Latest / Bloomberg Intelligence / Anthropic in Talks to Buy Startup Decart for $6 Billion

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Anthropic in Talks to Buy Startup Decart for $6 Billion · Bloomberg Intelligence

• 0:02
  Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the
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  Speaker 1: Bloomberg Intelligence Podcast. Catch us live weekdays at ten am
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  Speaker 1: or watch us live on YouTube.
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  Speaker 2: Let's check in with Ed Ludlow. He is host of
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  Speaker 2: Bloomberg Tech. It's based out there in San Francisco.
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  Speaker 3: Ed, we got anthropic. Now, we talked about anthropic.
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  Speaker 2: A lot of folks are saying, I want to wait
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  Speaker 2: and see this IPO perspective because this could be very interesting.
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  Speaker 2: But they're not waiting. They're out there doing some business anthropics.
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  Speaker 2: They're gonna be buying an egg guy startup here, talk
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  Speaker 2: to us about that.
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  Speaker 4: Yeah, this is a startup called Dcart, an Israeli startup
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  Speaker 4: that does two things. They work on world models. World
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  Speaker 4: models literally AI models that try to understand the world
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  Speaker 4: more rooted in real world physics. They're trained on things
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  Speaker 4: like video data. It's beyond text. But the second thing
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  Speaker 4: that they do is have a software platform that makes
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  Speaker 4: chips better at running AI, you know, optimizing basically. And
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  Speaker 4: it seems like based on our reporting that's the bit
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  Speaker 4: Anthropics interested in. So it's a six billion dollar deal
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  Speaker 4: we're reporting citing sources. We don't know the structure of
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  Speaker 4: the deal, but in the context what you just said,
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  Speaker 4: it would be in Thropics' biggest acquisition to date and
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  Speaker 4: with an IPO right around the corner. You know, it's
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  Speaker 4: interesting timing, but it kind of speaks to the operational
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  Speaker 4: technical challenges that Anthropics still has.
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  Speaker 5: Is this out of the ordinary though for Anthropic though,
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  Speaker 5: because they really make these big acquisitions. This is a
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  Speaker 5: big one. I mean, but they've been really spending heavily,
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  Speaker 5: you know, computing power, they want to develop new products.
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  Speaker 4: Yeah, I don't know, six billion dollars doesn't seem very
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  Speaker 4: big to me when you think about the balance sheet.
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  Speaker 4: I mean, the way that I look at it is
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  Speaker 4: Nthropics raised even this year, you know, north of one
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  Speaker 4: hundred billion dollars, and most of that sits on its
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  Speaker 4: balance sheet, you know, in you know, even the money
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  Speaker 4: it raised prior to this year probably still sits on
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  Speaker 4: its balance sheet. And we are seeing valuations of very
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  Speaker 4: specific niches that some of these startups occupy be at
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  Speaker 4: that level, be high. You know, there is a lot
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  Speaker 4: of activity and the frontier labs. The hyperscalers have used
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  Speaker 4: M and A to acquire those specialisms. In this case,
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  Speaker 4: you know dcarts is that that software to optimize the
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  Speaker 4: stack and make the chip run better.
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  Speaker 2: Ed do we know anything more about a potential IPO
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  Speaker 2: of Anthropic that timing thereof, I mean, we're just we're
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  Speaker 2: mentioning SpaceX is now back above its IPO price, presumably
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  Speaker 2: that that bodes well for the tech IPO space, but
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  Speaker 2: anything go on timing.
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  Speaker 4: Yeah, I mean the Bloomberg reporting is still that it's
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  Speaker 4: this fall. I mean, with respect as a British person
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  Speaker 4: who's lived in the States for almost a decade, I
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  Speaker 4: still have no idea what the full actually means. It
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  Speaker 4: seems an unspecified and infinite period of time.
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  Speaker 3: But that's what we've reported.
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  Speaker 4: I think, you know, late September, earlier October is what
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  Speaker 4: we had previously reported, and so it's kind of full
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  Speaker 4: steam ahead. And you make a really interesting point, which is,
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  Speaker 4: you know, I think I reported this at the time
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  Speaker 4: right once the SpaceX perspectors hit open, AI and Anthropic
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  Speaker 4: had a good chance to read it and decide what
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  Speaker 4: to do, and you know, whatever their psychology was behind
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  Speaker 4: closed doores. Ultimately they both filed confidentially with the SEC
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  Speaker 4: and SpaceX you know, was a led the way in
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  Speaker 4: that respect.
