Earnest Sweat 00:03
Welcome to swimming with alligators. I’m Earnest Sweat and each episode of Alexa Benz and I give you a VC podcast from the LP perspective. You ready? Let’s dive in.

Alexa Binns 00:14
Welcome to a special episode of Swimming with Allocators. We call these our DDQ episodes a little play on the Due Diligence Questionnaire. But for Earnest and I we ended up discussing D debate and Q questioning answering some questions from the audience. So with that, we’d love to dive in. We’re doing these about every 10 episodes. And so first, we’re going to discuss some of the things that we are hearing from LPS that don’t make it into the final podcasts, either per their requests, or because they were offline. So here’s some of the things that we are hearing in more honest and frank, personal one on one conversations.

Earnest Sweat 00:59
So we’ll start off with discussing, you know, I wanted to start off first with an article from theory ventures that was written, talking about the series, a crunch has returned. Tomas speaks about how in 2012, there were a ton of seed companies, and then or series A companies. And then that caused the series B stage to be extremely hard. And so we’re seeing that again. And from our conversations with a lot of LPs, and other VCs around, you’re starting to notice in here, how the seed stage and precede stage, there’s so much capital there, and still so much variance in the pricing. That’s causing a lot of trouble in the next round of Series A and so a friend I just saw today, Robbie, an infrastructure, VC, and friend of the pod. She was posting that 1 million in AR is not a mark for Series A. Yeah, and I think that used to be the gold standard. But now I think the industry as a whole is so honest, in the fact that hey, a Series A to one person may not be a Series A to another person when it comes to metrics. And this is an elevated problem. Back to you everyone should check out the article the series a crunch by theory vinters. But right now I believe there’s like a crazy amount of seeds to series A’s, like 10 or so I believe 10 to one. So that’s the first thing I don’t know if you have any opinions on that, Alexa, but like that’s just that’s just a problem right now.

Alexa Binns 03:07
The the series B crunch, the joke used to be for, for gals who are founder hunters in San Francisco, go try to find somebody who’s just failed to raise because it’s an ambitious person who sadly like knees, got

03:24
them. And they’re gonna make a much better life partner than the person who didn’t survive the series B crunch.

Alexa Binns 03:30
I think the one thing I’ve also heard is that, you know, you expect to have like three seed rounds. And so partially this all just feels like bizarre semantics, where by the time you’re ready for Series A, you’ve had three official fundraisers. But, but I guess we’re all having to come to agreement that we call the hardest one

03:55
We call the hardest one everything. Yeah,

Earnest Sweat 03:57
I think everybody can agree today. It is the hardest one and Miss Scott is five to five seeds to every series A but still, that’s a ton. And so, yeah, I think that’s, we’ll talk about this in the next segment. But I think with that trouble, it’s also an opportunity in that stage as well. No,

Alexa Binns 04:22
I think one of the metrics everybody likes to track in VC is you know, are you what is your graduation rate if you’re a seed investor, how many of you are graduating Series A, and so that’s going to continue to be a super powerful stat to track for your own KPI. Another thing I would love to discuss is this crazy statistic, that general catalyst in Andreessen captured 44% of the US VC fundraising so far in 2024. That’s 44% of all LP capital so far that can be added in 2024. So, we are seeing megaphones researching. And I would love to discuss what that means for VCs and then maybe also what that means for LPS. Yeah,

Earnest Sweat 05:13
It means for VCs that, depending on if you’re an established manager, or Adam MegaFon, or an emerging manager, you’re gonna have different experiences, or different outcomes and might be, I think, overall just tougher for everyone. But you’re starting to see, it kind of goes back to that old adage in business, like, you can’t get fired for hiring IBM, I think blue chips and established fund managers. They just feel safer right now. And so we can debate and discuss if that is like the right approach for LPS. But clearly with this, that is showing that that is what happened. That’s what’s happening. Now, the other thing you can think about, though, is like it is kind of like a denominator and effect of and just numbers of kind of weighted averages. Right? If you’re raising more, you’re going to have more of it. It’s going to be more of your funds, but it will be I’ll be curious to understand like, were those their original targets or not? Yeah, was that number going to be bigger?

