# LP Roundtable 2025/26 with Matt Curtolo & Anurag Chandra

An episode of [VC10X - Investing, Venture Capital, Asset Management, Family Office, Wealth Management](https://invisiblenetwork.ai/podcast/1632806986), 23 Dec 2025, 58 min.

Audio: https://anchor.fm/s/a453ddd4/podcast/play/113025128/https%3A%2F%2Fd3ctxlq1ktw2nl.cloudfront.net%2Fstaging%2F2025-11-23%2F414885998-44100-2-99a889426b0c9.mp3

In the inaugural VC10X LP Roundtable, we bring together experienced allocators Matt Curtolo & Anurag Chandra to unpack the state of venture capital as we close out 2025 and look ahead to 2026. ⭐ Sponsored by Podcast10x - Podcasting agency for VCs - https://podcast10x.com Topics covered: - How the recent Fed rate cut does and does not change venture capital - Why DPI pressure has become the dominant LP concern - Venture vs private credit and when the comparison actually matters - Fundraising realities and why it now takes 18 to 30 months to raise a fund - The changing role of secondaries, continuation funds, and engineered liquidity - Why M&A, not IPOs, has historically driven most venture exits - AI as a structural opportunity or capital concentration risk - Generalist vs specialist funds and what real differentiation actually looks like - Why some LPs are staying committed to venture despite short term underperformance - The biggest mistakes allocators made in past cycles and what they won’t repeat Timestamps: (00:00) - Preview (01:08) - Introduction to the LP Roundtable (03:15) - The impact of the macro interest rate environment on venture capital. (03:55) - The limited direct effect of interest rates on early-stage innovation. (06:00) - How interest rates negatively impact SaaS company valuations and exits. (09:35) - How "higher for longer" interest rates are changing LP expectations for returns. (11:13) - The LP perspective: Balancing DPI, MOIC, and IRR in venture investing. (14:09) - The role of the exit environment and secondaries in meeting DPI pressure. (16:38) - The risks of LPs over-focusing on short-term DPI. (18:44) - The emergence of the secondary market for later-stage companies. (20:30) - Future outlook for the M&A and IPO markets as exit paths. (21:02) - Why M&A is the historical bread and butter of venture exits, not IPOs. (23:37) - Underestimating the potential scale of venture-backed exits in the new tech era. (27:35) - How early-stage funds can engineer liquidity through secondary sales. (29:24) - Gross vs. Net Returns: The difference between a good investor and a good fund manager. (30:50) - Why is it so difficult to raise a VC fund today? (31:45) - The fundraising bifurcation: Brand names vs. emerging managers. (35:10) - Career risk and structural barriers for LPs investing in smaller funds. (38:01) - Why institutions often prefer to invest in Fund III and beyond. (40:38) - How can fund managers differentiate themselves? Generalist vs. specialist. (41:46) - Differentiating as a "hustle fund" with a functional specialty (e.g., go-to-market). (45:25) - It's not about being different, it's about being better: The importance of GP-thesis fit. (48:08) - VCs should "take their own medicine" when pitching to LPs. (49:17) - Outlook for 2026: Will the venture market get easier for funds and startups? (50:05) - An optimistic outlook for 2026 driven by technological acceleration. (55:18) - The growing importance of global and emerging markets in venture capital. (55:45) - A closer look at India's booming IPO market and its contrast with the US. (57:15) - Conclusion and final thoughts. --- Links to connect: Matt Curtolo - https://www.linkedin.com/in/matt-curtolo-caia Anurag Chandra - https://www.linkedin.com/in/anchandra Prashant Choubey - https://www.linkedin.com/in/choubeysahab Subscribe to VC10X newsletter - https://vc10x.beehiiv.com Subscribe on YouTube - https://youtube.com/@vc10x Subscribe on Apple Podcasts - https://podcasts.apple.com/us/podcast/vc10x-investing-venture-capital-asset-management-private/id1632806986 Subscribe on Spotify - https://open.spotify.com/show/7F7KEhXNhTx1bKTBFgzv3k?si=WgQ4ozMiQJ-6nowj6wBgqQ VC10X website - https://vc10x.com For sponsorship queries, reach out to prashantchoubey3@gmail.com Subscribe for weekly conversations on venture, private markets, and investing.

## Transcript

[0:00] And when you start to see 10 or 11% you know yields, you wonder
[0:03] why are you in venture which you know has not really performed
[0:06] that great and certainly on a DPI basis over the past 10
[0:09] years. If you're investing in venture
[0:10] for for short term liquidity, you're never going to be
[0:14] satisfied. What I'm hearing from GPS a lot
[0:18] is that it's harder and it takes a lot more effort and it takes
[0:22] much longer to raise a VC fund today.
[0:25] You know, some are saying it takes 18 to even up to three
[0:29] years of fundraising to set up a fund.
[0:32] What has made it so difficult and so tiring?
[0:35] There's also 1000 small managers out there who look and talk the
[0:39] same. They don't do a good job of
[0:41] differentiating themselves. Some of the coaching that you
[0:43] give to entrepreneurs on how to pitch to VCs.
[0:46] Take your own medicine. You never get fired for buying
[0:49] IBM kind of situation. Allocating to safe or perceived
[0:54] safety with larger, more established brands is probably
[0:58] the track that a lot of those groups go down.
[1:00] Doctors have to go to medical school to become doctors.
[1:02] Anyone can call themselves a venture capitalist, and it seems
[1:05] like that's what's happening, at least out here in Silicon
[1:07] Valley. Everyone, this is Prashant and
[1:10] I'll be host of the VC10X podcast.
[1:12] And today is a very special episode.
[1:15] For the first time, we are hosting an LP roundtable to take
[1:18] a hard look and the state of venture capital as we close our
[1:21] 2025. We all know the headlines.
[1:24] Interest rates are shifting, the fundraising environment is
[1:26] brutal, and the pressure for DPI, actual cash on cash returns
[1:31] has never been higher. But what does that actually mean
[1:34] for the future of our industry? Are we looking at a recovery in
[1:37] 2026 or is it just a new normal? To answer these questions, I
[1:42] brought back two of our sharpest allocators that have been on
[1:46] VC10X, Matt Kotolo and Anurag Chandra.
[1:50] They managed significant capital running into billions of
[1:52] dollars. They have seen multiple market
[1:54] cycles and they aren't afraid to speak the hard truths about
[1:57] what's working and what's broken in this asset class today.
[2:01] So without wasting any time, let's dive straight in.
[2:04] This episode is brought to you by Podcast 10X, my podcasting
[2:08] agency for VCs. We help VCs launch a branded
[2:12] podcast that serve as their entire content engine.
[2:15] Turn the conversations you're already having into a Machine 1
[2:19] Recording becomes your presence on Spotify, YouTube, LinkedIn
[2:23] and e-mail. Don't just build another VC
[2:26] form, build a brand that LP's want to bag and founders feel
[2:30] excited about having you on the cap table.
[2:32] Check out our services at Podcast ten-x.com.
[2:35] You'll find the link in the description below.
[2:38] Now on to the episode. Hey, Matt and Narag, so good to
[2:41] have you again on the VC10X podcast and this time for the
[2:45] inaugural LP Roundtable that we are hosting at PC10X.
