Latest / The Learning Corner by Precursor / Episode #60: The 2025 Venture Review feat. Hunter Walk (Homebrew, Screendoor) and Peter Walker (Carta)

Transcript

Episode #60: The 2025 Venture Review feat. Hunter Walk (Homebrew, Screendoor) and Peter Walker (Carta) · The Learning Corner by Precursor

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Founders should have full toolboxes to pull tools from.
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Sometimes you need a pliers.
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Sometimes you need a wrench.
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Sometimes you need a level.
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I think the consensus is just meaning that you get a bunch of hammers with different colored
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handles.
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Those colors are the content marketing, all telling you why they're better than somebody
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else.
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The expression to belabor it, to a hammer, everything's a nail.
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And so I think you're getting very generic investing, generic servicing, generic
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standardized playbooks of what growing companies look like.
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And that's uninteresting, unappealing, and ultimately, I think, maybe even depress the
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range of companies and outcomes and ultimately drive venture returnees to a lower multiple
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risk adjusted set and forget type of strategy.
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And I think that's uninteresting when you wanna sort of think about where does real alpha come
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from.
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It's the week of December 15.
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Welcome to the Learning Corner, a Precursor Ventures podcast.
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Welcome to the Learning Corner by Precursor.
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I'm Mia Farnam, and I'm joined by, of course, our GP and managing partner Charles Hudson, but
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we also have the privilege of hosting our first guest on the podcast, and we really couldn't
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have lucked out with a better set of guinea pigs here.
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We've got Peter Walker, head of insights at Carta.
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So if you've ever seen a graphic across LinkedIn or swapped between your founder VC
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network with thousands of likes and comments, It's likely been created by Peter, so we've
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featured so much of the incredible work that your team has done on the podcast, so we are
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beyond excited to have you here.
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Welcome, welcome.
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And we also have another Learning Corner feature leaderboard member, Hunter Walk, with
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us as well.
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Hunter is a partner and cofounder of the early stage fund Homebrew based in San Francisco.
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He is also the cofounder of the Fund of Funds Screen Door focused on emerging managers, which
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we've spoken so highly of here.
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Glad to also have you here, Hunter.
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You know, as I always said, I'll promote any episode that you feature any of my writing.
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I have to think of a new level of promotion.
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I'm gonna actually have to, like, do some paid some paid work on this one.
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Oh, bad.
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Since this is the last episode of 2025, we couldn't think of a better way to wrap up the
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year than to change the format slightly and just dive into some of the largest themes from
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the past twelve months that everyone here has either felt, seen, or written about publicly,
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and doing this with friends just felt like the best way to close out the year.
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So without further ado, let's start it off with the number one, valuations in today's market.
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It's no secret that we've talked about valuations in nearly every single podcast
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episode this year between the rapid inflation of pricing and many AI deals and the open
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question of how anyone is underwriting risk right now.
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It almost feels like founders tell us they're aiming at an arbitrary number when raising
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their first institutional round.
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Peter, I'm gonna start with you.
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You've shared so many data insights this year breaking down early stage valuation trends.
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One graphic that really stood out recently was around the point that most funding rounds
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rarely make headlines.
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But the ones that do tend to sit at the very, very top of the valuation range, you included a
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graph showing post money valuation benchmarks for AIC startups by location in 2025,
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highlighting that the, quote, zone of attention on social and press is concentrated on roughly
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the top 25% of Bay Area valuations and the top 10% in other geos.
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So any additional thoughts, Peter, on this and how it's impacted the broader landscape?
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Yeah.
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Well, in this digital Friendsgiving that we're have I I I think that the valuation question,
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I've heard it on your pod.
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I've heard it on a lot of podcasts over the past year.
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And I think maybe this is a slightly controversial take.
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I think it's a sign of overdone.
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People get valuations that can.
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It it in some ways when I'm talking to founders and they're looking at these charts and they're
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feeling candidly sometimes really bad about their startup or their idea because they're
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looking at the media and going, my god.
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I didn't raise $2,000,000,000 at a $12,000,000,000 valuation.
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Woe is my seed round.
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It's a function of who you are and what you come into this with.
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So every single one of these it's not like the range is available to everyone and it's just
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how well did you negotiate.
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Many parts of this range are not available to most founders.
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And so in that sense, I think, you know, comparison is the thief of joy a lot of times
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here because it it's not as though these were possible and you just messed up.
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These were never possible for your startup in many ways.
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And maybe last note, and Hunter and Charles have been on this a lot, it's not as though the
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valuation that you get at your seed stage is an actual reflection of what's going on in the
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biz.
