what can we do with an SPV?
19:57
You can do almost anything through an SPV, right?
20:00
You could buy a house through an SPV.
20:01
You can invest in the startup through an SPV.
20:03
You can invest in music royalties through an SPV.
20:06
You could buy a mine with an SPV and mine for gold, right?
20:10
You could do anything. Yeah, I had, I had a call with
20:14
someone who was in Alaska who asked me if he could use sidecar
20:18
to buy barge, right. And I was like, oh, that's an
20:20
interesting proposition. I'd love to learn about that.
20:23
As a you know, I'm just personally curious about barge
20:24
economics. But you can do anything through
20:27
an SPVI think the beauty of an SPV is that it's, it's there's a
20:33
defined business model upfront and define relationships that
20:39
are specific to a certain transaction in mind.
20:43
And once you affect that transaction, it's fairly there's
20:47
routine maintenance that follows.
20:50
And that's a big distinction between an SPV and like a multi
20:52
asset fund where you're not investing in the asset as an LP
20:56
and GP coming together as an LP, you're investing in the manager,
21:00
right? In a multi asset fund, the
21:02
manager's discretion to pick the right assets and that that's the
21:05
big distinction. And I guess, you know, if we
21:09
think about it, it's kind of an abstraction layer around an
21:11
investment or a company. You know, what, what comes with
21:14
that is that, you know, different menu of features that
21:18
you can add. Is there some that are by
21:20
default? You know, if we, we sort of
21:22
think about I guess that investment almost being a
21:25
company in many cases or the entity that you're creating to
21:29
invest in the company, you know, do you have other reporting
21:33
responsibilities, audits, you know, K1 tax issues, how how
21:38
much of that comes with by default and how much of that is
21:40
a la carte? So in, in our world, the one
21:44
that that we talk about, it's you know, we're talking about
21:47
venture capital here for, for SPBS at Sidecar and, and the
21:50
business that's that that you know that we've been talking
21:52
about. And SPB for venture capital is
21:55
buying private company shares. And what you get by default with
21:58
that is, you know, you get an entity that you're forming,
22:02
typically in Delaware to hold a private company shares, you have
22:05
to open a bank account. There's certain funds flow,
22:08
there are accounting records that must be maintained for all
22:10
of that funds flow in and out of the SPV for all the LP's joining
22:13
in, the money moving to a target asset.
22:15
And then at a minimum, there's tax reporting.
22:18
Now if you are a traditional venture capitalist that is
22:22
primarily investing in primary rounds, buying securities from
22:25
companies directly, you are likely what's called an exempt
22:28
reporting advisor, which means that you are not subject to
22:31
audit requirements and and more stringent custody requirements
22:34
and compliance requirements as you would be fewer what's called
22:37
an RIA or registered investment advisor.
22:40
Now there's like this really beautiful exemption for venture
22:43
capitalists that says as long as 80% of every fund that you raise
22:48
is investing in primary securities, I want to say every
22:51
fund. I mean also every SPV because as
22:53
every SPV is a fund that no matter how much capital you
22:57
manage over the course of your venture capital career, you are
23:00
still in ERA. However, if you do a single deal
23:05
that is not in that deal, 80% primary securities, like let's
23:09
say you buy through an SPV, secondary securities from an
23:13
employee who left the business. That one deal not puts you in
23:17
this category of potentially being an RIAA once the assets
23:21
that you manage are beyond $150 million in value, right?
23:25
And that's sort of like there's like these are the Sep.
23:27
Rules into an RAA without knowing it just because your
23:30
investment does really well. Exactly.
23:33
And that's that's true, right. It's assets under management,
23:37
the assets, the fair value of those assets right at the at the
23:40
measuring period, which might be on an annual basis.
23:43
Again, I would check with your attorney and all this is not
23:44
legal guidance, but there is there's an issue there, right,
23:48
which is once you become that RAA, now there are audit
23:52
requirements, custody requirements and other
23:53
compliance obligations to come into play that are very costly,
23:56
right? So you want to be in the RA if
23:58
you can, as long as you can be so.
24:01
But to all of these SP VS that are buying secondaries by
24:05
default now potentially Rias once they hit you know some
24:08
number is that is that what you're saying?
24:10
That's yeah, that's, that's correct.
24:12
That's, that's there's a, there's a potential opening
24:14
there to being an RA. And you know, when, when we look
24:18
at and you read the news about like, you know, Lightspeed and
24:20
Bessemer and other funds that are becoming Rias, it is for
24:23
this reason, it's because the world is shifting right from,
24:27
hey, you, you buy and hold an asset and venture capital for,
24:30
you know, back in the day, it was like 3 or 4 years before an
24:33
IPO, right? But now.
24:35
It was a long time back, yes. It was a long time back, like
24:38
80s and 90s I'm talking about right?
24:40
Like like Microsoft era days, but now still.
24:43
Still under 10 years maybe to get there up until maybe
24:46
10/15/20 years ago, but now it's definitely taking longer than 10
24:49
years and longer than fun life's fun life cycles.
24:52
Exactly. So if you're a fund manager,
24:55
right, and your LP's are holding you to liquidity expectations,
25:00
how do you cater to that realistically, right?
25:04
I think we're getting to like one of the, the big issues that
25:07
people are are getting into is how do you, how do you manage
25:10
liquidity when you've got an investment that is doing very
25:13
well, but maybe has existed for 810 years, Heaven forbid, you
25:18
know, 12 to 15 years. Now you've got, you know, a
25:21
demand or responsibility, maybe an opportunity to provide
25:24
liquidity to some of your investors, but maybe the company
25:28
management and you know, other folks who might have to consent
25:33
or oversee those invest that liquidity might might have a
25:35
different opinion. Exactly right.
25:38
So and there's a lot to entangle there and we can talk about, but
25:42
let's just assume you were this venture capitalist day one.
25:45
You, you entered a company starting today, right?
25:47
Chances are the company's wildly successful.
25:50
They will not IPO in five years or even 10 years.
25:53
They likely will stay private longer than that, which means
25:56
along your journey as a venture capitalist, your LP's are going
25:59
to say, hey, when I read your pitch deck, you mentioned you
26:02
know there was a certain fun life, right?
26:04
I'm expecting there through that fun.
26:05
Life, maybe 12. Years exactly with a one year
26:09
add on after 10 right for a couple of.
26:11
Years. Wait a second.
26:11
It's now 15 years. What's going on?
26:13
Yeah, right. And they're going to expect 3X4X
26:16
their money back, right? How do you make that happen?
26:18
Increasingly the path will be at least what we're seeing from
26:22
institutional size funds is continuation vehicles.
26:25
So now like at certain certain time point maybe the assets
26:29
mature for that fund that you created on day one, you create
26:31
another fund or an SPV to buy the asset at current.
26:35
Value Second, I just want to define when we say continuation
26:38
vehicle, just so our viewers understand, we're talking about
26:40
creating a new fund. This is when you you have an
26:43
existing fund, maybe it's gotten to 12 years, but now I want to
26:46
kind of create a continuation fund or vehicle for another, you
26:50
know, 357 years. And what I would typically do is
26:53
take my high quality assets by big winners out of my first
26:57
fund, roll them into this new vehicle, and then give my
27:00
existing LP's the opportunity to either roll into that new
27:04
vehicle or get some liquidity or maybe a combination of both.