[2:49] Our goal today is to look at the state of VC that's been in 2025
[2:55] and also get a peek into 2026 and how it would look like.
[2:58] Will it get better or will it get worse?
[3:01] We'll go all the way from macro, that is understanding the
[3:04] economy and how things are moving there, which impact how
[3:08] much of assets are actually allocated to private equity and
[3:11] venture capital, right? And then we'll go deeper from
[3:14] there. First up is the macro regime,
[3:17] right? So what we have seen with
[3:19] interest rate environment and with the recent, most recent
[3:22] interest rate update being it has further cut the interest
[3:26] rate about 25 PPS. The news was out yesterday I
[3:30] think on the date of recording and go out in about a week or
[3:33] so. How do you look at that and do
[3:35] you think the environment is getting better?
[3:37] Do you think fundraising is going to get easier or is it
[3:41] much the same? Not much is going to change with
[3:43] this. So once you look on what they
[3:46] are trying to do with the Fed is trying to do and what can be the
[3:50] way ahead with vents Capital especially.
[3:54] Matt, I'll let you go for sure. Yeah, happy, happy to kick off.
[3:58] So I, I think there's, there's two elements of this, right.
[4:01] When we think about, you know, we're going to talk macro and
[4:04] micro and we think at the highest level, what do interest
[4:07] rates really mean in venture capital, right?
[4:10] In, in early stage venture capital, there's not borrowing,
[4:13] right. The interest rates are they flow
[4:17] through an entire portfolio and asset allocation and things of
[4:20] that level. But when I think fundamentally
[4:22] about innovate innovation and innovation ecosystem, interest
[4:26] rates are not having a direct effect on the ability to create
[4:29] companies. There are a lot of other factors
[4:32] in terms of the speed of innovation where I would say
[4:35] interest rates are just less relevant to that aspect of the
[4:39] market. Now we think about projecting
[4:41] that forward. Where do investors want to put
[4:43] their capital? You know, as rates become more
[4:47] attractive or less attractive, you do see, you know, that safe
[4:51] haven, that risk free rate. And you mentioned the US, but I
[4:54] think globally you see interest rates kind of moving in a
[4:57] direction where, yes, it's now at a stable, relatively
[5:01] predictable rate. But is that really what folks
[5:05] are benchmarking their asset allocation to when they think
[5:08] about risk assets like venture? So I think there's, there's some
[5:12] correlation, but less correlation.
[5:13] And maybe I'll just start with that because as an asset
[5:16] allocator, I'm looking at venture capital to be my premium
[5:20] to my equity returns globally versus fixated around the fixed
[5:26] income or bond or safe haven rate in that capacity.
[5:29] So really thinking about this, the other end of the spectrum,
[5:32] if I increase a bit more within that fixed income allocation, if
[5:35] I'm borrowing from that, I think about private credit and all the
[5:38] other aspects of places where I am generating yield.
[5:41] That's not necessarily what I'm thinking about when I think
[5:43] about my venture allocation. So I don't want to be flippant
[5:46] because I think in a lot of in our world we do think a lot
[5:49] about micro to macro versus the other way around, the bottoms up
[5:52] versus top down. But I'd say, you know you want
[5:55] to be macro aware, but not necessarily let that tail wag
[5:57] the dog. Yeah, and there are yeah views.
[6:00] Sure. No, I think I generally agree
[6:03] with what Matt said. I guess just a couple of things
[6:05] to add. The first is, and I know we're
[6:09] in a sort of a post SAS environment in venture capital,
[6:13] but I'll just highlight SAS nonetheless is one example where
[6:16] interest rates can matter at the portfolio or company level.
[6:21] You know, I had the opportunity to run a venture fund for a
[6:24] large tech hedge fund and spend a lot of time with the portfolio
[6:27] managers on the tech hedge side. And it was very clear that they
[6:31] looked at the cash flows and the deferred revenue of SAS
[6:34] companies, the way they would look at cash flows on any yield
[6:38] curve and in the ZERP environment.
[6:41] We know those SAS companies went berserk in 20 and 21.
[6:45] So to the degree that venture capitalists still have SAS
[6:48] companies backed up in their portfolio and I know many VCs
[6:51] who do, I think it's going to be a struggle to exit those
[6:54] companies at reasonable valuations because of interest
[6:58] rates. So that says that's one micro
[7:00] manifestation where I think rising interest rates are, are
[7:03] not good for the venture industry.
[7:06] But broadly speaking, and I'll just put my San Jose hat on for
[7:10] a second, you know, we'd have to see some really dramatic changes
[7:14] in interest rates. We're we're higher interest
[7:16] rates and the ability to generate yields and private
[7:19] credit become tricky because then you start to look at your
[7:22] private credit allocation versus your venture or private equity.
[7:25] And when you start to see 10 or 11%, you know, yields, you
[7:29] wonder why are you in venture, which you know has not really
[7:31] performed that great and certainly on ADPI basis over the
[7:34] past 10 years. But I come back to Matt's
[7:36] fundamental point, if you're investing in venture, you're
[7:39] investing because you believe innovation generates alpha.
[7:43] And you know, my personal opinion is there are four or
[7:46] five, either call them platform technologies or verticals that
[7:49] will be powered by new platform technologies that'll generate
[7:52] Internet one point O type of wealth.
[7:54] So you know that those kind of returns that we're expecting are
[8:00] immune weather interest rates are at .5 percent, 2 1/2 percent
[8:04] or 5%, right. We're looking for real multiples
[8:07] on capital there. So I think there's still a place
[8:09] for venture given where we are in the cycle today post SAS, a
[8:12] lot of deep tech, AI, obviously autonomy, computational biology,
[8:17] I'm sure we're going to get into this stuff later.
[8:19] But it it does have a bearing on thinking about, you know, our
[8:22] interest rates going to fundamentally adjust our
[8:25] allocation to venture. It's just we're, you know, we
[8:27] have a specific approach to venture, but I don't think the
[8:30] interest rate environment right now is affecting it too greatly.
[8:33] Yeah. And maybe I'll, I'll tack on to
[8:35] that analog because you you mentioned something to the
[8:37] interest rates move, you know, Fed meetings, global policy, a
[8:42] lot of catalysts and factors that can move interest rates and
[8:45] yields. It is probably a better place to
[8:48] think tactically than necessarily with venture, right?
[8:51] The long dated illiquid classes. Now we have new entrants with
[8:55] semi liquid and being able to do a little more tactical
[8:57] allocation in the primarily or historically illiquid classes.
[9:02] But I still don't think you want to tie the two together and make
[9:05] your venture decisions based on where rates are moving.
[9:08] So you kind of keep that in the back of your mind.
[9:10] You do have a budget within a total portfolio allocation to be
[9:15] reactive or responsive or maybe even projecting where you think
[9:19] rates might go and what are the most rate sensitive assets that
[9:23] you can maybe take a bet one side or the other.
[9:25] I just don't think venture is the place where that's really
[9:27] going to have the, you know, the biggest impact in terms of what
[9:31] you, what decisions you make today.
[9:34] Yeah, I would totally agree with that.