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  Speaker 5: And I'm going to stick with SpaceX since you mentioned it.
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  Speaker 5: There was time actually Decart could be acquired by SpaceX,
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  Speaker 5: but Elon muskaid, it's not true, fake news, not happening.
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  Speaker 5: So why would that company be of appeal to SpaceX?
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  Speaker 4: Well, perfect summary. There were reports that SpaceX had offered
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  Speaker 4: wanted to offer similarly six billion dollars I think it was.
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  Speaker 4: The report was that it was an all stock propos
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  Speaker 4: and Elon Musk said that it was fake news. As
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  Speaker 4: you said, same logic as Anthropic, you know, with the
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  Speaker 4: greatest respect to Dcar, And again this is all Bloomberg's reporting, right.
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  Speaker 4: You know, Anthropic has not confirmed this acquisition, nor DCAR.
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  Speaker 4: But their work in world models is interesting. It is
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  Speaker 4: not unique. There are others working in world models. You
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  Speaker 4: know that the property that folks are interested in is
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  Speaker 4: that software that just makes the chip better from an
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  Speaker 4: economics perspective and operationally at running AI models and in
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  Speaker 4: a world where you know the the economics of leasing
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  Speaker 4: out compute capacity, running your own models on your own
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  Speaker 4: compute capacity is so important, and there is a supply constraint.
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  Speaker 4: There is not enough compute to meet the demand for
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  Speaker 4: running AI models that would make that software particularly interesting.
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  Speaker 4: And it kind of goes back to your question on
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  Speaker 4: the valuation right of and the six billion dollar scale
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  Speaker 4: of the deal.
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  Speaker 2: And cost of using AI, the token cost. We're here
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  Speaker 2: seeing stories ed CFOs and managers were saying, whoa, whoa, whoa, whoa,
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  Speaker 2: What are you using AI for? What am I paying for?
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  Speaker 2: What do we know about just the user cost experience.
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  Speaker 4: Yeah, so there are two different parts of that that
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  Speaker 4: the cost of running a model is measured on a
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  Speaker 4: dollar per million input tokens and a dollar per million
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  Speaker 4: output tokens basis. And so when we get releases from
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  Speaker 4: say like Kimmy K three from China, one of the
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  Speaker 4: reasons that was such a big news story is that
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  Speaker 4: it was a high performance model, highly capable, but it
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  Speaker 4: was priced quite reasonably against how the absolute top us
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  Speaker 4: models were priced. A token spend is a budgeting issue
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  Speaker 4: that basically technology companies around the country, some of them
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  Speaker 4: have got wrong. So if you're the CFO, you have
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  Speaker 4: to assign a budget right how much money you're going
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  Speaker 4: to allow your engineers to spend to run AI models.
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  Speaker 4: And because some of these companies have consumption basis arrangements
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  Speaker 4: with the Frontier Labs. A customer of Entropy OpenAI is
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  Speaker 4: consumption based. They just burned through them and then you
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  Speaker 4: have to go to the CFA and go, oh, actually, yeah,
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  Speaker 4: you know, I said I'd spend ten I spent one hundred,
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  Speaker 4: and then you're in trouble.
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  Speaker 3: Stay with us. More from Bloomberg Intelligence coming up after this.
• 6:23
  Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
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  Speaker 1: weekdays at ten am Eastern on Applecarclay, and Android Auto
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  Speaker 1: with the Bloomberg Business app. Listen on demand wherever you
• 6:33
  Speaker 1: get your podcasts, or watch us live on YouTube.
• 6:37
  Speaker 2: Let's break down the numbers from Cisco what it means
• 6:39
  Speaker 2: for the tech space. Wu Jinho, Senior technolog channel from
• 6:42
  Speaker 2: Bloomberg Intelligence. He's based down there in our Princeton campus,
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  Speaker 2: which talked to us about Cisco. What did we learn
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  Speaker 2: with their earnings results?