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That's not that's not how these things work.
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We always tell founders that in general, it's more important not to make stupid mistakes when
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you're fundraising than it is to worry about what an a minus averse an a looks like.
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And that so long as you're accomplishing the majority of your goals, which is to, as best
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you can, raise the amount of money that will get you from, you know, sort of hilltop to
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hilltop, way that sort of sets you up to if you do what you think you will be able to do, you
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will then be able to raise money at a two, three, four x step up the next point.
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And maybe most importantly, the people that you've brought onto your cap table are neutral
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to positive additions to your company that just get it done and then go back to work.
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And if you accomplish everything you hope to do, you will ultimately end up in a similar
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place over time.
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Some rounds will be burden of proof, and some rounds will be benefit of the doubt.
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Some rounds will be brothy, and some rounds will be during periods of momentary disbelief.
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But the greatest way to sort of impact the success of your outcome and ultimately the
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financial outcome is to sort of accomplish what you set out to accomplish.
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Yeah.
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Mean, Mia, you and I were talking about this on one on one this morning.
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I'd find it interesting trying to explain the founders the inputs to valuation.
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And sometimes I'll tell them, well, this person's in y c.
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And, like, why did they get a benefit for being in y c?
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Like, because they did.
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We could argue whether that's fair or appropriate, but, like, that's just the thing.
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Or why did that person get a bump?
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They're a repeat founder who knows a bunch of VCs.
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Well, why does that matter?
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Well, because that person's better at creating the FOMO dynamic that will get people excited.
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And so, Peter, I think what you said is really important for people to hear, which is
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sometimes what's available to you is a function of what you bring to the table.
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And I find oftentimes we have honest conversations with founders like, look, you're
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a first time founder who's been an individual contributor, never connected to the VC
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ecosystem.
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You're probably gonna start off with a smaller round at a lower valuation, and that's probably
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both okay and appropriate for you, why you find your ceilings.
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And the first round you raise is not the totality of the story of your company.
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And so I think it's funny.
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Many of our best performing portfolio companies actually started off with fairly modest initial
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fundraises relative to whatever the pricing environment was at that time.
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One thing that jumps out from the last, call it, three or four years on this is just how
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much more available all of this stuff is.
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And so, you know, when Brian Chesky and folks were raising seed rounds for Airbnb, it wasn't
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like every day they were waking up and reading exactly what the valuation ranges for seed
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stage rounds were.
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They just kinda raised the round.
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There's so much more information now that you can really get lost in some of the headlines
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and the data, and it kinda the feeling is so much stronger, especially in San Francisco.
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Whereas you hearken back eight, ten years ago, very few people were even talking about it.
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And and look also, I remember one of my first you know, so as probably the gray beard hints,
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like, I've been around for a while.
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And I remember while I was still at my Google YouTube days, I made my first two sort of LP
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investments as sort of an individual.
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I'd previously angel investment companies.
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And I had the great benefit both sort of economically, but even more so from an
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information perspective of investing in an early SV Angel fund, SV Angel two, and the
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first 500 startups fund, both of which have performed quite well.
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But almost more interestingly, it felt like for a period of time between those two funds, I
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probably had information on 50 plus percent of the startups that were in TechCrunch type of
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stuff.
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And you would see the headline on the round or the exit, and then you'd see actually the flow
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of funds.
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And you would realize that just like maybe the pictures you look at on Instagram look a little
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bit different when the filter is turned off, that there is a headline filter for what gets
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reported, these oversubscribed rounds of this and that.
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How did they raise $8,000,000?
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Well, they didn't.
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They raised four $2,000,000 rounds over some period of time.
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The first three had very low valuations and so on and so forth.
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The truth does not get reported.
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And you get enough of the data, and the averages are also uninteresting because nobody
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wants to be the average startup.
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In fact, the average startup is probably not anybody we're meeting with.
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And so it's kind of, I think, Peter and Charles were saying, sort of like explaining the
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contours of what occurs, but then disabusing people of the notion that the most important
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thing to do over the arc of the company is optimize the fundraisers.
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That being said, we all believe, or at least folks on the investing side here, believe that
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figuring out what a fair price to pay for a company is part of our job when we're
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investing, and then helping them have successful fundraisers, including not running
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out of capital, is our job at the other end.
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So we're certainly not, like, passive observers of the trends.
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We just have to understand, like anything, which games on the field you have to play
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versus you can sort of try to navigate through, steer around, or write your own playbook.
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I mean, Peter, was gonna bring up some data that you had.