[9:36] Yeah. That's interesting.
[9:38] So what we are seeing is that rates, what we're seeing from
[9:43] what the Fed is doing, it seems like the rates are going to stay
[9:47] higher for longer because even now when there wasn't just a 25
[9:51] BPS cut, there was a certain debate that should there be a
[9:53] cut or not, right. So it looks like it's going to
[9:55] stay higher for a period of time.
[9:58] And what that, what does that mean for LP expectation,
[10:02] expectations from venture funds in terms of let's say DPI, you
[10:07] know, IIRRMYC like like like Matt said that maybe they're not
[10:13] cutting allocations already. But the it's going to be the
[10:17] scrutiny that VC funds are going to face is going to rise and the
[10:22] quality of funds that they would like to back, it's going to be
[10:26] much different now than what it used to be maybe 3 or 4 years
[10:29] back. And anything in in reaction to
[10:33] sort of macro interest rates, the first of the question is
[10:38] will that sort of change the way LP's look at the venture asset
[10:41] class and some specific managers?
[10:44] Yeah, basically, if you see that, OK, if a private credit is
[10:47] giving you yields like maybe around 7-8 risk free, right.
[10:53] So if they're comparing it to venture and if it's not
[10:56] performing as well, which you've seen in the past couple of
[10:58] years, then it's becomes a deep debate, should we even allocate
[11:01] to it or not? And if we are allocating, then
[11:04] what should be our standards because they definitely will be
[11:08] different from what they have been for maybe let's say 3-4
[11:11] years back? So I'll take a stab.
[11:15] It's a two-part answer. A Part 1 is that venture capital
[11:22] is a small allocation for us. And you know, when we look at
[11:25] our endowment and foundation peers, particularly some of the
[11:27] folks in the endowment world and at some of the big endowments,
[11:30] you know they have made a lot of money over allocating to private
[11:34] assets and specifically venture capital and private equity.
[11:38] I think the track record for all of them over the past 10 years
[11:41] is checkered. I think even if they're able to
[11:43] report high IRS, they're not getting those on ADPI basis.
[11:49] So at San Jose, what I try to, you know, advocate and coach is
[11:53] there's this triangle, right. So right now VC, sorry, LP's are
[11:57] focused on DPI because there's been a real DPI crisis.
[12:01] Our program is a little bit newer and so as a result, we
[12:04] were, you know, I, I, I recommended that we think about
[12:08] cash flows and distributions in a 15 year cycle just because the
[12:11] LPA says 10 years. That's just a number in a legal
[12:14] document that hasn't mirrored reality at all.
[12:17] And so, you know, we're trying to keep DPI multiples on
[12:21] invested capital and IRR like you need all three.
[12:24] It's an equilateral triangle. And sometimes LP's become narrow
[12:27] minded and focus on one because that's, that's the fire they're
[12:30] trying to put out. So because we want that, we have
[12:34] determined like it's a very liquid asset class.
[12:37] We've got to keep it small. We have different imperatives.
[12:39] We got to make sure pension checks go out on time on a
[12:41] monthly basis. We're underfunded like most
[12:45] pension plans are in the United States.
[12:46] But just a little quick humble brag, we've improved our funded
[12:49] status pretty significantly in the last five years.
[12:54] And so we keep it small and we don't care what the interest
[12:59] rate like. Some of the questions you asked
[13:00] at the macro level don't matter because we're making a
[13:02] fundamental bet on venture capital's ability to capitalize
[13:07] itself on innovation and give us those 500 basis points or
[13:10] greater or above, whatever the equity benchmark you want to
[13:13] use. So, so we're committed to it no
[13:15] matter what happens with interest rates.
[13:18] We believe in modern portfolio theory, alternative assets are
[13:21] supposed to be high alpha generating and you know, quite
[13:25] frankly you should be seeking point 8X to 5X like, but no one
[13:28] wants to .8 X because they might get fired.
[13:30] So they start going into these very safe brand names that have
[13:33] gotten gigantic and maybe we'll discuss that issue later in the
[13:36] podcast because they think they'll get their safe two to
[13:39] three XI think it's going to be 1 1/2 to 2 1/2 net with those
[13:42] big funds. So we so, so that answer is Part
[13:46] 2. Part 2 for us is early stage and
[13:50] small funds with, you know, small denominator where they can
[13:53] drive, you know, meaningful moic and early stage, I think, as
[13:58] Matt pointed out, is far more immune to interest rate
[14:00] movements. You're, you're banking on any
[14:03] vintage to generate returns 8 to 15 years out.
[14:06] We don't even know what interest rates will look like then.
[14:09] I actually love that answer because I think I was thinking
[14:12] in the same context of you know for your new commitments, entry
[14:17] point matters, interest rates are not necessarily going to
[14:19] impact that valuation in a big way.
[14:22] So you do have to think that the five to 10 year time horizon for
[14:26] an early stage company where I think there is a little bit more
[14:30] of that pressure is for what we're seeing now this hyper
[14:34] focus on DPI. Is the exit environment going to
[14:38] be better or worse, right. I think we can talk about IPO
[14:42] markets, M&A, all the different ways that that liquidity has
[14:45] happened historically. But with the increasing rise in
[14:48] secondaries, I think you do have some element of how do people
[14:52] buy and sell and trade some of these positions.
[14:54] So for an existing portfolio, I think there might be different
[14:57] pressures within a portfolio because then you do you know if
[15:02] we're able to generate liquidity again, it's not tied directly to
[15:05] interest rates, but then where do you park that capital?
[15:07] Do you redeploy? How do you think about it?
[15:11] Or you mentioned modern portfolio theory.
[15:12] If you think about the total portfolio theory now or total
[15:15] portfolio allocation theory of where's your best risk adjusted
[15:19] return at any given point in time, I think that's something
[15:22] that will start layering into folks minds as that comes
[15:25] through. So again, probably one or two
[15:28] degrees further away from OK, the rates went down 25 BPS.
[15:33] What does that mean for my venture portfolio?
[15:35] But the sort of ripple effects across I think go from your,
[15:40] your current allocation probably minimal to zero.
[15:43] And then maybe your existing portfolio you take some
[15:46] positions on, you know, is this environment going to be more or
[15:49] less constructive to create liquidity?
[15:51] But I, I will say too, that the IRR and DPI and MOIC, I like
[15:57] that triangle analogy because I think it's too often people get
[16:01] tied to, you know, it's, it's almost like the recent past.
[16:06] What have you done for me lately?
[16:07] If you look at 21 and 22 funds were had unrealized marks of
[16:12] eight to 10X on the books. And people would look at funds
[16:15] that had three and 4X realized track records, which as we all
[16:19] know is a top decile returner in most market cycles.
[16:23] And people were kind of moving on from that because they were
[16:25] attracted to that shiny object. So now I think you just have to
[16:28] make sure that you keep all those balanced at every given
[16:31] point in time, because over waiting one sometimes distracts
[16:34] you from where the real value is going to get created long term.
[16:38] Yeah, completely. I mean, I, I have sympathy there
[16:40] and people have been allocating to this asset class for a long
[16:42] time and the, the liquidity rules of the road changed now.
[16:48] I thought it was clear they were changing by the late 2000s.