Alexa Binns 06:38
So yeah, for Andreessen, the number I think they published was about half.

06:44
So they actually raised double

Alexa Binns 06:47
that. Yeah, I think if you’re a presenter, seed investor, I’m like,

06:53
Corton, my buddy, is it those jobs, your friends, because they’re going to be making or breaking your outcomes. Like, if

Alexa Binns 07:01
you can get them following on, keep them close, those are your best brands. Because I don’t see founders turning down these brand names, I mean, there’s gonna be one one in a million that’s like, oh, I prefer this, this other series a lead. Because they’re willing to pay me less, but they have more relevant experience and they’ll give me more time. I think for the LPs, it’s fascinating, really, because the game has generally been like, stay out of VC unless you can participate in the Top funds, but they were so exclusive you couldn’t get in. So 2023 2024 is kind of a crazy time to be an LP, because, you know, anecdotally, I was chatting with a SoCal kind of Ra multifamily office. And they haven’t had a venture strategy in the past, but they were able to go get allocation and Andreessen among a few others. And they said, Okay, we’ll go ahead and sprinkle that into our strategy, because now we can get access. And, and similarly allocate. For those of you who don’t know, they’ve every platform, you can build a portfolio with pretty reasonable minimums. And, and I know Andreessen was one of the 20 some funds that you could get into. So it’s this, this whole universe of exclusivity is kind of like, seems like it’s kind of out the door. So on the one hand, it’s incredible that you’re able to get access. But I also wonder if it was your intention to get access to a megaphone? Because now you’re playing that kind of like back of the envelope math is really hard. So do you continue to believe the top tier firms are the only option? And that they’re going to be able to 3x $7 billion?

Earnest Sweat 08:56
Yeah. Yeah, I think that’s a tall task and a hard task. I think, some, a very small percentage may be able to. But I think the question is really asking LP LPs and, you know, new allocators, kind of what’s the purpose of, you know, what are you trying to get out of your venture portfolio? Is it really sizable returns just at some exposure? That’s, I think that’s the kind of question that they should be asking themselves, and then making the appropriate decision based on that.

Alexa Binns 09:41
One, one last super interesting thing from his book that I think would be, I don’t quite understand it. So I think it’d be cool to get through it. It seems different this time, the concentration in megaphones. They have this graph that shows the share of LP capital that’s concentrated in the five largest US VC funds from like 2020 to today. And every other year, it never went above 20%. But we seem to be on track to have the top five being far more than that. I mean, we already have, we’re halfway through 2024 and 44% is between two funds. So in that initial era of things like the Coteaux, kowtows and soft banks, things were less concentrated than they look like they’re on track to be for 2024.

Earnest Sweat 10:41
Yeah, that’s fascinating. I think we’re taking the power law to new heights and new areas when it comes to concentration of allocation. But it’s something that we definitely should keep our eyes out on. And despite, you know, numbers like that, every day, I’m hearing about new spin outs of friends doing teaming up with people, or being a solo capitalist as a solo GP themselves. And so a lot of things are going to stay the same yet change at the same time. Yeah,

Alexa Binns 11:22
the resurgence of the megaphones. They’re back people.

Earnest Sweat 11:27
They are. But I think that doesn’t mean there won’t be more cottage industry funds. And that brings me onto the next thing I wanted to discuss. I saw an interesting post on AIX the other week. And it was the 33 questions that led to partnership. And it was this expansive number of questions 33 from Pace capital. And what those two gentlemen asked each other, you know, before starting the partnership, and so from stuff like workstyle to, you know, what do you think the team should look like economics? What should time be, you know, time priorities on different activities. What are your weaknesses, strengths? motivations, and I thought it was so intentional. And I think it’s the intentionality that’s really demanded from this job. If you were going to be a successful fund manager. Yeah. And so I was curious what questions you know, what, what kind of caught your eye Alexa but or what questions would you want to ask? Someone I feel like people should ask their potential partners. Yeah,