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  Speaker 6: Yeah, hey, Paul, so Cisco results, I mean they're quite
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  Speaker 6: quite frankly, to put it in a nut shell, sales
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  Speaker 6: on White Hot right, AI close to doubling and fiscal
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  Speaker 6: twenty twenty seven based on their guidance, and then their
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  Speaker 6: core networking business, which is the you know, the basic
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  Speaker 6: stuff that connects all of our computers, that's going to
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  Speaker 6: grow at a fair double digit pace as well. So
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  Speaker 6: from a demand standpoint, it's great. Cisco is the only
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  Speaker 6: name that's read on my screen today on the terminal,
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  Speaker 6: and I think people are a little bit spooked on
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  Speaker 6: the gross margin side for the rest of the year.
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  Speaker 5: So where investors hopes just too high or maybe was
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  Speaker 5: Cisco just to conservative? I mean, what's your take.
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  Speaker 6: So from from a revenue standpoint, I don't think it
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  Speaker 6: was it was too high, Lisa, Quite frankly, I'm pretty
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  Speaker 6: pleased with the results because, like we all knew that
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  Speaker 6: AI was going to be strong, and then the core
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  Speaker 6: networking is continues to outperform. Uh And but that that's
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  Speaker 6: the issue right there, right, you have a higher hardware mix,
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  Speaker 6: and hardware in the face of a memory inflation is
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  Speaker 6: going to put a drag on gross margins.
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  Speaker 7: You know. The head fake was.
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  Speaker 6: At the fourth quarter gross margins was at sixty six percent,
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  Speaker 6: first quarter guidance was at sixty six percent, and all
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  Speaker 6: of a sudden, it looks like it's going to be
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  Speaker 6: closer to sixty four to sixty five percent in quarters
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  Speaker 6: to two quarters four. But at the end of the day,
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  Speaker 6: I think it's going to be a temporary impact and
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  Speaker 6: a gross margins should start to improve if we look
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  Speaker 6: past twenty seven.
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  Speaker 2: So what are the pressures on the gross margin here?
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  Speaker 2: Where's that coming from the cost side?
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  Speaker 6: Yeah, so you know, just a pinpoint where the gross
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  Speaker 6: margin pressures are. You know, they did implement some pricing
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  Speaker 6: increases in twenty twenty six, uh and and that kind
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  Speaker 6: of diminishes going into the second half of the year.
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  Speaker 7: At the same time, I don't.
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  Speaker 6: Know if those you know, future cost increases are going
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  Speaker 6: to keep pass keep pace with the.
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  Speaker 7: With the memory increases. Right.
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  Speaker 6: That's one and number two. At the end of the day,
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  Speaker 6: they're selling a boatload of hardware, a boatload of hardware,
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  Speaker 6: and we all know that hardware margins are just good
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  Speaker 6: at software margins now, I will tell you, Paul, there
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  Speaker 6: is some software attached related to their hardware products, but
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  Speaker 6: those are more on a recurring basis and not on
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  Speaker 6: a perpetual basis. So it will take several quarters for
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  Speaker 6: the software margins to catch up.
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  Speaker 5: So is this restructuring to kind of move toward AI.
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  Speaker 5: Is it the right move because it's putting them in
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  Speaker 5: a lot of competition. You have Broadcom, you have Hulett
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  Speaker 5: Packard Enterprise. Is it the right move for the company?
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  Speaker 7: Well?
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  Speaker 6: Quite frankly, I've used Cisco as one of the goldilocks
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  Speaker 6: of AI. It's like, you don't have too much AI
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  Speaker 6: and you don't have too little AI.
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  Speaker 7: Right, it's just right.
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  Speaker 6: So you're actually getting a fair amount of growth from AI.
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  Speaker 6: Right at the end of the day, like I said,
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  Speaker 6: the AI business is doubling, the optical business is probably
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  Speaker 6: going to continue to grow through twenty twenty eight and
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  Speaker 6: into twenty twenty thirty. Quite frankly and quite and even
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  Speaker 6: though it might be a modest drag on a gross margin,
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  Speaker 6: over the long term, you're getting a up on better
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  Speaker 6: scale right from a competition standpoint, and you make a
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  Speaker 6: good point. You know, they do have the silicon one
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  Speaker 6: product that goes head to head to someone like Broadcom.