27:06
Is that maybe a quick summary of continuity vehicle?
27:10
Could not have said it better, Dave, so thank you.
27:12
That's exactly what I what I was talking about.
27:15
And when you do that, you're essentially allowing new LP's to
27:19
buy a secondary from your first fund, right from that, from that
27:22
first vehicle, the SPV or fund you created in the first
27:24
instance that holds that mature asset now.
27:27
And you know, I'm, I'm kind of drawing this conversation now to
27:30
explain why some of these larger funds are becoming Rias because
27:33
they're increasingly partaking in activities like this and
27:36
they're well beyond $150 million threshold for AU1 and.
27:39
And more than 20% of their activity.
27:42
Right, right. Exactly.
27:43
And more than 20% activity is getting involved in things like
27:45
secondaries through continuation vehicles or maybe even just
27:48
going out and directly buying secondaries as a means of
27:51
getting access to an asset. Crypto and other related
27:55
blockchain type assets are also not VC style assets among other
28:00
things. Now we talked about a few
28:02
things. I think another interesting
28:03
angle is what if you're that investor on day one, right, that
28:08
wants to exit right after five years and someone wants to buy
28:11
your shares, How do you actually facilitate that transfer, right,
28:16
to create liquidity for your LP's?
28:18
And here's where you got to talk to a company, right?
28:20
The company that you invested in needs to consent to that because
28:23
they're typically our rights of first refusal on transfers.
28:27
The bylaws will prohibit those transfers where that company
28:29
consent. There may be other restrictions
28:31
related to the purchase agreement you signed.
28:34
So there's all kinds of things that will come into play and
28:36
that's why companies are involved typically when there
28:39
are transfers on the cap table. And companies are generally
28:43
reticent to supporting these secondary types of transfers for
28:46
a few good reasons. One yeah, I I can pause here if
28:50
you like. No, go ahead.
28:51
I was just going to say that I think you've identified one of
28:53
the biggest issues is, you know, when, when people want
28:57
liquidity. I, I think it's understood from
28:59
people in the industry, but maybe not folks coming in is
29:01
that you need consent from the board and the management of the
29:04
company to that transaction. The right of first refusal or
29:08
Roefer is a common phrase. And I, I don't think that
29:12
happens in all cases. And, and maybe it's happening
29:14
less these days than it used to, but founders and management of
29:18
companies typically want to know who their investors are and they
29:22
want to sort of, you know, manage that process while
29:24
they're private. Not an irrational perspective or
29:27
understanding, But at the same time, these investors who might
29:29
have been in the company for some period of time may want,
29:32
you know, partial or full liquidity and those two things
29:35
may come to a head. Yeah.
29:36
And then they often do for for exactly those those reasons, you
29:40
know, companies don't want to share confidential information
29:42
that they may owe investors to investors they don't know our
29:45
pre-existing relationships with. And they also don't want to have
29:48
to acknowledge a value for their shares that they may not have
29:53
been a part of negotiating. Right, that might I see.
29:57
Might for them trigger value of shares that has tax tax
30:01
implications for their employees or them?
30:03
Is that is that part of what's going on?
30:05
Right. I mean, there's, you know, I
30:06
think you're looting to, you know, the, the employee value,
30:09
right. So 409 A values are, you know,
30:12
it's a value that companies have to establish on an annual basis
30:15
for how they, you know, for, for the value which they issue
30:18
equity incentives like options to employees.
30:22
And if there's information about the value of those shares or
30:26
some information might affect the value of those shares, the
30:28
firm's app that determine that value, the 49A, the value that
30:32
you, you, you're issuing shares at has to factor that
30:35
information in. So let's see you have a bunch of
30:36
secondary transactions at an obscene valuation or higher than
30:39
where you want it to be 1. It kind of forces use a company
30:43
to reckon with that as like or how do I live up to this
30:45
valuation too? And may affect the 49A valuation
30:48
for incentives, right? Well, what are you seeing happen
30:52
in the market today? I mean, I, I guess I saw some
30:54
statistics recently where, you know, somewhat manageably small,
30:59
maybe only 2025% of, you know, secondary trades were being
31:03
Rowford or restricted. That's, that's a lot lower than
31:08
might have been the case, maybe, you know, 5-10, fifteen years
31:11
ago. But do you still see that as a
31:13
big, you know, issue or problem with people or are they, are
31:16
they managing to get, you know, approval?
31:18
I, I guess one thing was what happens if the company says,
31:21
hey, I, you know, I don't want somebody else to buy the shares,
31:24
but is the company might buy the shares, is that still OK or or
31:28
can they completely block any type of liquidity whatsoever?
31:32
Yeah. The the way these Rovers
31:33
typically work, the rights of first refusal is there's a right
31:38
of first refusal that the company holds and their rights
31:41
of first refusal that other investors hold.
31:44
And typically the way the way it unfolds is the company will have
31:47
a first right of first refusal, at least in their bylaws that
31:51
basically says, hey, the company can buy these shares at the
31:53
value of transacting at. Now venture backed companies
31:57
typically aren't using balance sheet cash to buy back its own
32:00
securities. I mean, usually cash is for
32:02
runway and investing in R&D and understanding how the market fit
32:07
building the company. So the row for that generally
32:10
comes into place. Other investors in the cap
32:11
tailors are the ones who. Who?
32:13
Who would? Likely participate now the
32:17
company could probably still block the transfer at that
32:21
point. Let's say investors did not want
32:23
to buy the company could still say no, this transfer could not
32:26
happen. What what I'm seeing changing
32:29
and I think what you might be seeing changing is that
32:31
companies increasingly are more permissive about these things.
32:35
And I think it's just what the market dynamics have changed,
32:38
right? Companies are not seeing public.
32:41
Going to have to be the case, right?
32:43
You can't keep, you know, employees in jail forever.
32:45
And if companies are taking 15 years to go public, you know,
32:48
some, some people may leave the company and move on.
32:51
Some people, you know, they want to buy a house for their kids,
32:54
you know, or send their kids to college.
32:56
So I think it's not unreasonable to see these requests come in if
32:59
the person's been with the company for five to 10 years or
33:02
even longer. Right.
33:04
Yeah. And you know, there I think
33:06
there was also this notion of it being taboo maybe for an early
33:10
executive that still have the company to sell a portion of
33:12
their holdings or an early investor to sell that holding
33:15
because it might signal a lack of conviction.
33:18
Whereas for the same reason, companies just staying private
33:20
longer, it's just a rational decision to make to keep money
33:24
moving in in the private markets.
33:26
So companies are increasingly more permissive.
33:27
However, I think when we talk about secondaries or a few
33:30
different flavors, 1 is a secondary where there's a
33:32
transfer of the company shares directly and there's another
33:35
type of transfer which might happen.
33:37
We're like an investor created, let's say, an SPV on day one to
33:40
create, to buy assets of a company.
33:43
They want to create liquidity for those early SPV investors.