Alexa Binns 12:52
no, this, this kind of reminds me of like, if you are interested in working in tech, consider your job selecting where you go to work like a venture capitalist. And similarly, it’s like, okay, if you’re sitting down, interviewing your potential partner, you should be thinking about it, like an LP, like, what am I going to see when I see you too? And, and I think 100% It’s gotta be, it’s gotta be, are we capable of top decile returns? What is it about us? Because I think it’s a job that a lot of people want to do. It’s like getting to work in Hollywood, like, you’re willing to start at the bottom in the mailroom, because it’s an exciting, cool gig. But do you actually think you’re going to be one of the exceptional ones and why? And I think that what you should be looking for in your partner is something where you’re like that mother who is the smartest freakin person or has access to something nobody else in this world has. That’s what I would be looking for in a GP partner. Yeah.

Earnest Sweat 14:11
Yeah, it reminds me of you know, one of my first Kaufmann sessions, and not sure I can share this but like, one of my what the speaker who won’t be named, but she said when she was asked what was the best investment she ever made, it was like she said in deciding to work with who she ended up partnering with, as far as she was, like, his best investment I’ve ever made. And I think that has to be the case. For things that are partnerships are special, because every LP we talk about is like when you have a partnership. They’re looking at each of your individual track records and then and diligence in each of you but then they’re also Dwolla just seen your partnership. And that’s going to be the most fragile thing. And so just like when we talked to founders, and you can tell people kind of like founders dated, but never went through kind of like the counseling needed before they got married. And so yeah, I would, I would push everybody to look at these as some great questions here. In thinking about how you all work together, it has really challenged me to think about, you know, what are those motivations for me? What are my superpowers? How important is brand? What are the key values that I want to have in any firm and want to be able to resist? day one, day 365, day 10,000. So everybody should read this. Next D is debate. And so this is where we don’t provide any real kind of prep for the other co-hosts, and bring up a subject and have a lively debate on it. So I kind of hinted at, I’ll start, I kind of hinted at this with the kind of series a crunch and all the doom and gloom of 1 million AR isn’t enough, what is a Series A and all the bad things associated with that. But I believe that the biggest opportunity right now, in the entire EAC ecosystem is a new series, a five or a new series A funds

Alexa Binns 16:43
go with a cruncher. I

Earnest Sweet 16:45
said, yeah, go where the conscious. And I say that because if you look at the entire industry, we have a ton of great pre-seed and seed investors, solo capitalists, and individuals who are really kind of driving the cottage industry at the early, early, earliest stages. And then we have multistage funds that can do cradle to grave for you. But when kind of the rubber meets the road, and you’re trying to get that graduation, from seed to series A, there aren’t that many funds, or I shouldn’t say there needs to be more funds that are focused just on a prime. Yeah, because it’s such a critical stage. And so I believe there’s a lot of opportunity there having

Alexa Binns 17:39
a fund that needs to be in order to have lead checks? And? And

Earnest Sweat 17:46
yeah, I think so company, I would say maybe, minimum one did Yeah, so I would say more than that, I would say probably 175, minimum 200 to under a million. Just given that there’s a fluctuation. And when a Series A can be made because we add at the height of 21, they were getting to 25-30 million kinds of rounds that we saw in series B historically. And so depending on what you’re investing in, whether it’s an AI company, Gen AI company, or something around enterprise, artificial intelligence, that’s going to be that high end. And then everything else with growth, you can see rounds of 8 million, 9 million 10 million again. And so I think being around somewhere between that 200 to $300 million. fund size would be ideal. It’s,

Alexa Binns 18:54
It’s hard for me to debate this without kind of tapping a little bit into what I wanted to bring up next. Okay, but I think they all play into each other. Because one thing I would say is maybe you want to be looking at some companies where the fair market value has been reset. And you’re not coming off of these blown up sea valuations. Yeah. Yeah, like if you’re just picking where in the, in the life cycle, you’re investing the crunch sounds good. Crunch sounds like it needs the money. You’re gonna have some options. But those founders are all I don’t know, have they been as they’ve been like?