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I think people would be surprised to know that you published a great graphic that had startups
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raising both money SACE before any priced round between, like, 2024 and August 2025, and it
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looked like almost half of these rounds had valuations lower than 10,000,000.
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I think that would be surprising for most founders to hear.
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One question to everyone in the room.
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If you told a founder that metric, do you think it would change their perspective?
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Or do you think they'd still believe I'm in that other cohort that deserves the hire?
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I think it was, what, point 8% of rounds get that $100,000,000 valuation.
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But I think everyone in Silicon Valley probably feels like I'm surrounded by the four that got
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them.
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I think that's sort of like saying point 8% of people who are actors become movie stars.
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It's like, I don't know about the other 99.2% because they're doing local theater in Peoria,
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you know?
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So They're waiters
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and waitresses at the diner that you're doing serve them,
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Yoria, man.
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Yeah.
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Not the same.
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I'm not an investor, but I think what most founders want at the end of the day, at least
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when they talk to me, is they want me to tell them, am I getting screwed?
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And as long as that's not the case, they are generally okay, but there's also a cohort that
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are like, if I'm not in the top 10%, then I'm doing something wrong.
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I think it's really hard when you're in San Francisco if you moved here and you're not part
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of the pipelines that get you to the front of the list on VC, whether it's working at the
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right companies or going to schools that people know or living in the neighborhood with a bunch
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of like, if you're not in those, I think it can be a very jarring experience because you're
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like, I had lunch with that guy, and that guy is just as smart as I am.
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I don't think he's or she is any better than I am.
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And they raised 10 on 40, and I raised two on eight.
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This doesn't make any sense.
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And I think it's sort of the opposite of the Peoria problem.
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You actually do know the person, and you're like, I don't think this person is that much
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more special than I am.
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Why are they having this radically different?
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And I think, you know, I think most founders I meet assume that people raise the most amount
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of money available to them at the highest price possible.
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And so if you raise a small round and we we didn't count this as a pre seed fund.
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People are like, is it gonna look bad if I raise one on seven?
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I'm like, no.
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Not if you turn that one on seven into something special, it's not gonna look bad.
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But you have to understand that, like, if you go to whatever this the sober curious version
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of a cocktail party is and tell your friends that, like, you raised the small rounds of
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evaluation, you're probably not gonna get the biggest high five.
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And I don't know.
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I, like, we at PrettySure tend to work with people who are, like, okay with that.
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And they're like, I'd rather get in the game.
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I'd rather, like, get the money I need to get started, and it's not necessarily, like, a seed
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round beauty contest.
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But if I lived in a house with four YC founders and I raised that round, I I might feel a
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different kind of way.
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Yeah.
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I do think there's to be fair, besides just sort of that comparative aspect, like, people
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do wanna have they wanna make it a a branding event.
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Right?
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And they wanna get their team members excited or the people they've been recruit well, the
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people they've been recruiting just missed on a step up evaluation regardless.
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But, you know, like, you wanna be able to say, this is another sign of other people believe in
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us, and and and I'm a good founder.
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I'm a good CEO.
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I ran a good process.
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What I kind of do, which no matter what the terms, I sort of have this thing.
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So I say, you know, there is 5,000,000 whatever.
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Post of whatever.
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Right?
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And I'm sort of you know what your company's actually worth today?
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$5,000,000.
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The cash you have in the bank.
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You know?
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Right?
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And then I'm like, actually, probably 4,999,950 because you're picking up the lunchtime.
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You know?
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Right?
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It's like, let's have the moment where we sort of think about how the fundraise went.
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What did we learn from that?
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How does that help us next time out?
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And now let's go start using those dollars to create a multiple of value for each dollar we
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spend because that's actually what's going to eventually put wealth in your pocket, your
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team's pocket, hopefully, my pocket as well.
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And, Hunter, before we move on to the next theme, I wanna touch on something that you
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wrote recently.
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You wrote a great piece on why you no longer focus on startup valuations when deciding
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whether to invest with the exception
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Yeah.
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So on the other hand, everything we just talked about, who cares?
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You take the fifth.
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Well, you had an exception for four specific reasons, and one of the reasons that you
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brought up was, will the next financing be made more difficult because of the pricing set now?
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I mean, how do you even think about that today where the market shifts every month and
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differentiation and mode are somewhat undetermined completely for companies closing
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funding rounds today?
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Yeah.
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So for quick context, we ran our fund the first decade as a traditional institutional seed
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fund.
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We raised three funds from outside investors.