33:46
Now they find new people to buy a slice of that SPV rather than
33:50
sell the shares of the company directly.
33:52
I think this is the trend that we're really starting to see
33:55
more. And I, I wonder what your
33:57
perspective and actually I wonder what the founder
34:00
perspectives are that you come across for that type of story.
34:03
Because, you know, as an early investor in a company, you know,
34:07
I think now I have a different perspective on things than maybe
34:10
1520 years ago when I first started doing this.
34:13
And, and we also have some, you know, some companies that went
34:17
on to really big outcomes, a, a few that might be not known to
34:20
everybody, but like, you know, investments in Canva or a couple
34:24
like Solano or a couple like GitLab that eventually went
34:27
public. But you know, in, in Canvas
34:30
situation in particular, I've been, I was an investor out of
34:33
our second fund at 500 startups in 2012 or 13.
34:36
And now it's 13 years later, you know, that investment done
34:41
fabulously well, which has been fantastic, but it's still not a
34:45
public company yet and might be another year or two before they
34:49
decide to go public. So I, I think we're seeing, you
34:53
know, I guess both an opportunity and well as well as
34:56
some concern. When people have, you know, a
34:59
big illiquid position that's increased in value, you, you
35:03
start worrying a little bit that you may not get to the finish
35:05
line or you may not be able to, you know, get a return on some
35:08
of those, those markups. And I, I guess that's where I
35:12
kind of wonder what kind of dynamics are you seeing where
35:14
people do want to provide that fractional liquidity within
35:17
ESPV? Are they still considered one
35:20
entity on the cap table or are they, you know, is that
35:23
abstraction layer OK for the company?
35:26
It's a great question. And unfortunately, here's where
35:29
the answer isn't as precise because you have to look to that
35:33
company's bylaws to see how they define a transfer.
35:39
Because they may define a transfer not just as a transfer
35:42
on the cap table, but they may define a transfer as a transfer
35:46
of like beneficial ownership of an entity on the cap table,
35:52
which would mean is to make it simple, if you're an SPV on a
35:55
cap table and a portion of your SPV changes hands, that may be
36:00
deemed the transfer on the cap table.
36:02
The company may say this, this is not permissible.
36:05
Now, I don't know if that specific language has been
36:09
tested by the Delaware Chancery Court as something that the
36:12
company can prohibit. I think that's maybe a question.
36:15
If that's you know true or not true.
36:18
Yeah, but but that is, that is the language in many companies
36:22
bylaws, bylaws that I've seen when I was at Cooley and and
36:25
beyond. Now what I will say, and this is
36:29
sort of like rather than a pining on specific transfers and
36:32
specific companies, companies I think are still generally averse
36:36
to any transfers, whether it's directly on the cap table or
36:40
through SPVSI. Think what needs to happen in
36:43
the market is companies need to accept that if, if they want to
36:47
stay private longer, there has to be a path for early
36:52
stakeholders to realize value and some opt in, maybe some
36:56
generalized standardized way of permitting this activity with
37:01
certain general information that they're comfortable sharing.
37:04
That is what would bring this market to healthier dynamic
37:08
where you will see less of what I would consider the more
37:11
perverse incentives in the secondary's market today where
37:14
you have people who claim to have access to XYZ company and
37:17
there's many that will fit this like open AI, you know, type of
37:21
type of institution today. But they don't have access.
37:24
They're going to go find a broker to get access and the
37:26
broker will find an SPV and an SPV and then they'll shop that
37:30
and sell that to investors who have no idea how many layers
37:33
they're investing through, how many layers on the cap table.
37:35
They're actually getting access to this, this shares and, and
37:38
not know the fees that are associated with that.
37:40
And that activity is not great. So I think if companies are
37:43
opting in more from the outset, there is more expectation from
37:48
LP's on the information they should have access to.
37:51
You have a more fluid market that still supports companies
37:53
staying private longer. And that's something I would
37:56
advocate for. And I would actually ask you,
37:57
Dave, with your megaphone, like that's something I'd like to see
38:00
happen. Yeah.
38:02
And it's, it's funny that you mentioned this because I was
38:04
literally just talking to a friend of mine last night and
38:09
she has been part of three different companies that have
38:12
gone through ups and downs. And you know, I, I, I will say
38:17
one or twice, one or two of the situations were, were favorable,
38:20
but you know, more than one of them was not so favorable where
38:23
the company went up in value, but there was no liquidity.
38:26
And then it later it went down in value substantially.
38:29
And she was saying, you know, hey, I spent 6-7 years of my
38:31
life working for these two or three different companies.
38:33
And sometimes, you know, the company value on paper goes up
38:37
to a certain level, but the employees don't see that
38:40
liquidity. And you know, same thing maybe
38:42
on the investor side as you might be in an investment
38:45
vehicle that, you know, hey, has a 5X10X even, you know, 20X
38:49
increase in value over the last 5-10 years, but you're still
38:52
waiting for realize that value. And I, I think I can understand,
38:56
as you say, the company wants to have some control of what's
38:59
going on and probably wants to prevent, you know, crazy multi
39:03
layered vehicles with lots of fees and lots of, you know,
39:06
obfuscation about who's actually on the cap table.
39:09
At the same time, you know, if we're, you know, employees and
39:13
investors are taking a journey with a company that's, you know,
39:15
risk oriented in the value of that, you know, equity goes up
39:19
over time. I don't think you necessarily
39:21
want to be held hostage until the day of liquidity, which may
39:25
or may never happen. Being an IPO and having some
39:28
regular opportunities along the way for liquidity seems, seems
39:32
like there's got to be some happy medium between, OK, some
39:36
amount of management of who's on the cap table, but also some
39:39
amount of management of, you know, reasonable fractional
39:42
liquidity along the way. Anyway, I don't know if that's
39:46
likely to happen right away, but it seems like market forces are
39:49
are pushing us towards that scenario, especially as you
39:52
know, maybe this wasn't as much of an issue when companies only
39:54
took 78 years to go public. But when they take 15 years to
39:58
go public, I I think really changes the dynamics for a lot
40:00
of employees and early investors.
40:03
Yeah, 100%. And you know, there are things
40:06
that companies will not be able to stop that.
40:09
I think this could also help put an end to.
40:11
For example, you know you may be aware of Robin Hood tokenizing
40:16
interest. That was fascinating.
40:19
Yeah. Again, for folks who haven't
40:20
followed this, the the creation of almost like derivative
40:23
instruments, really, really derivative instruments for, you
40:26
know, both, both maybe public equities, but as well private
40:30
companies where the platform that's creating those
40:33
derivatives doesn't really have ownership in those entities.
40:38
It's, it's kind of, I don't know, when you think about it,
40:40
it's sort of like magic almost where you could sort of create
40:42
this asset out of out of thin air and have people get trading
40:46
in it where you don't really control the asset at all.
40:50
Right. Exactly.
40:50
There's no voting right attached to that derivative security.
40:54
You don't really have a direct tie to claim beneficial
40:58
ownership in in, in what you own.
40:59
It's all through this derivative security that's not tokenized
41:02
and it's like a mirror of of the actual security.