19:43
They’ve been knocked down in the way that you might be hoping if founders date back in the day. You want the people who really just lost their unicorn status, like maybe there was, maybe that’s the portfolio I want right now.

Earnest Sweat 19:59
Maybe yeah, that feels like more of a crunch is that series B Series C and other growth. Yeah, you

Alexa Binns 20:06
call that like an IPO crunch?

Earnest Sweat 20:07
Yeah, IPO crunch. But I don’t know about this early stage, people feel like already having a unicorn status and being cut down. That’s a hell of a turnaround story. I was talking to somebody about this. I don’t know if you’ve ever had this. I don’t think I’ve had one company where I’ve invested in my 10 years in a down round, where that actually turned around

Alexa Binns 20:38
food is this tough reality? Right? Yeah. Once the growth slows? I mean, that’s I think that’s why everybody’s struggling right now with like, do we just need to land the plane? Or is there still a chance that this thing has escape velocity? Because everybody’s turned off growth? Yeah, like, you just aren’t used to seeing anybody recover from that? Yeah, I guess we’re gonna have to have a few. There’ll be a few survivors. Yeah,

Earnest Sweat 21:06
I think there’ll be survivors. But I think they’ve always had companies that have kind of teeter teeter Teeter, slow growth, slow growth, then kind of like, taken off, but to just like, do a 180. And then back. I don’t know, it’s just such a hard thing to do. But anyway, I think I want to, I think I won that. That first one.

Alexa Binns 21:34
All right, next question after debate, I want to play a new updated version of start bench cut. If you heard our last DBQ we pitted some sort of stereotypical theoretical emerging managers against each other in the game of who would you start? Who would you mention what you cut? But I don’t think this gives the full picture of what is available to the family office high net worth individual LP set these days. If you’re a little myopic, if you’re thinking of your competition is just other managers who are fundraising right now. Because there’s so many cool new products out there, where we can get access to venture as an asset class and not alone. things other than venture, there’s plenty of investment. So I want to do a start bench cut of three kinds of products that would be considered a competitor to putting together your own suite of managers.

Earnest Sweat 22:28
You say if you say private credit, I’m cutting this shit. No, it’s all venture all venture. Okay, cool. All right.

Alexa Binns 22:35
Okay, my first my first athlete is, let’s call it like a secondary fund, some kind of index like solution similar to what are your sponsor and friend, Dave Thornton at vested offers, where you’ve got a basket of all late stage mature companies, their pre IPO, they’re venture backed, and they’ve been repriced. So it’s all 2024, fair market value, low fees, and you don’t have to be so patient. So like, what, five years. So that’s player number one second. Player number two, would be like the portfolio blue chip, brand name, venture, but this like, say your RIA can now put together for you or you can get through allocate, where you get access to the lightspeed and Nicole says all with reasonable minimums, so it’s all top tier franchise funds. And then player number three, plenty of people are saying, let’s just be direct, we’ll go direct ourselves. You talk to these family offices who they can find an ex associate or analyst from one of these top tier funds, they bring them in house, and they get people they’ve got time, they’re gonna make some concentrated bets. Just stick to the industries they know. And you pick your own startups. You don’t need GPS.

Earnest Sweat 23:48
Hmm. I love how you asked me to do this. Because if Hey, you next time, I’m coming up with the start itching cut. So I can put you be like, hey, which of our sponsors do you think will work? Like? I was like, Alexa is because next season is going to be Alexa and somebody else. All right. So we have the secondaries. We have new creative ways to get access to blue chips. Yeah. And then we have directed through family offices. So I would say I would probably start secondaries. Because if I’m a family office, I’m thinking about, like, when am I actually going to get some DPI and maybe in this fake scenario, 2020 and 2021. I put a lot of money in different funds and I just have and have seen nothing yet? Yeah. too. So binge, I would do something like allocate, where I get access and kind of index, create my own little index fund of tier one funds and multistage funds. And then I would cut direct investing, and I’m making an assumption that they are new to investing in, in, at an early stage. And kind of in the scenario you mentioned is like somebody more junior, who might have some access, but like, that’s a really, really, really big bet. Yeah. And they might not have that much access to put in legitimate check sizes. So hopefully, that’s what I would do.