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With BCO lead seed rounds, do 1 to 3,000,000 of your first zero to five, invest twenty, twenty
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five, thirty, thirty five companies over a period of years.
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In that model, my particular belief is that at a deal by deal level, actually, ownership
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matters, price doesn't.
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But at a portfolio level, price matters.
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Because I'm making decisions then on each investment of, do I own enough of this that if
13:39
it does well, it can perform the way I need it to in a power loss scenario to be impactful to
13:44
my fund?
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But if I end up spending twice as much as I had modeled to get that ownership, that means I'm
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essentially deciding that I'm going to invest in one fewer companies that fund in order to go
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into this one.
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And so, obviously, over the course, my average cost of entry for that ownership matters.
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In 2022, we switched to something we've been thinking about for a while, which was a little
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bit more of a personal capital evergreen structure.
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So we still want the same type of risk, the same type of outcomes.
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What we're essentially doing is using our own capital as opposed to outside capital, and we
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no longer have an ownership target because we're rarely leading go leading rounds.
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We're usually writing still precedency checks.
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And so my sort of cheeky kind of thing was, I don't care about this anymore except for a
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bunch of reasons.
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Meant that, like, what I'm no longer doing is thinking about it as, well, this is is this
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one, you know, sort of slug or two slugs of capital for a 30 company fund.
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And instead, I'm looking at it more as, what is this process telling me, and what is the impact
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of this process on my interest?
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And so I said, look, valuation, in some ways now, I don't care.
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If I have conviction, I wanna be in the investment.
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I'm gonna be in the investment.
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Except it does tell me a few things that do impact whether or not I wanna eventually
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commit.
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The first is sort of like, what are the founders optimizing for?
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How are they gonna run processes?
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How do they treat those people involved in the process?
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Did it feel good?
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Are these people that I'm gonna wanna be in business with?
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Second, like, did it produce the best possible cap table?
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Or just the best possible valuation or the shortest process, whatever?
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People optimize for all different things, especially being, let's say, lines two through
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10 on the seed cap table now instead of line one.
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I care a lot who else is around me and who that lead is because they're gonna have undue
15:15
influence on the structure of that company, the advice they give the founders, and so forth.
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And then the third thing is, I think, Mia, as you were pointing out, where does this leave
15:23
them in terms of where they need to get to for the next round?
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You might hear the term, like, priced to perfection.
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Okay.
15:28
Great.
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They got the high valuation.
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But in order to make the next round as clean as possible, where do they now have to get for
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that to be a multiple of two, three, or four on where they just were?
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And I think of that as a multiple because frankly, that's sort of like the step up that
15:42
you kind of want when you think about dilution, when you think about how much capital there
15:45
probably is for the next round.
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And so if it's an interesting company, but with investors that I'm not sure are the most help
15:51
and price for perfection, even though I hold sort of a small slug of preferred stock, I
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might as well be common stock.
15:56
Right?
15:56
I need a clean outcome.
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I sort of think that my reality is if the team isn't gonna make money, then I'm not gonna make
16:02
money.
16:02
Right?
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And so I do care about that question of, okay, what do they need to accomplish and how did the
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valuation they take make it harder, easier to get to the next set milestones?
16:11
To your point about moving goalposts, I think you could still sort of judge a little bit on
16:15
best case scenario if, like, somebody mentioned before, you know, the number of companies that
16:18
are at a 100,000,000 valuation for their seed rounds or something like that.
16:21
You sort of have to know, well, this was raised on potential and tech demo, is the next round
16:26
gonna be raised on tech scalability, or is it actually gonna be raised on first dollar
16:30
revenue?
16:31
Is it gonna be raised not on first dollar revenue, but revenue run rate?
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What what sort of things do they have to derisk and prove, and are they set up to accomplish
16:37
that?
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I think all these things are like products or systems that if you're not thinking through,
16:41
well, great.
16:42
I now just got a round that's gonna be on the, you know, tech meme, tech crunch, the envy of
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all my friends, but I have no idea how to use that money to get to my next round.
16:50
That potentially might not be a great investment, even if it was a great fundraise.
16:55
I would just add one thing.
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This is one of the things I've learned from working with Hunter on Screen Door.
17:00
Like, we are a very entry price focused fund, and I've had the chance to meet managers whose
17:05
strategies are very different, who are very much like, I wanna find the high momentum
17:09
round.
17:10
I wanna find the high signal people.
17:12
And I've learned that it's actually like a slightly different style of investing.
17:15
To Hunter's point, the inputs are weighted differently.
17:17
Some of it is reputation.
17:18
Some of it is momentum.