41:05
Hopefully it's a mirror and there's no warps in that mirror
41:08
or imperfections in the glass that make it not exactly the
41:11
company, but but particularly when we're talking about private
41:14
companies, I mean, how do you know what's going on in the
41:17
private company in a way that, you know, you might expect from
41:20
a normal public market where you get quarterly, you know,
41:22
financials and earnings reports and things?
41:25
Exactly. So, you know, I'm sure, I'm sure
41:27
the folks at Robin Hood and across the market would prefer
41:30
that there was a more direct route and something that they'd
41:33
be happy to screen entry into if companies were also to opt in
41:39
once they reach a certain stage. And, you know, as a founder, I,
41:42
I frequently talk to employees at Sidecar and I, I mentioned to
41:45
them that it is a goal of mine to create liquidity for them for
41:49
the work that they're putting into their equity.
41:51
I don't want them to have to wait.
41:52
I don't know how many years, right, as a founder of a
41:54
business to, to create liquidity.
41:56
And we have a really healthy growing business.
41:58
There's no reason to sell the business prematurely, but it's
42:00
also no reason to hold back on liquidity for those who worked
42:02
really hard for it. So I think, I think we need.
42:04
To think that's where the market forces maybe dynamic is changing
42:08
that because I, I know 10-15 years ago it was really
42:11
considered to be rare and forbidden for people to seek
42:14
liquidity outside of normal, you know, exit event, IPO or
42:18
acquisition. But now more and more, it seems
42:21
like again, as, as these journeys take longer than 10
42:24
years, a lot of people are trying to figure out, well, you
42:27
know, OK, the company's playing for a larger outcome or maybe,
42:31
you know, just wants to say private forever.
42:33
But that wasn't quite the bargain that I think that early
42:36
investors and employees made with the founders of the company
42:39
when they got started is, you know, hey, we're taking risks
42:41
together. We should probably also share
42:44
the words together as as the company increases in value.
42:48
Yeah, exactly. Well, I, I guess I'd like to ask
43:00
maybe one or two other questions that might be on the radar for
43:02
people. I think we've had some recent
43:04
changes in legislation and some pending possible future changes
43:08
in legislation where that bar for, you know, ERA versus RIA
43:12
might be changing. I think we've had some changes
43:15
in QSBS rules that allow people to sort of take advantage of
43:18
some tax benefits at least at the federal level for companies
43:21
once they have had only three or four or five years, which is a
43:24
little bit of a change from the previous QSPS rules.
43:28
And then one other topic, which I may be getting into the weeds
43:31
here, but some transactions are not happening where they're not
43:36
actually transfers or purchases. They were what's called forward
43:39
contracts. And I think in many cases these
43:42
are done to avoid, you know, taxable events and maybe in some
43:45
cases to avoid transfer restrictions.
43:48
All, all these different structures now are starting to
43:50
play into SP BS and I know I threw a lot at you there, but
43:53
maybe let's walk through each of those and what do you think
43:56
those are going to, you know, how those play out now as we go
43:59
forward? Yeah, there there's, there's
44:03
certainly a lot on the scene right now from a from a
44:06
regulatory perspective. And I think, you know, we talked
44:08
a lot in this conversation about the market incentives and market
44:11
demands for liquidity. I think that on the other side
44:15
there's speculation that there will be regulatory easing with
44:17
the current administration and and changes at the SEC and, and
44:21
what not. Certainly seems seems like
44:22
they're leaning that direction. Right.
44:25
And we haven't seen any rules come into play yet that
44:28
definitively open the gates more.
44:31
I think there was a rule around 5 O 6C general solicitation that
44:37
basically made it so that if you invest past a certain dollar
44:41
amount, there's a presumption you're accredited and you don't
44:43
need to to serve information validating how you're credited
44:47
to the issuer. But that didn't really do much
44:49
because not many people rely on five O 16.
44:51
If you're investing that much, it's probably not a problem for
44:54
you to pull out it evidence of of of your five O 60 status.
44:58
But now there's all these other rules coming to play around 4 O1
45:01
KS being, you know, a vehicle that can invest in alternatives.
45:04
There are rules that may. Change, change really change the
45:08
amount of retail investing in startups and and funds that
45:11
might be happening in the future.
45:14
Total totally can. There are rules around the ERA
45:18
exemption and and broadening the scope of what VCs can do and
45:24
maintain the ERA exemption. That might include things like
45:26
secondaries or investments in other private funds.
45:29
What? Else what I heard was that was
45:32
explicit proposal with that, that number either 20% would be
45:35
raised or the dollar amount would be raised or possibly
45:38
both. Right.
45:40
And all of these finer details change as the bills go through
45:43
Congress and then being finalized.
45:45
But like the notion, the intent, the sentiment is opening the
45:48
gates a bit more. And of course you mentioned the
45:51
QSBS one, which makes it so you can realize QSBS the the
45:56
elimination of the the Federal Capital gains tax on private
45:59
company shares perhaps earlier and for a greater value which of
46:03
course as expensive. Implications for people who are,
46:07
you know, not nonprofit status who are investing.
46:10
And again, if we're opening up to the retail market, a lot of
46:12
those folks, you know, would benefit from that.
46:14
Certainly some of our investors, our previous funds have
46:17
benefited from that. I think the current exclusion is
46:20
up to $10 million per company, per person or or per entity
46:25
that's receiving that exemption, I guess.
46:28
That's right. That's right.
46:29
So we'll see how all these things unfold.
46:31
I think the QSBS 1, I mean, you would take some modeling to
46:34
figure out like the the net after tax gains on a certain
46:38
startup investment and to see how much it changes the value.
46:40
And maybe if you're a very large institutional investor that
46:43
doesn't have tax advantages, you might think about that as like,
46:46
oh, like maybe I should drop a bit more capital to venture as a
46:49
result. I think for the retail investor
46:51
probably won't change whether or not you invest in a certain
46:53
startup or certain fund, but maybe maybe it will.
46:56
I think the other stuff is really is it could really move
46:59
the market in particular the four O 1K opening, so.
47:04
That. Seems like a huge change maybe,
47:07
you know, equivalent to when mutual funds got into venture,
47:10
you know, I think 4050 years ago that really changed the game for
47:13
a lot of folks and you know, could, could bring a whole new
47:19
set of investors into the market that haven't been there before
47:22
with both positive and negative potential.
47:26
For sure, 'cause you got to think about, you know, you kind
47:27
of follow the money and the incentives here.
47:29
Who's who's who's shopping alternative asset opportunities
47:33
to four O 1K administrators? Are they shopping the best
47:37
opportunities? And what incentives do 4O1K
47:39
administrators have to make sure like they're getting access to
47:41
the highest quality alternative asset opportunities?
47:44
Not folks that have had that experience before either.
47:47
So I'm not sure if they're always going to be able to
47:49
figure that out. Yeah.
47:51
How about the one that I was mentioning there?
47:53
I guess this is something that we're certainly seeing in our
47:56
business more and more is what's called forward contracts or you
48:00
know, basically an agreement to an exchange of economic value in
48:02
the future when a liquidity event occurs, but not an actual
48:05
transfer of shares in the in the normal sense of, you know,
48:09
buying equity. So the the shareholder of record
48:12
remains the shareholder of record.