Alexa Binns 25:56
I think it’s an interesting pattern, we’re seeing that some people are saying we’d rather not have managers, we’re going to try to do this ourselves. And, and for sure, a big pitch, I think for our early GPS is, you know, we’re gonna give you co investment opportunities. So the number of LPs who think that that is the start? You know, it’s, it’s an interesting challenge for anybody who’s fundraising to say to you, you do need my help, you do need my access? Yeah, I think that what we hear often is everybody asks for CO investments, and then when it comes around, you know, they don’t have time to move quick, quick, quick enough to do it, or what have you. Well, interesting as they are, I think it’s just helpful to sort of like, zoom out a little bit and be like, Okay, your only option is not right now to just pick which manager that we’re, there’s a lot of new products coming out. It’s

Earnest Sweat 26:56
great time to have a podcast for allocators to think about all the options too. So for debate, number three, something that’s been coming up a lot with all of our conversations, recent interviews that we’ve released, in some we haven’t released yet, has been the emergence of the solo GP. And I’ve actually been very surprised, despite the numbers that we’ve heard from, like fundraising, and capital going to a lot more of established brands, more and more, very talented, millennial investors are spinning out and creating their own funds. And a lot of them as a solo GP. And many of them don’t want to be solo GP forever, but didn’t want to rush, their rush, any type of partnerships. And so, I’m really intrigued with like, what’s going to happen to them? So my I guess stance is I think we’re gonna see a lot of mergers. Yeah. Over the next five years of these people building out their brands, their brands continue their track records, and merging and finding those different partners in either kind of keeping one of the names or starting a new one with some fun ones. I

Alexa Binns 28:33
do think there, there’s at least one pretty good example, I started out my VC career at Maven ventures, where the solo GP Jim, over time, gave more and more responsibility to his first Junior hire Sarah, who’s now taken over as the mean GP on this latest fund. you know, kudos to Jim that he liked figured out what that looks like. And now Sarah isn’t in the leader means a thought. Yeah, yeah.

Earnest Sweat 30:10
So the way I see it is that because there’s going to be more of these solo GPS, some of them might raise enough funds to lead some seed and, and maybe even some series A rounds. But as they get to more of that series A and mango seed, they’re going to have to have more party rounds. Yeah. So I think it’ll give people exposure to working with others and being on the board with others. And so something might flourish through those experiences.

Alexa Binns 30:43
Well, okay, the last topic to debate is 2024 going to be a breakout and ditch. So we’ve got some helpful stats on how important the vintage year turns out to be. In this game we’re playing called Venture. Okay, step zone published some numbers. Over the course of 23 vintage years, 80% of the returns came from five, six separate vintage years. So hitting the vintage year, right is not a record, we wouldn’t recommend trying to time the market. But it turns out to matter, you do happen to hit the right years. So what’s your take on 2024? Is this going to be one of the stars?

Earnest Sweat 31:29
I think it’s definitely going to be better than 2020 and 2021. But I think some time will tell. I think you still need to be disciplined. Obviously, if you’re going to be investing in some hype industries, you need to pick the right winners in those industries. And ownership always comes down to ownership as well, right? You can pick the right winners and logo shop, but you won’t really end up with any kind of strong returns. So I think 2024 is going to be there. But I think it actually makes me want to think like, so when did you start? I started my current venture career in 2016. So yeah, which of those years 82 2016 to now? Which, which, which is how would you rate the years? I think that that kind of is like, okay, of the years I’ve been in now? What I ranked 2024 Oh, yeah.