[16:51] I think most people didn't really figure it out till
[16:54] 20/15/2016. And even then maybe they didn't
[16:56] fully figure it out. So they didn't adjust their
[16:59] their models for distributions because you need distributions
[17:02] to continue to fund your next vintages, right?
[17:06] And I have sat in some closed sessions, LPLP only where people
[17:11] are banging the DPI drum and I said well wait a minute, the
[17:13] DPI, that seems like a you problem, not a me problem.
[17:16] Why are you asking our managers to sell their best companies,
[17:20] even parts of them in the secondary market?
[17:22] This is a power locker business. I want to trust their judgement,
[17:25] just like people trusted my judgement when I was in LP to
[17:28] figure out how to maximize the value of your best assets and
[17:32] holdings. And you know, if you give me 5X
[17:35] in 40 years, that's not so great.
[17:37] So, you know, IRR is terrible. And if you give me a great IRR,
[17:41] but you turn my capital and I'll, you know, I got 1 1/2 X in
[17:44] three years, which is more of a private credit profile.
[17:47] That's not why I invested in Venture either.
[17:49] And that's if there's no DPI. And, you know, it's kind of like
[17:53] greater full theory at that point.
[17:56] All about aligning incentives, right?
[17:57] Knowing what your, what your expectations are going in and
[18:00] that's where I think you have this, this push and pull of is
[18:03] this DPIII love seeing, you know, fund one go out and raise
[18:09] fund 2 comes back to market two years later.
[18:12] And LP's, I'll say probably more novice LP's are newer to the
[18:16] game are wondering where their capital is right as where did
[18:20] that, did that money come back? When do I actually expect that
[18:22] back? And it's just that fundamental
[18:24] misalignment. I always say to your point
[18:26] around, if you're investing in venture for for short term
[18:30] liquidity, you're you're never going to be satisfied.
[18:33] So think about it and what is it designed to generate?
[18:36] It's the power law, you know, long term compounding, winner's
[18:39] run and hopefully big returns for the total portfolio.
[18:44] Yeah. And Matt touched on something
[18:46] we're we have conditioned our stakeholders to think in like a
[18:50] 30 year time horizon, could be 50, could be longer.
[18:54] We get capital markets assumptions from consultants for
[18:57] 10 and 20 years and that's that's those are helpful.
[18:59] But we really want folks to think in the long term.
[19:02] So in when you've got that kind of time horizon, early stage is
[19:07] really the place to be. So we're focused on early stage,
[19:09] but the interesting thing that's developed over the past 2025
[19:12] years is just the number of companies this this was a
[19:15] cottage industry when I got into it.
[19:17] Now it's a fairly large industry, still smaller than
[19:20] private equity and private credit, but you have these
[19:23] different stages of capital and you've got more liquidity at
[19:27] these different stages. And this, this entire movement
[19:30] of family offices and folks trying to invest into the
[19:33] secondaries for later stage companies that creates
[19:36] liquidity. Now, I am no expert, but I
[19:39] imagine some family officer institution that just wants to
[19:42] play that game, get a little bit quicker liquidity.
[19:45] It's hard because I tend to find that those later stage companies
[19:48] are overvalued to ultimately what they exit at, whether they
[19:52] go public or there's just so much froth and lack of
[19:54] information. But that's a very serious lane
[19:57] now, right? You know, my, my buddy Hans
[20:00] Wilden just sold his platform to Goldman Sachs, right?
[20:03] And sorry, that's industry ventures.
[20:05] And so there's probably some opportunities there for folks
[20:08] who are thinking in a shorter term liquidity but want to play
[20:13] in venture slash tech innovation, not a game that we
[20:17] play, but you know, that's that's emerged and we really
[20:19] didn't have that 10 years ago or 20 years ago.
[20:22] Absolutely, Yeah, that's quite interesting Big.
[20:25] So what it sounds like is that the allocation to venture
[20:29] capital isn't changing at least for now.
[20:32] And what what is required right now is distributions liquidity
[20:37] or DPI as you said. And if we go dig deeper into
[20:41] that, let's talk about the M&A market, which is how the exits
[20:45] are generated on the IPO market, right.
[20:47] So how do you look at that part of the market flowing in future
[20:52] and you see that generating the kind of exits that you're
[20:55] looking for, for the funds to be able to return the kind of
[20:58] returns you're expecting out of them, let's say 10X4 or less,
[21:01] right? Yeah.
[21:03] I mean, my own personal view is if you look at the distribution
[21:07] of distributions over the last 20 years, it's been majority
[21:11] through M&A, right. I think IP OS generally get a
[21:15] lot of the hype. They tend to be the biggest in
[21:17] volume, the high, high Flyers, high profile big raisers.
[21:21] And I think we're on the cusp of seeing a bunch of these later
[21:24] stage companies. We've heard about SpaceX, we've
[21:26] heard about data bricks and and open AI, all these groups that
[21:30] have raised a ton of money in the private markets.
[21:32] And there are those later stage darlings that Anirag just
[21:34] mentioned that are trading quite a bit in the private markets may
[21:38] go public, we're going to see big dollars come through that.
[21:41] But the bread and butter of this industry has always been through
[21:43] M&A. And so I think that is the
[21:46] that's what's really been the challenge of the last handful of
[21:49] years is that there really hasn't been as much activity in
[21:52] M and AI would say the regulatory regime in the US has
[21:56] had been challenging. We're seeing that hopefully
[21:59] loosen up a little bit. I was listening to, I think it
[22:02] was a chief economist at Goldman Sachs kind of talk about 2026
[22:06] looking at maybe one of the biggest years in sponsor back to
[22:08] M&A coming forward. So I think there's an
[22:11] opportunity here for that to continue to grow and maybe re
[22:14] establish provide some of that liquidity.
[22:18] And then IPOs as I said, probably here and there, but the
[22:21] public markets are just not as attractive as they used to be.
[22:24] You see that, that famous chart where the number of private
[22:27] companies over 100 million in revenue versus just the total
[22:30] number of public companies. Those lines are crossing and and
[22:33] the public companies are are going continuing to decline and
[22:37] the private companies continuing to grow.
[22:38] So more and more of that activity is going to have to
[22:41] happen in the private markets, but prefacing what we were just
[22:44] talking about in terms of secondaries, but that's also
[22:47] becoming a growing part of the liquidity.
[22:49] So as an LP, maybe there are different pockets that you can
[22:53] get out of that. The traditional means M&A and
[22:55] IPO, the secondary, you know, trades, whether that be on a
[22:59] company level, on a fun level, you know, portfolio management,
[23:03] you can talk about LP's thinking about a much more mature and
[23:08] efficient secondary market to be able to generate liquidity on
[23:12] the micro level, on the individual portfolio level.
[23:15] I can tell you a lot of the LP's that I advise are thinking
[23:18] about, yes, we haven't gotten a lot of liquidity so we can't
[23:22] move back into what you could argue is incredibly attractive
[23:25] time now to be investing in new enterprise and early stage
[23:29] companies. But so they're taking it into
[23:31] their own hands and kind of using the mechanisms that are
[23:34] available to generate that liquidity on their own, on their
[23:37] own books. As a really good comprehensive
[23:39] answer, I, I do not have much to add like we, we need the, I
[23:43] fundamentally would like the exits in our venture portfolio
[23:47] or even the personal venture investments my wife and I have
[23:51] made to come from IP, OS and M&A.