48:13
The buyer in this case is the person signing the deal, but
48:17
there's no taxable event for the seller to to have to worry
48:20
about. There's no change or control
48:23
theoretically on the cap table for the employee or the investor
48:27
who holds those shares. Is that something you're seeing
48:30
more and how does that affect the, you know, is there an
48:35
actual roofer over a forward contract?
48:39
You know, I, I don't think there is and I don't know if you can
48:42
restrict because the way that these contracts are drafted and
48:46
candidly I haven't looked at them in a while, But there,
48:49
there are a couple companies, Equity B, SECFI, among others
48:53
that were in the business of essentially going to employees
48:57
of companies that they may have left and saying, hey, we can
48:59
help you finance the acquisition of your shares.
49:01
Because when you leave a company, you have a.
49:03
Certain. Typically like 90 days to
49:05
exercise your options. Right after that you might lose
49:08
it, use it or lose it and maybe it's like 50K to exercise your
49:12
options and you don't have that cash sitting around or how do
49:14
you get that, that cash? There are some companies that
49:16
would finance that and then make you sign a forward contract so
49:19
that a portion of that value right go to that company exit
49:23
so. Essentially, they're going to
49:24
front you the money to exercise and pay, you know, for the
49:28
exercise and purchase of your shares.
49:30
But then they're going to want some of those shares to come to
49:33
them in the future at some point.
49:36
But right now they're not taking control of those shares.
49:38
But, you know, that's why they're fronting, you know, the
49:41
cost of making that exercise available to the employees that
49:44
they have an expectation of getting some of those shares
49:46
back in the future when there's a liquidity event.
49:48
But for the moment, that's not a taxable event.
49:51
And it may not be shares, right? I think this is the key.
49:53
The key component of these forward contracts is it's value,
49:56
not shares. So the way at least the ones I
49:59
looked at the the contract was signed by someone that was
50:04
perhaps exiting a company need to text as an option.
50:06
They sign a forward contract, they receive some cash.
50:08
The forward contract basically says that at some point in the
50:11
future, when there's a liquidity transaction, whether it's an M&A
50:14
or an IPO, those shares will be sold by that individual and then
50:19
the capital from that transaction is given to the
50:22
other. Or the shares might be
50:24
transferred at that, or the shares might be.
50:26
If they can be, yes. If they can be transferred at
50:28
that point, true. If they're if it's a public
50:29
listed company, maybe that that's the case, but there
50:32
isn't. There isn't typically a a
50:34
commitment in the forward contract to a transfer of shares
50:37
explicitly, because that might then implicate the transfer
50:40
restriction. I see.
50:41
Yeah. So although there's no tax
50:43
upfront, it may be less tax efficient because it might
50:45
actually be subject to ordinary income for the person sending
50:48
the forward contract later. I think that's also.
50:50
Depending on depending on it. Yeah, exactly.
50:54
Delicate line to sort of dance there between having that still
50:57
be deemed an investment and capital gains instead of
51:01
ordinary income taxation, but also not a transaction that is
51:05
subject to a taxable event. Exactly.
51:07
And of course there's all these, you know, intricacies of like
51:10
when they sell, whether it's within a year after year,
51:12
etcetera. But yeah.
51:13
Right. And I and I think you brought up
51:15
an important part of that which is it's very fuzzy I think at
51:19
the moment whether you know transfer restrictions and
51:22
roofers can actually restrict these type of forward contracts.
51:27
I think the company is sort of assume that they can control
51:30
that, but I, I don't know if that's actually been tested.
51:34
Do you have a a sense of whether that's definitive or not or is
51:37
that on the case by case basis? You know, I think this will,
51:41
well, I think the forward contracts really depends on how
51:44
they're drafted. I think if it commits to a
51:46
transfer of shares in the agreement, then a company might
51:50
claim that it violates a transfer restriction because it
51:52
may be considered what's called like an encumbrance on, on the
51:54
shares. And that's typically something
51:56
that is in bylaws. If it's just a transfer of value
51:59
or a transfer of shares when they are freely transferable,
52:02
then I don't think it would violate any transfer
52:04
restrictions, but it can case by case.
52:06
I think the real interesting thing is like what we first
52:08
talked about in this conversation around transfers,
52:10
which is, hey, what happens if you're a fund or an SPD on a cap
52:14
table and and that fund or SPV changes hands?
52:17
Is that a transfer? I don't know if that's been
52:19
tested and there's so many transactions happening in that
52:21
world where, you know, it would be really interesting to see how
52:25
the market plays out because I don't think market dynamics are
52:27
slowing. So I think companies will just
52:29
need to get on board and and I think we can help make that
52:31
happen. Well, I think the positive
52:34
opportunity here is that we create an alternative path to,
52:38
you know, both transfers of shares, liquidity, well,
52:41
transfer of economic interest at the very least, and and
52:45
hopefully a way for people to, you know, benefit as as the
52:49
company is increasing in value, you can transfer some of that
52:51
benefits to the employees to the investors, to other investors,
52:56
you know, again, either partially in full.
52:57
And I think that's beneficial to the entire, you know, industry.
53:02
I think it's eventually beneficial to the company as
53:05
well, although people may be looking more short term for
53:07
control rather than, you know, the long term benefit.
53:10
We had this conversation before in one of our early episodes
53:14
with SIM Desai at Hive, where he was essentially saying a lot of
53:19
public company private companies CE OS are almost doing their IP
53:23
OS, you know, on training wheels.
53:25
I guess maybe that's not the right metaphor, but they might
53:28
have the company be private, but still getting used to being a
53:31
public company, possibly releasing some limited
53:33
financials or at least some metrics that could help, you
53:37
know, 0 in on value for the company and really use that as
53:40
an exercise to do price discovery before they go public
53:43
in the real markets. And I, I would guess that a lot
53:45
of, a lot of private companies, CE OS if they, if they know what
53:49
the alternative is, having to pay an investment bank here 3 to
53:52
5%, do some imperfect price discovery, you know, prior to
53:56
going public. I think we've seen recently with
53:58
the Sigma IPO that that can be wildly inaccurate sometimes.
54:03
I think it would make a lot of sense if you could do that price
54:05
discovery over more measured period of time with some actual,
54:09
you know, test cases before you go public and, and maybe that
54:13
becomes a less expensive and more precise activity when you
54:17
do decide to pull the trigger. But I, I don't know how many,
54:20
how many CE OS are really thinking like that.
54:22
It, it seems like they should be thinking like that rather than
54:27
trying to take a shotgun approach to going public and
54:29
having to figure that all out. You know, in one or two
54:31
quarters. You might want to get your reps
54:34
in, you know, start, start working out before you go up
54:37
there on that stage and, and really try to figure out in the,
54:40
in the private markets how you can get some stability and, and
54:44
growth and price discovery. I totally agree.
54:47
And the data's there, right. If you're a pre IPO company,
54:49
there is a there's a good amount certainly on your shares.