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  Speaker 6: But quite frankly, some of the hyperscalers are looking for
• 10:12
  Speaker 6: an alternative to someone like an Nvidia or Broadcom, and
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  Speaker 6: Zisco is one of the few companies that can offer that.
• 10:17
  Speaker 6: They have the chip capacity to give it to the
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  Speaker 6: cloud providers, so they might be in the sweet spot
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  Speaker 6: of picking up a little bit of share, not too much,
• 10:25
  Speaker 6: but a little bit of share from the bigger silicon players.
• 10:28
  Speaker 2: So we're you know, most of the big tech companies
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  Speaker 2: have reported or we're still waiting for Nvidia and a
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  Speaker 2: couple others. What's the narrative or has the narrative changed
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  Speaker 2: on AI, the spend, the return.
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  Speaker 3: Where are we on that narrative right now? Which when
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  Speaker 3: you talk to.
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  Speaker 6: Yes, look, I mean if you look at super Micro
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  Speaker 6: results yesterday and also some of the other smaller picked
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  Speaker 6: and shovel guys like Lumentum and Coherent the other day,
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  Speaker 6: I mean, the spending on the cloud is really really
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  Speaker 6: starting to ramp up. Right.
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  Speaker 7: We're still in like I.
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  Speaker 6: Would say, the third inning, and twenty twenty seven is
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  Speaker 6: going to be the ramp of phase into twenty twenty
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  Speaker 6: eight as well as into twenty twenty eight as these
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  Speaker 6: AI infrastructure buildouts continue to keep pace. Now where it
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  Speaker 6: hasn't really started to pick up and Cisco is started
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  Speaker 6: to see it is on the corporate IT side, and
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  Speaker 6: that's going to be a positive read through for someone
• 11:19
  Speaker 6: like adele or HPE, which reports later in the month
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  Speaker 6: and early in September.
• 11:25
  Speaker 5: Hey, woudin getta s two at the same point, Like,
• 11:27
  Speaker 5: we've been hearing a lot about the AI space and
• 11:30
  Speaker 5: what's been going on there as well. But when we
• 11:33
  Speaker 5: start hearing about new clients, are are they getting anyone
• 11:37
  Speaker 5: anywhere let's say new or what's on the horizon for
• 11:40
  Speaker 5: the company?
• 11:41
  Speaker 6: Yeah, So look, the sovereign space as well as the
• 11:44
  Speaker 6: neocloud space is still relatively new for someone like Cisco, right,
• 11:48
  Speaker 6: But again, I do think that they fulfilled the sweet
• 11:51
  Speaker 6: spot where given that given their enterprise expertise, they could
• 11:56
  Speaker 6: play a very good.
• 11:56
  Speaker 7: Middleman for the neocloud guys.
• 11:59
  Speaker 6: Who need a little bit more as well as the
• 12:00
  Speaker 6: sovereigns who need a lot more handholding than someone like
• 12:05
  Speaker 6: let's just say a Fox corn Ye can provide.
• 12:08
  Speaker 2: Stay with us more from Bloomberg Intelligence coming up after this.
• 12:16
  Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
• 12:19
  Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android
• 12:23
  Speaker 1: Auto with the Bloomberg Business app. Listen on demand wherever
• 12:26
  Speaker 1: you get your podcasts, or watch us live on YouTube.
• 12:30
  Speaker 2: Let's stay in the world of technology we can do that,
• 12:33
  Speaker 2: And I want to talk to annorag Ronie. He's a
• 12:34
  Speaker 2: senior techanos for Bloomberg Intelligence. Apple is going to bring
• 12:38
  Speaker 2: in a foldable phone two thousand dollars.
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  Speaker 3: I don't know. I'm not a foldable phone. I don't know.
• 12:46
  Speaker 2: Andrew Anuraga, thanks much for joining us here talk to
• 12:48
  Speaker 2: us about Apple.
• 12:50
  Speaker 3: And a two thousand dollars foldable iPhone.
• 12:53
  Speaker 7: Yeah.