[23:54] Those are the best, they tend to be the best the, the, the most
[23:57] fulsome. It's it's been challenging.
[24:01] You know, Prashanth knows this. I invest a little bit in India
[24:04] and I did some, I did a couple of early stage funds about five
[24:08] years ago. We've continued to re up.
[24:10] And when I did them, people are like, wow, you know, you've been
[24:12] following India for 20 years. You know what's changed?
[24:15] Were you bullish? And I said, look, if there were
[24:18] five categories in which you would evaluate A venture
[24:22] ecosystem, I give I4 or five stars in four of them and one
[24:26] star in the 5th. And of course, everyone asks
[24:28] Gots the the 5th. I'm like exits, right?
[24:31] But I know I'm trying to skate to where the puck is going and
[24:33] hoping that, you know, the changes that have taken place
[24:36] with the current administration in India, it's on its third
[24:39] term, but hopefully those will inure and I see evidence of
[24:43] that. You know, you could give a
[24:45] version of that answer in the United States as well.
[24:47] I mean, you give five stars for, you know, talent and
[24:50] universities and all that, what you make up your categories.
[24:53] But you know, exits have really been challenged and I'm
[24:57] hopefully skating to the park is going.
[24:59] And what I mean by that is I think I may be at risk of over
[25:03] learning a mistake that I made around 2012 to if the three of
[25:08] us were doing this and either of you said, you know, and I don't
[25:11] know, there's going to be $100 billion market cap venture
[25:15] backed company in 2020. I think it was within the lock
[25:18] up still when when Coinbase hit 100 billion.
[25:21] And I haven't stayed current at all with its valuation might be
[25:24] lower, might be higher. The point is, I would have said
[25:27] to you guys, you're insane. Like it had a total failure of
[25:30] imagination at that point. There was no innovation in
[25:32] venture. It was SAS, which is a business
[25:34] model innovation. I've already picked on that.
[25:37] But I mean, it was a good one. I made it really unleashed the
[25:39] SMB market for enterprise types of software, also created the
[25:44] middleware layer that had some technical innovation, but
[25:46] nothing like Deeper or Leapfrog kind of stuff.
[25:50] Mobile seemed interesting, but we quickly settled on 2
[25:52] platforms. So we're just building apps,
[25:54] etcetera, etcetera. But you know, I didn't really
[25:57] anticipate that we would have these big scale exits.
[26:01] And now I sit here in the Say I world and I asked myself, will
[26:04] open AIBA trillion dollars? Will Anthropic be worth a
[26:08] trillion dollars? SpaceX privately is trading at
[26:11] 800 billion right now. So, you know, yes, there been a
[26:15] lot of exits, but maybe when they finally come, you know,
[26:18] fears down the road they're going to be really big.
[26:21] And then people like Matt and I are going to be, you know,
[26:23] really happy that we stayed committed to the asset class.
[26:26] It's so fight. We always joke about that like
[26:29] you, you just can't we, we tend to index to what we've seen
[26:34] versus it's funny because in this asset class, we think about
[26:38] the outliers, we think about that top end curve.
[26:41] And I would argue the same thing is that I, I underestimated how
[26:45] big things could be. So what when folks talk about,
[26:48] you know, you see these, these opportunities to buy into open
[26:53] AI at half a trillion dollars, right?
[26:55] From a fundamental perspective, I have a very hard time
[26:57] underwriting that return. But why couldn't it be a two or
[27:02] three or $4 trillion company? There's I think we've, we've now
[27:06] gotten the insight that these things are possible as things
[27:10] continue to scale. And that's by no means a
[27:13] straight line, but for sure it opens up a world of possibility
[27:16] where it goes back to the idea of maybe you do need to ride
[27:20] these longer. If you think about what the
[27:21] outcomes can be from these businesses, they're certainly
[27:25] getting to revenue a lot faster than they ever have.
[27:28] They're they're doing it in an efficient way.
[27:30] But you know, what does that mean from the ultimate exit?
[27:32] We just are waiting for that chapter to be written.
[27:35] Yeah, Yeah. The other thing I'd add to what
[27:37] Matt said is since we're a little bit focused on earlier
[27:41] stage, you know, some, some of these folks were investing at
[27:45] seed, they, they get some really nice markups by Series B and
[27:48] Series C. And so that is a way for those
[27:51] funds to manufacture some liquidity.
[27:53] And it's a, it's secondary, but it's more, you know, bigger firm
[27:57] coming in wants a 50 million, $100 million allocation because
[28:00] that's their ticket size. Company only wants 50 for the
[28:02] balance sheet. So, you know, if they can scarf
[28:04] up some secondaries and you know, I there, there's a big
[28:07] debate in the seed community when I talk to folks who focus,
[28:11] there's some want to do it, some don't.
[28:12] Some take some off the table, not look, you're a risk manager
[28:16] when you're a venture capitalist, which I think most
[28:20] emerging VCs don't appreciate. I often say that we colloquially
[28:25] call it the venture business and everyone understands the venture
[28:28] side. The three of us could start a
[28:29] venture fund together tomorrow and we could sit around the
[28:32] table and I could say, I like this company and Prashant could
[28:35] say I hate it. And Matt could say, well, let's
[28:37] think twice about it. We may be good, we may be bad,
[28:39] but you know, doctors have to go to medical school to become
[28:42] doctors. Anyone can call themselves a
[28:44] venture capitalist. And it seems like that's what's
[28:46] happening at least out here in Silicon Valley.
[28:48] But it is a business, right? There's so many elements to
[28:50] running the business. Well, it's not as complicated as
[28:53] an operating business and the startups I was a part of.
[28:55] But you know, we could go into that, the portfolio
[28:58] construction, how you manage your back office compliance, how
[29:01] you issue term sheets, knowing your lane where you compete in
[29:03] that value. But a big part of that is, you
[29:05] know, knowing how to manufacture good exits too.
[29:07] And I think some of the seed folks have an opportunity and
[29:11] it's going to be interesting to see.
[29:13] I think people like Matt and I will have more data five years
[29:15] from now within our portfolios to see the folks who said I'm
[29:19] going to let it ride and maybe it works out and maybe it
[29:21] doesn't, and the folks who clip some coupons for us.
[29:25] The one anecdote, and that's 100% true.
[29:27] The one anecdote I get the number of people I'm talking to
[29:30] now that do have that rearview mirror mentality.
[29:34] If only I'd they're almost putting in in their materials.
[29:38] Well, if I had sold when it was XI would have generated this.
[29:42] But you didn't, right. I think that's the question.
[29:44] Did you see a lot of these folks now putting in a lot more policy
[29:48] around distributions and hey, we got a public company.
[29:51] How do we distribute this right? Is the right sort of the old
[29:55] Fred Wilson, you know, 1/3 a third, a third mentality?
[29:57] Or do you take a fundamental view like someone like a Mary
[30:01] Meeker does in a portfolio and says, I'm underrating this as a
[30:04] public company for 10 years, I'm doing DCFS.