17:20
Some of it is perception.
17:21
And it's not all just ARR.
17:23
The traditional things around, like, did you hit these milestones aren't as important as
17:27
figuring out, do these people who've managed to create interest around their company to a
17:31
degree that's maybe impressive, do you think they can continue to keep people as interested
17:35
in that company long enough to actually build the thing that justifies the interest in the
17:39
first place?
17:40
And I feel like I've had to learn how to think that way, particularly in this environment,
17:44
because it really is a different you're asking yourself a really fundamentally different set
17:47
of questions about what's this company gonna do with this money.
17:49
I like the idea that there are two, maybe even more, probably quite a bit more strategies that
17:54
can work here.
17:55
Mhmm.
17:56
It seems as though in this world of, you know, attention seeking, like, you it's very easy to
18:01
say there is one right way to do this investing, and there's clearly not.
18:06
And so it gets back to the comparison point.
18:08
You just don't have the ability to compare across investing strategies or across portfolio
18:12
companies in the same way because they are trying to do different things.
18:15
The only way you get messed up is when you are thinking you're doing one strategy, but you're
18:18
acting as though you're doing another, and then you're you're kinda lost in in the middle.
18:22
I I think I think that's absolutely true.
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I tell everybody I'd rather have the best version of their own strategy than a bad carbon
18:29
copy of somebody else's.
18:30
That said, I think people, especially either folks who are maybe first time VCs and or
18:36
people who are at firms where they are sort of takers of that firm's strategy rather than
18:40
makers of it in the sense of they're not the managed partner, they're joining something in
18:43
motion.
18:43
I think you do sometimes have to look and say, is the playbook match skill set, match the fun
18:49
size, match the fun brand, so and so forth?
18:53
Because if those don't all match up at least somewhat synchronously, best case scenario is
18:58
you're sort of running a marathon Yeah.
19:00
With some ankle weights.
19:01
Worst case is you're running in the wrong direction.
19:03
You can't just decide and flip to be like, I'm a momentum investor.
19:06
Like, I'm never gonna be a pure momentum investor for all the reasons Charles said.
19:10
Like, I fall back to, well, what are we gonna actually accomplish?
19:12
Oh, that person's a great fundraiser for me is a sub bullet that gives them an outsized chance
19:16
try something that's really difficult rather than the reason to back them themselves.
19:20
And I'm not a believer of, oh, yeah.
19:22
Well, you know, if you get in this, you're signing up for three rounds of markups.
19:24
Who knows how it's gonna turn off?
19:25
But you'll get the markups, and that will help you raise your next fund.
19:28
I don't care about that.
19:29
Oh, you'll sell.
19:29
You'll you'll have a chance to get out in a secondary.
19:32
Well, maybe.
19:33
I don't invest because I'm hoping to trade out in eighteen months before the the greater fool
19:37
finds out type of stuff.
19:38
And so I'm the optimist, but I still fall back on, like, the yeah.
19:41
But what are you actually gonna build?
19:43
Not I'm so glad that somebody told you they already wanna preempt the next round.
19:46
How cynical of you, Hunter.
19:48
Yeah.
19:48
It's right.
19:48
Have you
19:48
had that good
19:49
shit on the other side?
19:50
How dare you That's
19:51
why I missed look, I missed I have, like, I have zero degen investments, like, personally
19:55
or professionally, because I I missed the whole, you know, YOLO, who cares, risk it all.
20:01
This is fun.
20:02
I thought that that was a momentary blip because of, like, COVID checks.
20:06
And it's amazing to me and scary to me on sort of everything from these prediction markets to
20:09
the tokenization of private stocks to legalized gambling, to leverage options trading.
20:15
I'm like, woah.
20:16
This is a different I mean, this is different than, you know, this is different than the
20:20
venture I grew up in.
20:21
There's a little get off my lawn sometimes.
20:24
Yeah.
20:24
When just a bunch of white guys and Indian guys could meet some people on Stanford's campus and
20:28
name their price.
20:29
Interesting.
20:29
We could keep on talking about that theme forever, it seems.
20:33
But I do wanna pivot the conversation because I do wanna talk about exits, which we talk about
20:37
in most podcast episodes from the Learning Corner.
20:39
You mean
20:40
GPs exiting their firms?
20:42
I see.
20:43
Lots of I know.
20:44
We can take
20:44
this in a whole different direction, Hunter.
20:46
I mean, this conversation has shaped the broader perspectives around venture as an
20:51
attractive asset class altogether, and it has created a lot of talk and chatter around what
20:57
truly is in control of the GP and fund manager.