Alexa Binns 32:40
Well, if, if so little capital continues to be committed in 2024. It’s going to mean, anybody who does raise is going to have a lot of opportunity and choice. I think that drives down valuations. So I think that helps out ownership. Just give everybody loves everybody we pick here should you be raising in 2024. I think this should give you a little beat to a drum to beat this. This is worth doing right now. And if you’re an LP, who’s investing right now, I think things are gonna look pretty good. In retrospect, looking back at 2024: Should you want to rep the 2024 Vintage? Do we now offer a teaser, limited edition that says In fact 2024 Vintage on swimming with alligators.com backslash shop. And I am gonna go ahead and say this is going to be a breakout year. This is worth doing.

Earnest Sweat 33:47
Yeah, I should have. I didn’t see where you were going until it was too late. Yeah, 2024 is going to be the best vintage. And you should buy a shirt.

Alexa Binns 34:00
Our final segment questions. We have a few questions that we’ve received from our audience. Thank you so much. If you have any more questions, just send them over. And we’ll run down these quickly. One first time fund manager said, What can I possibly include in an LP update that actually gets them over the line? Like we all have these drip campaigns? What should they say?

Earnest Sweat 34:23
Well, I think from hearing it from a lot of LPs, they want to hear consistency. They want to hear that there’s a conviction in your strategy and you’re executing on it. I was talking to emerging managers today. And he was telling me about his, you know, pipeline and, and kind of CO collaborating over a year with LPs and keeping in touch with them. And a number of them. You know, initial feedback was you were too broad and you were trying to be All Things to everybody. And they didn’t know where to put you and how you fit in. So that makes them want to know if you get that initial not now, but maybe later, they want to see what you put pen to paper is actually what you end up doing. So I think being able to clearly say that and clearly execute on what you said you were going to do, is really important. And then a second piece, I would say is, when I think about some of the best LP updates, they’re genuinely that person. So I’m thinking of one emerging manager, and he’s just a great writer, you can tell that like, it’s not trying to be too formal, or too casual, but he’s just himself. And you can feel that he put time into it. And so be you know, really kind of drafting something that’s truly you is important to

Alexa Binns 35:58
Yeah, though, that’s a great point, like, is the point when you’re messaging them really expecting that they are going to come in on this final close? Or is this a longer sale, in which you expect to maybe work together in 234 years? Yeah, I really liked that point that you just like, it doesn’t have to be like, everything is news. Everything’s breaking news. It’s much more just like consistently executing on your strategy. I do think the one thing that actually gets people to make a decision if they are still considering coming in is a deadline to meet with any other emerging manager and still sit on my decision about you.

Earnest Sweat 36:43
Oh, I thought you I thought you’re gonna say it’s we’re oversubscribed. You have to wait to do

Alexa Binns 36:51
there. You got two, what are two things you can create in your LLC? Update? I’m oversubscribed. Alright, yeah. Okay, second question from the audience. This is an aspiring ally, what is something I can do to be a better ally, and he’s speaking specifically about minorities and women in finance? Well,

Earnest Sweat 37:13
I think this is going to happen a lot in 2020, and 2021. But instead of more mentorship, writing a check. And so I know a number of executive coaches, former GPS of other firms, just started in a small LP book. And so they were writing small checks within emerging managers that were from underrepresented backgrounds, just to throw that support. So yes, it’s great to kind of the old adage When you ask for advice, you get money. And when you ask for money, you get advice.

Alexa Binns 38:04
Black or female, you just always just get advice that

38:08
doesn’t matter where you ask for it. You just get advice.

Earnest Sweat 38:13
Whether you’re black or a woman, you just get advice. Yeah. That is our next and we have a T-shirt for that now.

Alexa Binns 38:27
I’m here asking. I’m here for advice. Um, I, I also feel like another one for me is, the next time you have a freakin rad opportunity. Make the first person you send it to somebody from one of these less included groups. So it’s like you have four partners, and a series of funds, send it to the black partner, send it to the female partner. Yeah. If you are day trading, and you have a hot stock tip, send it to your niece, send it to your sister. Because I think there’s these communities where people just share the best stuff. And the way for us to be top decile investors is to be included in these share circles. So that’s what I would suggest is like next time you have something rad to share, share it first with somebody you wouldn’t necessarily have thought of.