• 12:53
  Speaker 8: So first to hoard, you have to thank Mark German
• 12:55
  Speaker 8: for all the reporting that he has done on this topic. So,
• 12:58
  Speaker 8: first of all, Samson has a voldable phone that came
• 13:01
  Speaker 8: out seven years ago. So the big question is why
• 13:03
  Speaker 8: did they take Apple so many years to come out?
• 13:05
  Speaker 8: And you know what Mark bills us is that Apple
• 13:07
  Speaker 8: was not happy with the crease in the middle of
• 13:09
  Speaker 8: the phone when you fold the thing. And so Samsung
• 13:12
  Speaker 8: has a new display which is helping out Apple to
• 13:15
  Speaker 8: solve that problem.
• 13:16
  Speaker 3: So now here is the thing.
• 13:18
  Speaker 8: We are coming to a point where the unit shipments
• 13:21
  Speaker 8: are not growing for Apple, largely because or it may
• 13:24
  Speaker 8: not grow next year because they're most likely going to
• 13:27
  Speaker 8: raise rates. When they announced their next line of phones
• 13:30
  Speaker 8: coming up the first or the second week of September.
• 13:33
  Speaker 8: So the big question is, well, what can you do
• 13:35
  Speaker 8: to go out and increase you know, average selling price.
• 13:38
  Speaker 8: So the promac sells it about twelve hundred dollars, and
• 13:41
  Speaker 8: that's I think where most of the users for this
• 13:44
  Speaker 8: device will go. The real Apple crazy the enthusiast which
• 13:49
  Speaker 8: only buy the brand new phones out there, and they
• 13:52
  Speaker 8: buy the promacs. That's about twelve hundred dollars. So if
• 13:55
  Speaker 8: you are able to just shift that buyer from a
• 13:58
  Speaker 8: promax to affordable, well that's a sixty seven percent increase
• 14:02
  Speaker 8: in average selling price for that. So I think that's
• 14:04
  Speaker 8: what's going to happen next year because remember, because of
• 14:07
  Speaker 8: memory pricing, everything is getting more expensive, and that's where
• 14:11
  Speaker 8: what we anticipate is going to happen with Apple as well.
• 14:14
  Speaker 3: But enter are people going to buy it?
• 14:16
  Speaker 5: I mean, I see, I'm looking at your notes here
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  Speaker 5: says Apple's first fobile phone generate twenty to twenty eight
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  Speaker 5: billion of fiscal twenty twenty seven revenue in your scenario
• 14:25
  Speaker 5: based on ten to fourteen million units at the average
• 14:28
  Speaker 5: selling price of about two thousand dollars. I mean, is
• 14:30
  Speaker 5: that right?
• 14:31
  Speaker 3: You think people are going to buy into us?
• 14:33
  Speaker 8: Look that's actually, to be honest, if you look at it,
• 14:35
  Speaker 8: half of Apple's phone or half of Apple's total revenue
• 14:39
  Speaker 8: comes from the iPhone. So it's still this very small
• 14:41
  Speaker 8: portion of that total or number. I know, you know,
• 14:44
  Speaker 8: twenty four billion is a big number by itself, but
• 14:46
  Speaker 8: your Apple on any given year sells about two hundred
• 14:49
  Speaker 8: and fifty million phones out there. So out of that,
• 14:53
  Speaker 8: you know, selling about ten to twelve million phones in
• 14:56
  Speaker 8: year one is not that big of a deal because
• 15:00
  Speaker 8: as I said, there are enough people that buy the
• 15:02
  Speaker 8: promas or the pro every year. You know, you can
• 15:05
  Speaker 8: see combined that's about thirty forty percent of any new
• 15:09
  Speaker 8: year phones. It's just proing the promac. So it's a
• 15:12
  Speaker 8: very sizable market. And you know, Apple buyer on the
• 15:15
  Speaker 8: higher end is fairly affluent.
• 15:18
  Speaker 2: So talk to us about just give us an update
• 15:19
  Speaker 2: where we've got your anat on China both from an
• 15:24
  Speaker 2: end selling market as well as you know, the supply
• 15:27
  Speaker 2: chain aspect. Where are we with China these days?