21:00
So secondaries, Hunter, what you mentioned earlier, and what still remains to be a feature
21:04
venture altogether.
21:06
In almost like a bright spot, Peter, you shared a graph titled, quote, startup m and a is
21:10
really hot right now that showed around 3,200 startups acquired in The US from 2020 through
21:15
2025.
21:16
And about 50% of those deals, they happened in the pre seed or seed stage with about 25 to 30%
21:23
of those occurring at series a.
21:25
Obviously, not everyone who gets acquired are able to repay the folks on the cap table.
21:28
A lot of things you don't see in the media when these announcements come out.
21:31
But any other interesting data points about these exits that jumped out to you over the
21:35
last couple of years, Peter?
21:37
Then Andre and Charles, I have a series of questions for you also.
21:39
I think it's just it's sort of a picture of what always happens in startup exits, only more
21:43
so, which is most exits are not great exits.
21:47
Most exits are for companies that are tiny, and the team is getting purchased or maybe a
21:52
feature.
21:52
Like, it isn't as though a lot of the exits that we talk about are a whiz getting the
21:57
amazing exit that they had to Google.
21:58
The other thing to note though is, like, some of this is starting to get pretty real on the
22:02
AI side.
22:03
There were more series b exits this year than the last three or four.
22:08
So it's not like these things don't exist.
22:10
I think the m and a opportunity is quite real right now.
22:14
What is difficult to figure out, and these two would have better answers than me on this, is
22:18
like, how much of this is because they had to?
22:21
How much of this is because they were overwhelmed by a fantastic offer?
22:25
Then how much of this is actually FOMO from the buyer side saying, we are in an AI wave and we
22:31
don't know how to do it internally, so let's some let's bolt on some AI stuff from somebody
22:35
else.
22:36
And those those kind of there's buckets of all these kinds of acquisitions happening, and they
22:40
gotta get rolled up into one number.
22:41
One byproduct of this yawning disparity of, like, fundraising scenarios is I found more
22:47
founders kind of four years in.
22:49
They've got a seed round.
22:50
They're thinking about the a.
22:52
They're looking at Anthropic, OpenAI, Databricks.
22:55
They're like, we're not that.
22:56
And we're probably not on track to be that.
22:59
Should we try to get on that track?
23:01
Should we grind it out profitably, or should we explore m and a?
23:05
And the nice thing is usually these companies have preference stacks that are like in the 3
23:09
to $5,000,000 range.
23:10
So there is a universe in which the company could get acquired, investors could either get
23:15
back a good chunk of their invested capital or stock in an interesting company.
23:20
The founders will get jobs.
23:21
I put this in our actually, our ATM deck that I've been spending more time with companies in
23:26
our portfolio that are in the sort of twenty sixth to fiftieth percentile.
23:31
The the the ones in the very bottom, it's very hard to transact.
23:33
But these are companies that I'm like, look, if we were thoughtful about who we know well, who
23:37
might be interested in our technology and team, you can generally, if you give yourself enough
23:41
time, you can find an outcome of some sort.
23:44
And in some ways, this kind of reminds me of like, it's not quite as good as the Apple hire
23:48
days of mobile, where Yahoo bought everybody, it felt like.
23:51
But I think there's appetite on the side of medium to large size tech companies to acquire
23:56
teams and tech that they think can be more usefully deployed in their environment.
24:00
I think this sort of m and a environment, even for the big companies, feels a little bit more
24:05
accommodating for them.
24:06
Maybe not to do, like, mega deals, maybe not to do the Adobe Figma type stuff, but for smaller
24:10
deals.
24:10
But I think the hardest thing as an investor is convincing a founder that this is a path you
24:14
should go out, and I've concluded you can't actually convince them.
24:17
All you can do is create the conditions where the founder can choose to walk through that
24:20
door.
24:21
One of our LPs is like, well, why don't you sell more of these companies?
24:23
I'm like, well, they're not my companies.
24:24
I don't run them.
24:25
I'm a minority investor in these companies.
24:26
I'm not even on the board.
24:27
If the founders wanna have that conversation, my job is to, like, create the conditions where
24:31
it can happen without them feeling like they're somehow letting me down or throwing in the
24:35
towel.
24:36
I remind them all, it is much better to get ahead of this process and sell and try to find
24:40
an outcome than it is to wait till you have three months of cash and say, well, what do we
24:43
do now?
24:43
Charles just made me so nostalgic for the fifteen, twenty years ago norm where you got a
24:48
million dollars per engineer.
24:49
I know.