[30:07] I'm really thinking about it as not just a private market
[30:10] investor, but where does this company go?
[30:12] But it, it all ties back together.
[30:14] The analogy I usually say is I can look at your gross returns
[30:17] and analogous sort of what you're saying.
[30:19] We could be good stock pickers, good investors, but my net
[30:23] returns tell me how good of a fund manager I am.
[30:26] So I can absolutely, I can't have great fund returns, great
[30:30] net returns without good gross returns, but I can absolutely
[30:34] erode those gross returns by mismanaging the business side of
[30:37] of running a fund. Absolutely.
[30:40] Yeah. That's so, so true and very
[30:43] important. The point that fund managers
[30:46] need to remember today that your job is not to, you know, set up
[30:49] a fund, find the best companies, invest in them and goes all the
[30:52] way to managing that money and ensuring that liquidity comes
[30:56] back in the DPI generated. And you might have to engineer
[30:59] that. You might have to look at, look
[31:00] at secondaries, you might have to do look at different ways how
[31:04] to do that. But LP's are another stakeholder
[31:07] in this whole VC game and you need to make sure that you're
[31:10] doing the job for them as well. Now, talking about the venture
[31:13] market as of today, what I'm hearing from G PS a lot is that
[31:19] it's, it's harder and it takes a lot more effort and it takes
[31:24] much longer to raise AVC fund today.
[31:27] You know, some are saying it takes 18 to even up to three
[31:31] years of fundraising to set up a fund.
[31:36] How do you look at that? What has made it so difficult
[31:40] and so tiring, and how do you look at that in general?
[31:44] And you want to take a shot? Sure.
[31:47] Yeah, it is hard to raise capital right now and people
[31:52] have been talking about this bifurcation in the market for a
[31:55] few years. I don't think this is a 2025
[31:57] phenomenon where the brand names continue to get more and more
[32:00] money. And you know, when, when I
[32:03] talked to, I don't always call them emerging managers.
[32:06] I call them small managers because some of them are on
[32:09] their second or third front and have decided to stay 2550 sub
[32:12] $100 million. Let's say.
[32:15] You know, you're, you have to first of all, first of all,
[32:17] understand your audience. You're not going to get money
[32:19] from the big sovereign wealth funds because they've got to
[32:21] write gigantic checks and your fund is too small, right?
[32:24] And so that audience needs to be focused on high net worth
[32:27] individuals, small family offices and you know, maybe
[32:33] maybe the a larger family office, really hard to break in
[32:37] with the Enfs and the pension funds.
[32:39] That's changing a little bit. I know an endowment that's
[32:41] exclusively focused on sub $50 million funds.
[32:44] So you're seeing some more people enter that space, but
[32:46] it's like you got to know your customer and then and, and often
[32:51] the processes are less professional.
[32:53] And I think that's the bigger issue is that you're dealing
[32:56] with folks who don't have pressure to allocate the way our
[33:00] investment staff at San Jose does across all the asset
[33:02] classes. You know, in my committee, we
[33:04] set strategic asset allocation, we take it to the board, the
[33:07] board approves it or, or, or tweaks it.
[33:09] And then that's the, you know, they've got their menu now and
[33:11] they've got to go shopping for managers in the, in the various
[33:14] asset classes, you know, high net worth individuals don't
[33:18] necessarily have that sense of urgency.
[33:20] Small family offices, I've seen them run the gamut from kind of
[33:24] a fake family office and poor managers spend all this time
[33:27] talking to that, that audience. And there's really no money at
[33:30] the end of that, no pot at the end of the rainbow.
[33:32] I've met legit small family offices, but there's no sense of
[33:35] urgency. I've seen folks go through 23456
[33:39] weeks of conversations and they get ghosted because, you know,
[33:42] they're off on their yacht for the summer.
[33:44] I mean, it's, it's so I think a lot of those mechanical issues
[33:49] need to be understood and contribute to why the
[33:51] fundraising process is 18 to 24 months.
[33:55] You know, with places like San Jose or larger institutions, you
[34:00] know, it's, it's you, you'll know within a year.
[34:03] I mean, that's not a short time period, but at least and we move
[34:06] a little slowly, but there's a very defined set of processes.
[34:09] So I answered there first because I think a lot of people
[34:12] look at the macro data and the reason there's more money going
[34:17] to the bigger funds is because the folks that they pitched to
[34:23] have allocated a venture in a very professional way.
[34:25] They have certain checks size that they've got to write and
[34:28] those big funds by virtue of been around or built brand or
[34:31] maybe even having a good track record, which is not always true
[34:35] of all of them. They are playing that game.
[34:39] And so when those big dollars get raised, you know, the the
[34:43] the press and and and the the analysts who like the Cambridge
[34:47] associates and Burgess who covered, you know, they, they
[34:49] highlight that. But I think there's a long tail
[34:52] of folks who are interested in investing in smaller managers.
[34:56] I just think the processes are are challenging because they're
[34:59] not professional and there's also 1000 small managers out
[35:03] there who look and talk the same.
[35:04] They don't do a good job of differentiating themselves.
[35:08] So I think those are the real culprits.
[35:12] It's such a good I feel very passionately about this.
[35:14] Having been someone who allocated to a lot of large
[35:17] managers was really to Analog's point.
[35:21] I, I always managed pools that were maybe too big to be able to
[35:25] look at those sub $100 million funds.
[35:27] So there was always an allure to it.
[35:29] But structurally, many organizations just can't do it.
[35:32] But I think when you get exposed to that and you realize these
[35:36] tend to be earlier, more nimble firms that can kind of move a
[35:40] bit more in in a bit more specialized and efficient way
[35:44] than some of the bigger firms. Not to say big or small is good
[35:47] and bad, but I think the small managers are underrepresented in
[35:51] the total asset allocations because of the structural
[35:55] challenges that Arrow just mentioned.
[35:58] But I also think that approach I, I call it sort of asset owner
[36:03] versus the asset allocator. There's the asset owner, it's
[36:06] their own capital where they represent the 1° removed from
[36:09] that like your professional staff working for a family
[36:12] office or it's the individual who can sign that check directly
[36:16] in an asset allocator position. There's a fiduciary
[36:19] responsibility, but there's also career responsibility, right?
[36:22] I think the alignment of should I invest with Lightspeed, who
[36:26] just announced that they closed $9 billion, or should I invest
[36:30] in emerging Manager X that has a $25 million fund, maybe more
[36:35] upside, but I can't size that in the same way.
[36:39] I have to explain it a lot more. Even if it generates a big, a
[36:43] big return, is that going to move the needle from a cash
[36:47] perspective, right? I have to downsize the check.
[36:49] So there's all those considerations in there where
[36:52] it's not to say that these are making good or bad decisions,
[36:55] but as a large allocator, you need to think about both the
[36:58] structural piece, but also what are my incentives if I'm not
[37:02] tied to the outperformance of a portfolio that also comes into
[37:05] there. I'm you know you never get fired
[37:07] for buying IBM kind of situation allocating to safe or perceived
[37:13] safety with larger more established brands is probably
[37:17] the track that a lot of those groups go down.