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  Speaker 8: Yeah, So one thing that's happened with Apple over the
• 15:34
  Speaker 8: last three quarters is they have gained a lot of
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  Speaker 8: share in China, and that's because they did not increase
• 15:40
  Speaker 8: their price of their phone over there, while the competitors
• 15:43
  Speaker 8: have So if you look at their iPhone results, I
• 15:45
  Speaker 8: mean it's just been staggering twenty plus percent for the
• 15:48
  Speaker 8: last couple of quotos at least, and we have never
• 15:51
  Speaker 8: seen that. I mean, it always used to be high
• 15:52
  Speaker 8: single digit growth and we attribute a lot of that
• 15:56
  Speaker 8: to share gain. So when we see them coming out
• 15:59
  Speaker 8: with the next iPhone iteration, I'm really keen to see
• 16:02
  Speaker 8: if they're going to raise the rates throughout the entire
• 16:05
  Speaker 8: chain of fronts, everything from the lower end or the
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  Speaker 8: higher end, or or they're only going to target the
• 16:10
  Speaker 8: higher end of the market. I think if they leave
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  Speaker 8: the lower end alone, I think they're going to go
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  Speaker 8: out and gain more market share in China. What you're
• 16:18
  Speaker 8: mentioning is Paul going back three years, they lost some
• 16:21
  Speaker 8: share in China because of Jami coming up with their models.
• 16:25
  Speaker 8: But I think these guys have done a very good
• 16:27
  Speaker 8: job of capturing phone market. Now another thing, Mark Governman
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  Speaker 8: has said it's possible the next series of the phones
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  Speaker 8: may have a red iPhone, and that if it comes out,
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  Speaker 8: you know, that's another thing that's going to entice the
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  Speaker 8: Chinese market because frankly, speaking, the US market is saturated.
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  Speaker 8: China and India are the two really big markets for
• 16:45
  Speaker 8: them to go after, and China being the more affluent
• 16:48
  Speaker 8: between the two countries.
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  Speaker 5: Anraic something you point out in this article, it's a
• 16:52
  Speaker 5: new leasing plan. Can you explain this, caud You say
• 16:55
  Speaker 5: he's going to give shorter replacement cycle for the foldable.
• 16:58
  Speaker 8: Yeah. If you remember, just about three or four weeks ago,
• 17:01
  Speaker 8: Apple launched something called the Apple Upgrade Plan. It's like
• 17:05
  Speaker 8: leasing your equipment directly from them on a two year
• 17:08
  Speaker 8: or three year basis. So typically, you know, you keep
• 17:11
  Speaker 8: your phone for four or five years, but if you
• 17:13
  Speaker 8: get on this leasing plan and you know, let's say
• 17:15
  Speaker 8: you pay fifty five dollars normal phone not obviously the affordable,
• 17:19
  Speaker 8: and you just have to return it back to them
• 17:21
  Speaker 8: after two years or three years, depending on what you use.
• 17:25
  Speaker 8: They increase this for watches, they did it for max,
• 17:30
  Speaker 8: they did it for iPads. And what we think that
• 17:33
  Speaker 8: happens is for people who are just thinking about a
• 17:35
  Speaker 8: payment plan and not so much buying, you know, twelve
• 17:38
  Speaker 8: hundred dollars up front payment, this is going to go
• 17:41
  Speaker 8: very well for them and tap into an end of
• 17:44
  Speaker 8: the market that they are not used to. Second, they're
• 17:47
  Speaker 8: going to raise the rates of refreshes of the device.
• 17:50
  Speaker 8: So what that does, that's also helps in the revenue
• 17:52
  Speaker 8: growth because again, as I said, we are coming to
• 17:55
  Speaker 8: a point at least in the US that you're you know,
• 17:57
  Speaker 8: you have a saturated capacity of getting new users to
• 18:02
  Speaker 8: jump on the bandwagon.
• 18:05
  Speaker 3: Stay with us. More from Bloomberg Intelligence coming up after this.
• 18:12
  Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live
• 18:16
  Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android
• 18:19
  Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever
• 18:22
  Speaker 1: you get your podcasts, or watch us live on YouTube.