24:50
And it was both, like, just what you did, plus all these corp dev people at these companies
24:54
wanted to eventually be in venture, and so they knew they wanted to treat the sellers well.
24:59
And so it was like total, you know, incentive types of I think we're coming into a really
25:03
nice period for for NA.
25:05
And what I mean when I say, like, healthy MNA, I don't mean, oh, everybody's overpaying.
25:09
We're gonna be great for ventures and so forth.
25:10
I think, like, companies actually will slot into the right lane for potential discussions,
25:15
which are this is something very special, and there's aggressive bidders amongst multiple
25:19
parties.
25:20
This is something that could continue, has value, but may have value more as part of
25:24
somebody else.
25:25
And then things that are or are not working to certain degrees, but can find homes, and we're
25:28
coming out of a period that was terrible.
25:30
Anything of any consequence, people were somewhat frozen on a regulatory standpoint.
25:35
And then if you remember post '21 with all the the layoffs and freezes, like, folks didn't
25:39
wanna take on new head count.
25:40
And so if a company wasn't profitable, they didn't even wanna go through the notion of,
25:44
like, I don't have head count to buy people, you know, type of
25:47
And a lot
25:47
of that has changed now.
25:48
You know, I was an angel investor in BrowserCo, which, you know, Atlassian bought.
25:53
There's some other things underway that, you know, inside, outside the portfolio that I know
25:56
of that should hopefully close within coming quarters and stuff.
25:58
And just I think the conversations are happening again and people wanna be creative.
26:01
I'm hopeful that will return alongside IPOs, you know, as, you know, one of, if not the best
26:07
way for startups to realize their value.
26:09
Gotta wrap things up.
26:10
But since this is the final episode of the year and in spirit of reflection, I really would
26:14
love for us go around the horn and share a take on the past year in Venture and where we sit
26:19
today.
26:20
The question really is, what do you think the broader game is that's being played in Venture
26:25
right now with the players being investors, founders, LPs, etcetera?
26:30
And then what does that mean for your specific role and position in the ecosystem?
26:35
I'm gonna start with you, Peter, then Hunter, then Charles.
26:38
Well, my answer gets to be easy because all games are good games.
26:42
Right.
26:42
We
26:43
just want more people playing more games.
26:45
That's exciting.
26:46
I think that this has been beaten into the ground this year, this idea of there are two
26:49
games in Venture.
26:50
One is a capital game, and one is a nonconsensus game.
26:53
And you can define those in any way that you want, but those are the two games being played.
26:57
I think that in the next, call it, eighteen months, there's not going to be some sort of
27:02
tiredness or annoyance with the consensus capital game.
27:06
It's just it's not going to change, So we have to accept that.
27:09
What I do think is going to change, and this is a hope more than perhaps a data backed evidence
27:14
based take, is I hope that people in the non consensus area will start trying to do way
27:20
weirder things.
27:21
I would like to see weirder funds being raised and weirder founders being backed, and that
27:27
will, by definition, increase loss ratios.
27:30
So in some ways, sad thing to say, too many companies are sticking around for too long that
27:36
are just, like, being the fourth in a space or the eighth in a space or the tenth in a space
27:40
these days because so you just spin up AI stuff.
27:42
Or I wanna see companies that are one of one in their space, and that space might not be worth
27:46
investing into at all.
27:47
But they gotta shine.
27:48
So I'm hopeful for, like, weirder stuff in 2026, at least outside the mega fund world.
27:53
Great take.
27:54
Hunter?
27:55
I'll talk a little a little bit.
27:56
I I agree the sort of capital accumulation, of large existing consensus fund dynamic is not
28:02
going away.
28:02
But my hope for 2026 would be that we continue to speed the Darwinism of thinning that herd.
28:08
And I think Darwin moves at kind of, like, half speed in venture.
28:11
Too slowly, mediocrity persists because the timelines to actually figuring out whether
28:16
something is good or not take a long time.
28:18
The incentive model on the LP side, if you've been in business with somebody and those seats
28:22
keep changing, like, basically, you're always willing to give somebody who might have been
28:25
successful for you in the past, like, one more chance.
28:27
The time is long.
28:28
You have to replace that seat with somebody else if you're an underwriter.
28:31
So, like, who wants to do all that work type of thing?
28:32
So plug for Screendor, the fund of funds we run.
28:35
I mean, I think one of the reasons we believe emerging managers are gonna be the places where
28:38
you really get the five x, seven x, 10 x, and above funds is because you have folks who have
28:44
modern, new, compelling strategies where the practitioners are close to the strategies and
28:49
about the people who inherited it from a third generation firm just running some out of date
28:53
playbook, and their funds are right sized to the strategy.