Earnest Sweat 39:34
Another point of advice I just heard today, from an emerging manager, that allies can participate in is if you’re not able to write a check is Be an advocate and then essentially a disciple on behalf of that emerging manager. And the idea that this person shared with me is that they had kind of this advisory council, where they had friends who are other emerging managers, executives, founders, review their decK not just to review and give feedback, but he wanted them to know his story as good and narrative as good as him. So then they could spread the gospel because that then helps you know, LPs or our like venture venture capitalists who you get a lead from and who validates kind of like your thinking you know, and if someone’s good or not really impacts your decision if it’s a go or no go and so that’s another thing be a Paul Revere for one of these people you want to be an ally for

Alexa Binns 40:37
and last question, someone considering raising their own fund what swimming with alligators episode, would you recommend? That’s

Earnest Sweat 40:44
really hard, what I’ve learned from the audience is they’re vastly different opinions on what is the perfect episode for what manager? And so I think if obviously, if, if you’re running kind of like an incubation group or something like that, you’re going to listen to Sarah’s episode from vault right. If you’re looking for GPS or individuals, you’re going to listen to the Boris episode, right? So or, or J cows episode. So like, there are different flavors for everybody. I think this is really putting the work on you. Like who do you think you are as much as we push our founders to understand who their ideal customer profile is? Who’s your ideal LP profile? Like that’s what you should be thinking about and testing. Alright. Yeah, one final segment. So we did this last time, and I didn’t hear anybody say absolutely no, again, so we’re going to continue to do it. And next time, Alexa has to do one. But it’s additional information. So we know DD cues are the diligence questions or questionnaires are really long. And then they ask at the end, do you have anything additional? It’s like, No, I’ve signed off my child. And you know, everything from social security to who my kindergarten teacher was. But we wanted to do some additional information where it’s just a parting thought, for you all. So we’ll take suggestions and feedback, and we’ll make sure Alexa does it next time.

So I finished listening to power law about two weeks ago. And I was enthralled and hooked. as I got a glimpse of the history of venture capital in the United States and globally, I noticed a few things. Venture capital is a young person’s game, unless you can stay hungry and nimble. Like some type of VC LeBron, which it felt like in the book was Mike and Doug and Sequoia. I also noticed that the industry is constantly evolving. The author pointed out every new successful fund from the 70s on had two things in common. One, they had a recognizable investor, or a group of investors that had some type of cloud or community that saw value in their previous experience. And every new firm that entered the market had a truly novel approach to the venture capital model. This book left me with a lingering thought I couldn’t shake the lingering thought was what is going to be that next novel approach that provides a new firm with a lead, which then causes the entire market or a good portion of it to join in. and becomes table stakes. It happened with a generalist approach and the 70s. Then it went on to prepare for Excel being a telecom fund. And that’s kind of led to the whole wave of verticalized firms. Then there were services and platforms, as you know, Andreessen and other large firms brought into the market. And then we had early data firms, right, and now it’s growing into the next thing will be these truly AI automated firms. But what will be next? I’m seriously thinking about what will be next. So I’ll take a wild guess right now. Maybe it’s not just about AI platforms, but how we use them. Imagine a venture firm that leverages AI, not just for the analytics and automation, but for fostering, deeper human connection between investor and founder and founder and customer. A platform where AI curates personalized experiences for the founders and investors making the network feel like serendipity. Or what if the next big thing is the democratization of venture capital, where blockchain that you didn’t think you’re going to hear that word today creates a more transparent and decentralized fund that allows anyone to invest small amounts and startups disrupting the traditional LP GP model and ending our podcast? Or is it something even crazier, like venture firms becoming many nations and with their own digital currencies, governance models, social contracts with their portfolio companies? Who the heck knows? The point is, the next big thing is probably something we can’t even fully imagine yet. And what makes this industry so damn exciting is that fact. So what’s next and venture capital? Your guess is as good as my or maybe it’s not because I have a really weird guess that I think someone should build. But whatever it is, it has to be bold, to actually shape the future of this critical industry.

Alexa Binns 47:23
See you later, Allocator!