54:53
This is the thing though, I, I think there's a lot of companies
54:56
who are probably let's say in this range of doing 100 million
54:59
to 500 million in revenue. You know, maybe there's 500,
55:02
maybe there's 1000 companies that fit that, you know, sort of
55:05
model. And now that we're really seeing
55:08
500 million, maybe even a billion dollars being the, the
55:11
mark for companies to go public. There's a good period of time
55:15
where they're going to be doing more than 100 million, but not
55:18
public. Maybe that's even a five year
55:20
period. I it seems like the secondary
55:23
marketplaces out there are going to be the opportunity for
55:26
liquidity and maybe these SPV's are sort of the vehicle by which
55:31
you can provide some of that liquidity.
55:33
Yeah, Yeah, we certainly think that's the case.
55:36
And I think it's an elegant place where if companies are
55:38
amenable, it does not require transfers of the shares
55:41
directly. And there is an opt in and a way
55:43
to do this the right way that we're pushing for.
55:46
And you know it's speaking for Sycar, we're we're an
55:49
administrator. So we don't we don't have a
55:51
substantive view on a people use our platform for but I have
55:54
personal views on how I want the market to shape up right.
55:56
So yeah. And I think again, invitations
55:59
there that they're probably some really good people out there
56:01
like Sam yourself and others that if we come together and
56:03
work on this, I'm sure we can come up with something good to
56:06
to kind of put forth and suggest as the template.
56:09
Well, I think we need to get behind a movement here, Nick,
56:12
and I'll tell you that I think there's actually a perfect sort
56:18
of metaphor for this, and I want to lay it on you here on my
56:21
shared screen. So tell me what you think about
56:23
this idea for our movement is that we need to start, you know,
56:29
an MTV channel and make make SP VS as popular as music videos
56:35
and make SP VS available to everybody.
56:38
Is that is that a good sort of like, you know, power to the
56:42
people sort of power to the investor employee sort of
56:46
Clarion call out there. Do you like?
56:48
Do you like? I want my SPV?
56:50
Dave, that's the anthem. Let's let's rock.
56:53
We will be a part of this. Yeah.
56:55
But I, I really do think that, you know, your platform is
56:58
creating an opportunity that more and more people are going
57:02
to take advantage of. And, you know, I think maybe
57:04
5-10 years ago, SP VS were sort of this weird, odd thing that
57:08
happened, you know, once or twice in the market.
57:11
But now it seems I, I saw, I saw, I heard some numbers from
57:14
Forge that more than half of their secondary volume was
57:18
happening through a single asset SP VS.
57:21
And, and it does seem like, you know, the roofers are coming
57:24
down, you know, maybe there's people that aren't trying.
57:27
And I know there's, there's still some people that are
57:30
pushing back against, you know, all these things happening, but
57:32
it seems more and more like people are looking at, you know,
57:35
frequent opportunities for liquidity being an OK thing for
57:39
a company, for employees as well as early investors.
57:41
So I hope we're going to see more use cases in the future.
57:46
For sure that that's that's the win, win outcome.
57:48
That's the icon Charlie Munger would be a fan of.
57:50
Well, Nick, thanks for spending some time with us today and
57:53
really appreciate you pulling the covers back and taking us
57:56
under the hood, seeing how things are are made.
57:59
And I really hope we're going to see more SPBS and more Sidecar
58:03
in the future. Amazing.
58:04
Let's make it happen, Dave. Thank you for having me it.
58:07
Certainly is a big bun. It's a.
58:09
Very big bun big. Fluffy bun.
58:12
It's a very big, fluffy bun. Where's the beef?
58:16
Some handbag of places give you a lot less beef on a lot of bun.
58:20
Where's the beef? OK, we're here for another
58:28
session of Valuation Corner with Professor Virgie Aman.
58:32
What company were you going to be covering today?
58:34
Today, Dave, we're going to be covering Stripe, which is a
58:38
payments processor. Up until at the very beginning
58:41
of this year, this was one of the maybe the third biggest
58:44
company, private company in the world.
58:46
It's not been surpassed by Open AI and Anthropic and a couple of
58:50
others, but it's been a very successful company for a long
58:54
time. The payment space there, they
58:56
did a secondary back in February, about a $91.5 billion
59:00
evaluation and has been one of the most available, most liquid
59:04
companies if we're in the secondary market available on
59:07
platforms like Hive and others. And there's been an active
59:10
secondary market that's going back a number of years now.
59:13
The company's had a really interesting valuation trajectory
59:17
before that February 2025 valuation.
59:20
Their valuation back in 2021 reached almost $100 billion.
59:25
This was at the peak of the bubble and and their valuation
59:29
at that time. $100 billion. My goodness. $100 billion.
59:39
They did turn a lot of heads with that $100 billion valuation
59:43
in March of 2021 and then in 2023 they kind of corrected as
59:47
the market corrected and did a the $50 billion evaluation.
59:50
But if had subsequent up rounds, if you look at the graph then
59:54
the and the history of the valuations, you can see that
59:56
just that one March 2021 valuation is kind of an outlier,
1:00:00
right? It's kind of the one that
1:00:01
doesn't. Seem pretty steady.
1:00:03
So I think that's that just tells you that the market was
1:00:05
out of whack, but the company has otherwise performed well.
1:00:07
And if you exclude that outlier, it's been fairly a solid, almost
1:00:11
monotonic trajectory up into the right.
1:00:14
So if I have a deep dive on Stripe and what they do and what
1:00:17
their what their current valuation looks like and maybe
1:00:20
talk about whether this $90 billion valuation is too low,
1:00:24
too high or or just right. And I expect in the next three
1:00:28
to six months to another, they'll do another secondary
1:00:30
because they happen every year and they're certainly one of the
1:00:33
top IPO candidates for 2026. So let's talk about how to do
1:00:43
evaluation. There's really two ways that you
1:00:45
can do it. On the left hand side, you can
1:00:47
see a methodology and the the things you need for a discounted
1:00:52
cash flow methodology for evaluation.
1:00:54
On the right hand side would be market comps.
1:00:57
These are really the two ways. If you talk to auditors, these
1:01:00
are the two ways that they will guide you on doing fair market
1:01:03
valuations. There may be a third way usually
1:01:06
around IP and if what do you own, what are the, what are the,
1:01:09
what's the value of the assets that you own?
1:01:10
That's typically done for drug companies and people like that.
1:01:14
But for tech companies, it's really just one of these two.
1:01:17
On the left hand side, this down to cash flows.
1:01:19
What we're looking for is revenue growth in revenue and
1:01:22
unit economics. And then we'll look at basically
1:01:25
free cash flow. What are the drivers of free
1:01:26
cash flow? That's going to be a function of
1:01:29
your profit margin, the, the growth rate and all those
1:01:33
things, how durable those cash flows are based on competitive
1:01:37
advantage technology you've got or other ways to define and
1:01:41
forecast those things. And we we will look at all those
1:01:45
things as we know them for Stripe today.
1:01:47
I'll also do another market comp comparable for Stripe.
1:01:51
So I'll kind of give you a discount cash flow analysis and
1:01:54
a market cap analysis. And we'll, we'll try to use both
1:01:56
those things to come up with a, a reasonable thing for, for
1:01:59
Stripe. The thing to look for with
1:02:01
market comps is, well, what, what do you think is the right
1:02:04
market comp? You can compare payments
1:02:07
companies to different companies within that category.