28:56
You can be early, you can be nimble, you can be aggressive without having to worry about, can I
28:59
get $50,000,000 into that deal over time?
29:02
If not, it doesn't really matter to me.
29:03
And so that's kind of like my separation of '25 and '26.
29:07
Moving from the I wish consensus would disappear to saying consensus is here.
29:11
Let's pick off the the weakest what's what's the national geographic?
29:14
Pick off the weakest, you know, caribou.
29:16
And so I'm hoping to release more hungry emerging managers onto the Serengeti to cut
29:21
down the fat, lazy VCs that exist today.
29:24
Megafauna instead of megafund.
29:26
I believe
29:26
what you're looking for there.
29:28
I'll go a really different direction.
29:30
Towards the end of year, had a bunch of conversations with LPs that are significant
29:34
investors in the megafunds.
29:35
And for once, they didn't just give me the, like, we're gonna accept lower returns.
29:40
We know that.
29:41
Couple of them said, you know, if the last wave produced $100,000,000,000 companies like
29:47
Facebook, what if this wave produces $1,000,000,000,000 companies with a greater
29:51
frequency than we've seen in the past?
29:52
I was like, you know, if that's true, it works.
29:55
Honestly, it works.
29:55
Like, you can get 250 to $500,000,000 out of a $5,000,000,000 fund into some of these
30:02
companies, and if they turn out to be of that scale, not only does it work, it actually works
30:06
quite well.
30:07
Now, I can't envision a world in which there are enough of the I think we have, what, four
30:11
publicly traded trillion dollar companies depending on the day.
30:14
Four or five, three to five, I don't know.
30:15
We have a couple.
30:16
But I can envision a world where if that math is true, there's enough for several, but
30:21
probably not all, of the mega funds to not only succeed at this side, but to succeed at a side
30:25
that's even greater than today.
30:27
And that was something I really hadn't wrapped my head around.
30:30
But I keep looking at the candidates, and I'm like, I don't know where we find that many of
30:36
them.
30:36
But I'm very curious to see what that leaderboard of private company valuation looks
30:41
like at the end of the year.
30:43
The other correlated some of these people said as a pushback was, well, these are gonna be
30:46
trillion dollar companies, maybe I don't need to own them as privates because at least some
30:51
meaningful chunk of that compounding will likely happen in the public markets too.
30:55
And would I rather try to pick them out as privates?
30:58
And so the meta theme I I heard from a lot of LPs is I think a deep rethink of like, what
31:04
does my venture allocation look like at the portfolio level.
31:07
If it really is becoming mega fauna hunting again, I will be able to capture some
31:12
meaningful chunk of that mega fauna upside in the public markets.
31:15
And I just met a lot of LPs who I think are, the first time in a long time, rethinking how
31:20
much money do I want to venture and where in that venture stack do I want it to live?
31:24
And I'm very curious to see where that conversation is this time next year.
31:27
I think that's a great point.
31:29
As you believe that those companies become consensus multiple funds, it's like, you don't
31:33
need to be in every fund to get exposure to that company.
31:35
Fact, as opposed to being able to be in these many funds to get you exposure to the tech
31:40
ecosystem, if all those funds are coalescing around the same companies just entering at
31:44
different stages, I like stake.
31:45
I don't need stake eight ways.
31:46
But that fundamentally, there's an underlying assumption there, which is these companies will
31:50
go public.
31:50
Yeah.
31:51
Which is Or
31:52
or that they will
31:53
be over the last year
31:53
or so.
31:53
They will be public like companies that will be tradable in the same way that the Elon
31:57
companies are tradable today.
31:59
Public could be better, I think, for for the masses, but that's a good addition, Peter.
32:03
But I think there's some belief that, like, hey.
32:05
I can get into these companies later either as very late stage privates or as public companies
32:10
and still capture a meaningful chunk of alpha.
32:12
Love it.
32:12
Makes me excited for 2026.
32:14
We are, Sally, out of time today.
32:16
Thank you, Hunter and Peter, for taking time out of your day to record with us as our very
32:21
first guests, setting a high bar.
32:24
I'm sure it is not the last time you will come through the Learning Corner.
32:27
Thank you, Charles.
32:27
Thank you to our incredible listeners for being such supporters of the pod over the last twelve
32:31
months.
32:32
Happy holidays, and we will catch you all in 2026.
32:35
Thank you, guys.
32:36
Bye.
32:37
Thanks very much.