[37:18] Now I am seeing what analog mentioned a lot more
[37:22] institutions embracing smaller managers and thinking about that
[37:26] as the next driver of alpha because I think venture is
[37:28] getting bifurcated or segmented into a lot of different
[37:31] subclasses. So I think that also introduces
[37:35] an opportunity for these groups to both be impactful for these
[37:39] smaller managers. If you think about maybe they
[37:42] want Co investment, maybe they get, you know, fee concessions,
[37:45] they can be a bigger, a bigger percentage of a smaller fund and
[37:49] have more impact potentially. So I think there's a lot of good
[37:53] opportunity there, but we're not necessarily seeing it all
[37:55] materialize thankfully. Feels like the the wind is
[37:59] changing a bit though. Yeah.
[38:01] But it's so important that Matt highlighted those incentives
[38:04] dictate behavior and some of those structural issues.
[38:08] Yeah, I, I don't think the venture officer at San Jose
[38:11] would mind my saying when we were putting our program
[38:13] together and I was sort of insisting we focus on, you know,
[38:16] I'd love to do smaller funds, but as a as a pension, you know,
[38:19] we can't do first and second time funds who maybe haven't
[38:22] demonstrated operation. The ODD isn't there.
[38:25] We're going to get more questions asked if someone has
[38:28] really misstated their portfolio or done something that is a
[38:33] black eye, then we are if their performance isn't great.
[38:37] So you know, we'd like to see folks to fund 3 because not only
[38:40] can you see how the portfolio is developing, it's a strategist
[38:42] thing, consistent. Are they continuing to win deals
[38:45] in the way they said they would or if they're tacking
[38:47] differently, is there a logic to it and are they demonstrating
[38:51] it? We're also want the ODD there
[38:52] and you can see better evidence of that.
[38:55] But even, you know, 100 to $300 million is kind of our sweet
[38:57] spot for fun size and, you know, fun three, that's still fairly
[39:00] early. And most of those funds are not
[39:03] brand names. And so I remember saying at a
[39:05] meeting to the CIO and his staff, and particularly the
[39:09] person who runs Venture for him, I said, you mean your job is
[39:12] like we made X because it's really hard to do worse than .7
[39:16] or .8 X. And we're in the heart of
[39:18] Silicon Valley and we've got trustees, we've got venture
[39:21] experience and I think we have the best team in the state.
[39:24] We were small but mighty punching above our weight class.
[39:27] Like that's our bottom, but our top is like in A4 or 5X.
[39:30] And then it really becomes interesting to be in the asset
[39:32] class. And you know, your alternative
[39:34] sleeve is supposed to take that kind of risk.
[39:36] It's not a beta play is, I guess a short way to say Venture is
[39:39] not a beta play, you know, and then after the meeting says,
[39:41] well, you know, that's great while you're here because I've
[39:44] got air cover, you know, you're the one advocating this.
[39:47] But what happens when you leave? Like, you know, if I have a
[39:50] point 8.9, what is the next CIO or what is the next chairman of
[39:53] the IC say? Right.
[39:54] And that's the career risk Matt was referring to.
[39:57] It's it's very difficult for people to sign up to do what
[40:01] they're supposed to do in the alternative asset bucket bucket,
[40:04] which is take risk human nature, you know, and they don't get
[40:06] paid great bonuses. I mean even at the enfs and.
[40:11] All of these things really do end up influencing their ability
[40:14] to invest in the smaller managers.
[40:16] But as Matt said, things are changing.
[40:18] My one concern about them changing is this might become,
[40:21] you know, an open opportunity for like, a mass flurry of fund
[40:24] to funds in this space. Like, hey, you need to write a
[40:26] $50 million check, give it to me, and then I'll break it into
[40:29] smaller pieces. There are some fund to funds
[40:31] that I've done that successfully, but I worry that
[40:34] we may have, you know, a flurry of them now.
[40:36] We'll see. Yeah, absolutely.
[40:38] I'm actually very glad that we're talking about this.
[40:41] Although the representation on this particular round table is
[40:45] more on the institutional side, but we are talking about all
[40:48] aspects of it. And the different types of LP's
[40:50] that are interested in different types of form in the different
[40:54] stage are at. If you're raising fund one of
[40:56] fund 2 like and Rock said institutions might not be
[40:59] interested at that particular stage.
[41:01] But once you mature in two fund three fund 4 and you have more
[41:04] data on the previous ones, then they can be interested.
[41:08] But there are other let's say family offices or high net worth
[41:12] individuals that you can target for those fund one fund 2 or
[41:15] operators in the startup world who are already successful, have
[41:18] made money from resource etcetera.
[41:20] So there are different LP's for different people and different
[41:24] interests. All these different LP's have
[41:26] different interests, right? And, and Rod, you mentioned
[41:29] about what we are looking for is differentiation, right?
[41:32] There's often this debate about general generalist versus
[41:35] specialist. So when you talk about
[41:37] differentiation, what, what does that look like to you in all?
[41:42] In what all aspects can fund managers look to differentiate?
[41:47] Oh, that's a great question. I'm also curious to hear what
[41:50] Matt says on this because I mean, they all look the same.
[41:54] And I'm on the selection committee for Raise Global,
[41:56] which focuses on small managers. I probably looked at, you know,
[42:00] 40 decks a year for five years and everyone's got this like the
[42:04] same slides. It's almost funny.
[42:05] It's like I'm this for Lot Tam. I'm this for women founders.
[42:10] They've got the slide with the testimonials from the three
[42:14] founders who've said I've worked with so many VCs and so and so
[42:17] added more value than everyone else.
[42:19] How many VCs could you have worked with?
[42:20] I mean, you can't have founded many companies like you can't
[42:22] really have that big a sample set.
[42:24] So it it it's you know, but again, I've had my tin cup out
[42:28] raising money. I have a ton of sympathy.
[42:30] This is not meant to, you know, be pejorative or, or poke fun.
[42:34] So the way I look at it is you asked a specialist versus
[42:38] generalist. I, I both are fine.
[42:41] You know, in theory I could see a manager, an allocator saying I
[42:46] want specialists in the seven or eight domains that I think you
[42:49] could generate a lot of upside. And and then you've got folks
[42:54] like just laser focused on that's great at the allocator
[42:56] level. It's not always great at the fun
[42:58] level. So I'm sensitive to the fact
[43:00] that GPS want to make money and they don't want to be in an
[43:03] asset class or sub sector specialization.
[43:06] That's out of favor. I'm old enough to remember when
[43:09] some of the biggest brand names on Sandal Road in the 90s were
[43:12] firing all of their life sciences partners because
[43:14] everyone was making money in the Internet, right?
[43:16] And they just didn't feel the life sciences folks were keeping
[43:20] up and, and pulling their way then, you know, now with
[43:22] computational biology, I think it would be really interesting
[43:25] to have a partner who focuses on that space.
[43:27] So I'm OK with generalist. I do think specialists have
[43:31] value. I think since we're focused on
[43:33] earlier stage, I don't think this doesn't apply to the folks
[43:37] who invested B&C or later stage where I think you're just you're
[43:41] more just money, but you might be able to add value.