• 18:27
  Speaker 2: Business Development Companies you maybe heard them by the acronym
• 18:30
  Speaker 2: BDC's there. They are a type of closed end fund
• 18:33
  Speaker 2: that provide retail investors exposure to a diversified portfolio of
• 18:37
  Speaker 2: private companies in their early stage. One such company went
• 18:41
  Speaker 2: public today on the New York Stock Exchange. That would
• 18:44
  Speaker 2: be Robinhood Ventures Fund to ticker r v II. Sarah Pento,
• 18:50
  Speaker 2: head of Robinhood Ventures, joins us live from the ny SE. Sarah,
• 18:55
  Speaker 2: thanks so much for joining us here. Talk to us
• 18:57
  Speaker 2: about the IPO. Why take Robinhood Interest Fund too public.
• 19:02
  Speaker 9: Thanks so much for having me. It's so exciting to
• 19:04
  Speaker 9: be here today.
• 19:05
  Speaker 3: So there's so.
• 19:07
  Speaker 9: Much happening in the technology market with early stage companies,
• 19:12
  Speaker 9: particularly now with the advent of AI, creating amazing innovation
• 19:17
  Speaker 9: and wealth creation, and historically that wealth creation has been
• 19:21
  Speaker 9: incredibly hard to access for most investors. Right, you have
• 19:24
  Speaker 9: to be accredited, you have to know the right people,
• 19:27
  Speaker 9: you have to have really high investment minimums, and then
• 19:30
  Speaker 9: there's no liquidity once you invest in private venture funds.
• 19:33
  Speaker 9: And so really with Robinhood Ventures Fund too, we are
• 19:36
  Speaker 9: bringing innovation to this market, to bring early stage venture
• 19:40
  Speaker 9: to everyone.
• 19:41
  Speaker 5: Well, can you give us an idea of how many
• 19:44
  Speaker 5: private companies does include, like what different sectors? Can you
• 19:47
  Speaker 5: break it down for us?
• 19:48
  Speaker 9: Yes, of course. So we chose to focus on what
• 19:50
  Speaker 9: we think is an end of one unique ecosystem for
• 19:54
  Speaker 9: early stage companies, which is why Combinator the storied accelerator
• 19:58
  Speaker 9: incubator based in San Francis, Cisco. They produce about five
• 20:03
  Speaker 9: to eight hundred companies a year, and we plan to
• 20:05
  Speaker 9: invest in about one hundred and fifty companies a year,
• 20:08
  Speaker 9: So over three years, this fund could have up to
• 20:11
  Speaker 9: four or five hundred companies, which for an early stage
• 20:14
  Speaker 9: strategy makes a lot of sense because you want to
• 20:17
  Speaker 9: have that diversification in order to be able to invest
• 20:21
  Speaker 9: in some of the companies that were really early when
• 20:25
  Speaker 9: you invested in them, but go on to be worth
• 20:28
  Speaker 9: tens hundreds of billions of dollars.
• 20:31
  Speaker 2: So eight million shares, I guess it was a total
• 20:35
  Speaker 2: underwriting here.
• 20:37
  Speaker 3: What are the u SUIP proceeds here?
• 20:39
  Speaker 9: So use of proceeds is really capital for the team
• 20:43
  Speaker 9: to invest in the next generation of innovative, innovative companies
• 20:47
  Speaker 9: from artificial intelligence to deep tech companies that are building
• 20:52
  Speaker 9: in the financial sector, in healthcare and space and defense.
• 20:56
  Speaker 9: And we will write checks in every single ycom vinator batch,
• 21:00
  Speaker 9: probably about one hundred or to one hundred and twenty
• 21:05
  Speaker 9: a year, and every check is in the hundreds of thousands,
• 21:11
  Speaker 9: and so that capital will be used to make those
• 21:13
  Speaker 9: investments that will be added to the.
• 21:14
  Speaker 5: Fund any investment minimums. What about fees for people who are.
• 21:18
  Speaker 9: Interested, Yes, for sure. So we decided to use a
• 21:24
  Speaker 9: tried and true model which is for fees, which is
• 21:27
  Speaker 9: the venture capital model. So two percent management fee, twenty
• 21:30
  Speaker 9: percent performance fee. To align incentives between the managers and
• 21:35
  Speaker 9: the investors, and it'll be the fund size will be
• 21:40
  Speaker 9: somewhere between two hundred and twenty and two hundred and
• 21:42
  Speaker 9: fifty million dollars depending on the green shoe exercise.