1:02:10
There are payment providers, there are financial services
1:02:12
companies, there are banks, there are wealth managers.
1:02:16
Companies always get a little bit of creative in terms of how
1:02:18
they choose comps. They want to find comparables
1:02:19
that are favorable to them and that kind of work for their,
1:02:22
their marketing and their pricing.
1:02:24
But investors have to have to think a bit about that.
1:02:27
OK. So we'll go through this
1:02:28
exercise now and I'll take you through what a possible
1:02:31
evaluation looks like for Stripe for 2026 for a viewing audience.
1:02:36
This is a, a chart that just shows two things. the Y axis is
1:02:41
it's a bit of a magic metric. It is the EBITDA margin of the
1:02:44
company multiplied by the CAGR of the sales.
1:02:47
So the growth rate of the sales in the past two years.
1:02:50
So I'm putting profitability and growth and just multiplying them
1:02:54
together one metric and on the X axis is your multiple, what is
1:03:00
the multiple of the enterprise value of the company to sales.
1:03:04
So let me start by adding in the comps that I think are going to
1:03:07
be relevant for Stripe. I'm, I'm going to put in payment
1:03:11
processors folks like PayPal or Global Payments or Fiserv, money
1:03:15
transfer companies like Western Union.
1:03:17
And then I got Visa and MasterCard on the chart as well.
1:03:20
And I've put in a line that I think represents a good fit
1:03:23
between the Y axis and the X axis.
1:03:27
You can see that there's basically two companies on the
1:03:29
list that fall outside of that line in a, in a, in a way that
1:03:32
shows that their sales multiple is a little bit higher than
1:03:35
their metrics. That's a Visa and MasterCard.
1:03:38
Those aren't payment processors now those are payment networks.
1:03:40
So there's a lot of recurring revenue and sticky brand value
1:03:44
in both those companies that might, that might tell you,
1:03:46
well, the value of companies is off the line in a, in a positive
1:03:50
way for the multiple just because when you have a strong
1:03:53
brand and a strong network, maybe investors pay a premium
1:03:56
for that. Let me add in a couple of
1:03:59
others, ADP and paychecks. These are payroll processors.
1:04:01
You can see they're close to the line, but also a little bit
1:04:05
higher than the financials might justify their multiples a little
1:04:08
bit higher. Why is that?
1:04:09
Well, if you're a payment processor and you're a payroll
1:04:12
provider, there's a lot of stickiness too, right?
1:04:14
If you're ACF of a company, you know, you don't really want to
1:04:16
switch payroll processors. It's hard to do that because if
1:04:19
it works, it works. Your employees are happy, you're
1:04:21
happy, you don't want to, you don't want to break anything.
1:04:24
So this is where Stripe and its nearest competitor, Audien fall
1:04:29
at the $91 billion evaluation for Stripe.
1:04:31
Stripe and Audien are pretty much on that line, as you can
1:04:33
see. And so that tells me based on,
1:04:36
you know, based on this magic metric and just based on
1:04:39
treating Audien as near competitor, but even looking at
1:04:41
the whole thing this universe, that seems like a pretty good
1:04:44
valuation for Stripe. So therefore at the valuation, I
1:04:48
think Stripe is, you know, kind of close to close to fair value.
1:04:53
Let's just walk through a quick comparison of Stripe versus
1:04:55
Audion and what what they both do.
1:04:58
They are very similar in terms of their, their basic business
1:05:02
model. Both of them are payment
1:05:04
processors, gateways and merchant accounts.
1:05:06
They both deal with merchants. I've done a side by side or a
1:05:09
comparison of what their revenues and multiples are.
1:05:11
And things like total payment volume strike is processing a
1:05:14
little bit more payment volume has much higher headcount.
1:05:18
So they, they need a lot more employees to do what they do.
1:05:21
Their productivity in terms of TPV per employee is not quite as
1:05:25
good as Audien. And that's good.
1:05:27
Stripe is focusing on more on smaller businesses and audience
1:05:30
focusing on larger enterprises. I think that probably is good
1:05:34
for Audien. If they've got fewer customers,
1:05:36
they're less complicated to serve.
1:05:39
It's a bit more of a technology platform.
1:05:41
And so they're going to be a bit more productive.
1:05:43
And so maybe that's why Audien has a little bit of a stronger
1:05:46
multiple. But again, going back to that
1:05:48
line of best fit, given the metrics, I think Stripe and IDN
1:05:52
are pretty much right on top of each other.
1:05:54
So that that would suggest to me based on these metrics that
1:05:57
Stripe is is exactly where it's supposed to be at the $90
1:05:59
billion evaluation. Well, thanks for taking us
1:06:02
through that evaluation analysis month.
1:06:04
We'll see you back next week for another company.
1:06:17
Welcome to another episode of OPP or Other People's
1:06:20
Portfolios. Today we're going to be
1:06:23
reviewing Omni Venture Labs and we have with us Sushant Sharma,
1:06:26
who's one of the limited partners in Omni.
1:06:29
Sushant, welcome to the show. Thanks Dave.
1:06:32
Pleasure to be here. I.
1:06:32
Wonder if we could start off maybe just a little bit of your
1:06:35
background. So it started as a software
1:06:37
engineer more than 20 years ago. Then my Business School did
1:06:40
management consulting for for a few years and then jumped into
1:06:43
completely different space, which was enterprise sales go to
1:06:45
market for, for tech companies. So I used to need businesses for
1:06:50
mostly investing companies, Silicon Valley headquarters or
1:06:53
European headquarter companies. I would leave their go to market
1:06:56
and enterprise sales previously missed in Hong Kong, then moved
1:06:59
to Singapore about nine years ago.
1:07:01
During my strategy consulting days, I did some work for some
1:07:05
corporate VCs. Then around 2017 is is the time
1:07:08
when I started doing some Indian investment.
1:07:10
During this time, I also realized that as an Indian
1:07:12
investor, it's very hard to get access to like good deals,
1:07:16
right, unless you are into the into the networks.
1:07:19
And I think one of the thoughts was that it's probably better to
1:07:21
invest in, you know, some good fund managers, like even the
1:07:24
small checks, but then being able to find some interesting
1:07:27
deals. So we myself and some of the
1:07:29
Angel investor, we set up a fund, an Angel fund in Southeast
1:07:32
Asia. So that fund is now kind of
1:07:33
fully deployed. And then about two years ago I
1:07:36
met Simon. What I liked about, you know,
1:07:38
Omni is and Simon's background is that especially in Southeast
1:07:41
Asia and you know, most parts of Asia, there is not that many
1:07:44
deep tech, foreign startups and so on.
1:07:47
And I think a lot of focus has been on consumer tech, fintech,
1:07:50
you know, those kind of those kind of areas.
1:07:52
So that's what kind of caught the attention in Southwest Asia.
1:07:55
It's very hard to find people who really understand deep tech,
1:07:58
especially in the context of manufacturing industrial kind of
1:08:01
these industries, right? You might find them in Japan and
1:08:03
Korea, but very hard to find in this part of the work.
1:08:06
That's also what struck me as that both Simon and Sabrina had
1:08:09
pretty strong backgrounds in, you know, working from Apple but
1:08:12
also working with hard manufacturers.
1:08:14
And they really zeroed in on kind of the manufacturing tech
1:08:18
being a big component of what they're going after.
1:08:20
Yeah. What do you see is kind of
1:08:22
unique or special about what they do?
1:08:24
You know, first and foremost says like you also mentioned,
1:08:26
you know, Simons and Sabrina's background.
1:08:28
So they, they have kind of lived that life.
1:08:30
So they understand the whole stack of, you know,
1:08:32
manufacturing hardware, software, etcetera.
1:08:34
They, you know, in their in their Apple days, they kind of
1:08:37
travel the world, looked at all kind of tech, looked at all kind
1:08:40
of product design aspects of as it relates to manufacturing
1:08:44
industrial. And also they are kind of very
1:08:47
well complement each other. So I think both on the you know,
1:08:50
the IRIR aspect of fundraising deployment and then you know,
1:08:55
all the operational investment aspects of of running AVC third
1:08:59
was obviously in the the thesis, right.
1:09:02
So again, investing in deep thing and it's as a condition
1:09:04
manufacturing industrial and more oriented on I think
1:09:07
software rather than less of hardware, but more of kind of
1:09:10
software as to how software kind of changes or or disrupts, you
1:09:15
know, that that industry. They had a very clearview of who
1:09:18
are the founders they're going to invest in, right?
1:09:20
So they're going to be mid career professionals from
1:09:24
manufacturing industrial background or people who have
1:09:27
put their teeth, you know, either on the factory floor or
1:09:30
you know, or, or or in those organizations who have seen
1:09:33
these current challenges first time, who have felt the pain
1:09:36
first time. And then they want to kind of
1:09:38
bring the startup to address the pain point as opposed to more
1:09:42
like an economic oriented deep tech ecosystem where you know,
1:09:46
some PhDs will come up with a with a solution and trying to
1:09:49
find a problem, right? But in this case, you know this
1:09:52
mid career profession, they have seen the problem already and
1:09:54
then they need funding to kind of build a solution to kind of
1:09:57
address the problem, right? Yeah, I noticed that, You know,
1:10:00
it's not maybe the typical Silicon Valley software founder
1:10:04
who's early 20s and maybe just out of college or sometimes not
1:10:07
even in college. They're really going for people
1:10:10
to, you know, had 10-15, maybe even 20 years of experience.
1:10:13
Who really a bit around the block a few times.
1:10:16
I think one other thing that caught my attention was they
1:10:20
also looked for their companies to exit I guess primarily or at
1:10:24
least significant opportunities to exit to corporate
1:10:28
acquisitions. And I wonder if you had a
1:10:30
perspective on that part of their thesis?
1:10:32
Yeah, that was the something that caught my attention as
1:10:35
well, that they were not looking for blockbuster exits.
1:10:38
You know that the kind of stuff that you would read in, in, in
1:10:40
the in the media. But I think they, they really
1:10:42
thought about not just the portfolio construction, but the
1:10:45
the exit construction as well that are these companies
1:10:48
exitable? What is the exit horizon?
1:10:50
And rather than waiting for that 10 + 1 + 1 classic BC model, is
1:10:54
that a way to generate DTA faster, return that capital
1:10:58
faster to the LP's and then move on to the next, next opportunity
1:11:04
and so on, right. So that caught my attention as
1:11:05
well and that kind of a lower or mid market M&S space is probably
1:11:10
I was a less regulated in the US as compared to some of the
1:11:13
larger companies. So I think there is definitely
1:11:16
an opportunity for them to you know exit companies faster at
1:11:19
very reasonable valuation because Omni is coming in, you
1:11:22
know below 10 mil valuation and you know those exits could be
1:11:26
could be several multiples of the of the initial valuation.
1:11:29
That's why I think that exit, that exit perspective was quite
1:11:33
interesting, which again you know, coming back to Southeast
1:11:35
Asia, which we have not seen here either in public markets or
1:11:38
in the in the M&M market as well, which also makes them kind
1:11:42
of quite unique. I wonder if you had a chance to
1:11:44
look at the book that they just released.
1:11:47
I think it's called Unlocking Alpha.
1:11:48
The rise of niche VC that seems to tie in with the what we were
1:11:52
just talking about was really identifying a specific niche in
1:11:55
the ecosystem where they're building solutions that are
1:11:58
potentially on the M and a radar for some of these larger
1:12:01
corporates. But we actually spoke about it
1:12:03
early this year when I was in the Bay Area.
1:12:05
So we did kind of speak about some of the topics and I, I, and
1:12:08
I hope I was able to give some inspirational thoughts to, to
1:12:11
Simon to include in the book. Yeah, I think coming to the,
1:12:13
your question was around the, the niche area on the unlocking
1:12:17
alpha. Yeah.
1:12:17
So I think looking at industry verticals who are not yet
1:12:20
disrupted, of course everyone talks about robotics and that's
1:12:23
like a big topic in in Asia as well in China, Korea, etcetera.
1:12:27
Yeah, there are, you know, that sector is definitely is quite,
1:12:30
quite destructive. But I think there are other
1:12:33
aspects of manufacturing industry as well.
1:12:34
So I think, yeah, that industry has not been as destructive as
1:12:38
compared to let's say financial services or telecommunication or
1:12:41
some of the other industries that we have that we cannot read
1:12:43
about. So there is a huge potential in
1:12:46
as to the digitalization of of the entire manufacturing
1:12:51
process, how things are done, make them more efficient, the
1:12:54
whole kind of supply chain around it.
1:12:56
A lot of focus has not been kind of spent on, and that's where I
1:12:59
think Stamina Sabrina are kind of really focused on.
1:13:03
Yeah. I think you mentioned you know
1:13:05
the software being AT component or at least capital light
1:13:08
hardware being one of the things they look for.
1:13:11
Are there specific companies or Co investments that have come
1:13:16
your way or other things that you're looking for you might Co
1:13:19
invest with them on? Yeah, yeah.
1:13:21
So Simon has shared some Co investment opportunities from
1:13:25
his from their portfolio. I think Mimic was one and there
1:13:28
was another one for me. I mean I'm more like an
1:13:31
opportunistic investor. So we only invest options
1:13:34
strictly when we see the kind of right opportunity we do have our
1:13:37
run, what we call it Albion Capital like a discovery and
1:13:40
selection practice for LP's who are looking to find emerging GPS
1:13:44
like Omni Ventures or GPS who are looking to find destructive
1:13:48
tech. So by virtue on that we can
1:13:50
always bring in, you know other interesting LP's to Omni or
1:13:54
other GPS who might be interested to Co invest with
1:13:57
Omni into those kind of startups, right.
1:14:00
And there is definitely a demand for other kind of companies that
1:14:04
that Omni is able to uncover maybe not in the at that stage
1:14:07
at the pre seed seed stage, but maybe you know a subsequent
1:14:10
stage of Omni as portfolio companies.
1:14:13
Sushant, thanks for spending some time with us today.
1:14:15
Thanks, Dave.