• 21:46
  Speaker 2: So, in the venture capital community today, Sarah, do you
• 21:51
  Speaker 2: have to have you have to be an AI play
• 21:55
  Speaker 2: to raise money today?
• 21:57
  Speaker 9: That is a very good question and the answer is
• 22:00
  Speaker 9: not necessarily. What you have to be is really an
• 22:05
  Speaker 9: innovator who has a compelling story. And so what we
• 22:08
  Speaker 9: look for is we look for these founders who are outliers,
• 22:11
  Speaker 9: who have an amazing vision and who will beat the odds,
• 22:15
  Speaker 9: because right the odds for these early stage companies is
• 22:18
  Speaker 9: probably that they won't be able to displace the incumbents.
• 22:21
  Speaker 9: But what's amazing with being a tech investor is time
• 22:26
  Speaker 9: and again you see companies that start out really small
• 22:29
  Speaker 9: and go on to become the next defining company of
• 22:32
  Speaker 9: their generation.
• 22:33
  Speaker 5: Well, I'm looking through your list here, and you have
• 22:35
  Speaker 5: some pretty well known yc alum. I'm looking at open
• 22:38
  Speaker 5: ai stripe like Airbnb, companies like this.
• 22:43
  Speaker 9: Yes, y Combinator is an extraordinary ecosystem. They've gone on
• 22:46
  Speaker 9: to create over a trillion dollars of value over one
• 22:50
  Speaker 9: hundred unicorns and decacorns to your points, Companies like DoorDash
• 22:55
  Speaker 9: and Airbnb and Stripe have come out of Y Combinator.
• 22:58
  Speaker 9: Sam Altman was deeply involved before and while he was
• 23:03
  Speaker 9: founding open Ai. Our first on Robinhood Ventures one has
• 23:07
  Speaker 9: invested in companies that came out of Y Combinator or
• 23:10
  Speaker 9: whose founders went through Y Combinator, like Boom, Supersonic and
• 23:15
  Speaker 9: Stripe and Ramp. So we're incredibly proud to be working
• 23:20
  Speaker 9: on a fund now that is focused on that ecosystem.
• 23:23
  Speaker 2: So your fund IPO price twenty five, it's training at
• 23:27
  Speaker 2: twenty three dollars six cents right now?
• 23:29
  Speaker 3: How do you investors?
• 23:30
  Speaker 2: How does the market typically value a structure like yours,
• 23:35
  Speaker 2: a fund like yours?
• 23:36
  Speaker 9: Yes, of course. So as a manager, we will publish
• 23:39
  Speaker 9: a NAV every single quarter and the share price will
• 23:44
  Speaker 9: will trade based on supply and demand, sometimes at a premium,
• 23:50
  Speaker 9: sometimes at a discount to NAV. But frankly, here at
• 23:54
  Speaker 9: Robinhood Ventures were focused on creating the best possible portfolio.
• 23:58
  Speaker 9: We control the inputs to make sure that people can
• 24:01
  Speaker 9: buy and sell every single day if they so desire. Obviously,
• 24:05
  Speaker 9: this is a portfolio that will generate its most appreciation
• 24:10
  Speaker 9: in my opinion, if you buy and hold it over time.
• 24:13
  Speaker 9: A lot of these companies will take years to become
• 24:16
  Speaker 9: worth a billion plus, but it is, in my opinion
• 24:20
  Speaker 9: again well worth the waits because some of them will
• 24:23
  Speaker 9: become again defining companies of the next generation.
• 24:27
  Speaker 5: So you're trying to bring private market access to retail investors.
• 24:31
  Speaker 5: So I'm just curious. Are companies staying private longer than
• 24:35
  Speaker 5: maybe they used to?
• 24:37
  Speaker 9: Absolutely, companies were definitely staying private longer than they used to.
• 24:40
  Speaker 9: When I started my career, if you were worth ten
• 24:43
  Speaker 9: billion dollar plus, it was standard to go public. And
• 24:45
  Speaker 9: now look at SpaceX and Anthropic and Open AI. We
• 24:49
  Speaker 9: have companies that are worth close to or north of
• 24:52
  Speaker 9: a trillion dollars and are still private, which is absolutely unprecedented.
• 24:58
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