[43:44] And I actually I do know one fund that is trying to do that
[43:48] for the smaller earlier funds. I say, look, you have to be the
[43:51] hustle fund and and really make yourself attractive to founders
[43:55] whereby you say, if you take mic check versus a brand name firms
[43:58] check with them, you're just a call option.
[44:00] And if they choose not to write the Series A lead or participate
[44:05] in a meaningful way, that's a bad signal for me.
[44:08] You getting that next round is vital.
[44:10] So now how do you differentiate yourself as a hustle fund in a
[44:14] hustle versus Halo? Like I've seen folks who
[44:17] developed the lane in go to market.
[44:19] They've got a bunch of chief revenue officers they work with
[44:22] at some of the largest SAS companies who built businesses
[44:26] from, you know, 10 million to 100 million.
[44:27] So they've got that pool that can come in and help these
[44:30] founders. I've seen other folks do it on
[44:32] the product management side, right?
[44:34] So I do think you need to have some kind of lane or you don't
[44:36] have to. I think it's nice when you have
[44:38] that kind of a lane. You're not going to jump in and
[44:41] run the business alongside. But there are these mistakes you
[44:45] can make at these different inflection points when you're
[44:48] building a company and just to have a stable of folks who can
[44:51] guide you through that. And so I think those things
[44:54] matter because then you can also build a brand around that,
[44:56] right? And we know how important that
[44:58] is. And then founders start to tell
[45:01] other founders that XY and Z firm is really good at this, you
[45:05] know, and if I was a founder, I just mentioned 2 examples.
[45:09] I'd love to have both of them in my syndicate, the one that can
[45:11] really help me with revenue and the one that can really help me
[45:13] with product and has a stable of, you know, 50 to 100 product
[45:18] like chief product officers and chief revenue officers who I can
[45:21] have calls with. So it's things like that.
[45:25] This is a topic that I feel strongly about and I've I've
[45:28] talked about it a lot and and I think all of those things are
[45:31] true in terms of when I think of generalist versus specialist, I
[45:36] think people immediately go to sector is like you're a deep
[45:39] tech specialist, you're an AI specialist, you're a life
[45:42] sciences specialist. I think what analog just
[45:46] described are specialist qualities, right?
[45:48] I have a domain expertise in go to market, in product
[45:52] development, in network, in whatever it might be that that
[45:58] group has a skill, we call it GP thesis fit right?
[46:02] Is it the right person doing the right thing at the right time?
[46:05] And I think that the right person and the right thing are
[46:08] the easiest to align. So who are you as an individual
[46:12] GP or your team of GPS and what strategy are you executing?
[46:17] So I want to find that through line of you have the skill set,
[46:20] you have the background, you have the capability to deliver
[46:23] on that. And then yes, as an early stage
[46:26] founder, I want to look for groups that can help me in those
[46:30] key areas that I need. It may be somebody that has the
[46:33] depth in aerospace, but then there may also be somebody who I
[46:37] want that has connections into DC and the government contracts
[46:40] and has experience with, you know, labor and and procurement
[46:45] and things like that. So I think as a founder, it's
[46:48] incumbent on you to piece that together.
[46:50] It's very possible that that means it's two people.
[46:54] It's very possible that means it's five people.
[46:56] So I think it's incumbent on the founder to figure out what they
[46:58] need. But one of the things I always
[46:59] come back to it's, it's not so much about being different, it's
[47:03] about being better. And I think that's the thing
[47:05] where a lot of people talk about white space and contrarian and
[47:09] non consensus, yes. That is, if you're playing where
[47:12] someone isn't and it's very successful, then you're going to
[47:15] have hopefully good outcomes, less competition, all of those
[47:18] things. But in some cases, there's a
[47:19] reason why it's white space. It may not be in big enough
[47:22] market, it may not be attractive.
[47:24] So being different on its own, I don't think is enough of a
[47:27] qualifier. It's actually being better
[47:30] analog to your point, the number of decks that come through that
[47:34] look like the cookie cutter, the stamped version of the same
[47:36] thing. I want to see why back to that
[47:40] GP thesis point, why you're the person who's best positioned to
[47:43] do the thing that you're doing. It doesn't mean you have to be
[47:45] the only person doing it, but you have to be positioned in a
[47:47] way that you're going to be be able to out compete or win
[47:51] deals, source deals, whatever it is, help all the components of
[47:55] what makes a great venture manager.
[47:56] So I I love having that debate because there is no right
[47:59] answer. And then you can and start going
[48:01] into different definitions of each of these labels.
[48:06] Yeah, it's definitely a fun one. I, I hope the audience that
[48:09] there was a, there were a lot of gems in there and what Matt just
[48:11] said. So I, I hope everyone rewinds
[48:13] and listens to that again, because it's being better is the
[48:18] trick. It's the key.
[48:19] And in terms of telling the story, just to pick up the last
[48:22] point on the decks being somewhat generic, you know, VCs
[48:27] expect their report for their prospects to be able to define
[48:31] the company's purpose with clarity.
[48:34] They expect them to be able to explain the problem that they're
[48:36] addressing, right? More venture capitalists should
[48:39] approach it with there's too much, there's too much venture
[48:41] capital money already sloshed around the system.
[48:44] So what am I going to do differently or better?
[48:46] Why do I deserve a right to exist?
[48:48] And why is that going to result in superior returns, right?
[48:51] Because again, if the white picks space is too small, that
[48:54] won't happen. And so, you know, and, and tell
[48:58] a story, the stories have worked for 30,000 years in, in human
[49:02] history, right? Tell a really compelling story.
[49:05] It's not just like, again, you know, the titles are almost
[49:08] always the same on all these slides and stuff like that.
[49:10] And so it takes some of the coaching that you give to
[49:13] entrepreneurs on how to pitch to VCs to take your own medicine.
[49:17] Absolutely and completely. There are a lot of gems
[49:21] throughout this conversation and I'll be sure to make sure we cut
[49:23] out short clips of each of those gems and we'll make you go
[49:27] through them again for sure. And then trying to sum up this
[49:31] conversation and we are at a time we are leading into 2026
[49:35] also the time of holidays. I hope people find time to
[49:39] listen to this around that time. So looking into 2026, how do you
[49:44] see the market behaving? Do you see things getting easier
[49:48] for venture capital and for startups as well when the
[49:51] valuation sort of ease out in 2026?
[49:55] Or do you feel that the same level of stress is going to
[49:59] continue into 2026, both for fund managers as well as
[50:02] startups? I I think there's, there's 2
[50:06] answers to that. As someone who and I can speak
[50:09] to this too. I've been a multi asset investor
[50:12] for most of my career, but having been steeped in venture
[50:15] for the last 6 or so, there's a level of optimism in this asset
[50:20] category, right? You have to believe the future
[50:22] is going to be better than the past or or you wouldn't be doing
[50:24] this right? You're you're the only asset
[50:27] class where you're creating something out of nothing.
[50:28] Everything else is is trading paper in some degree.
[50:32] Venture is this, this innovation ecosystem and life cycle, the
[50:36] opportunity to advance human flourishing technology, all the
[50:40] different ways that we can make our lives better.
[50:42] It's, it's hard not to be involved in this asset class and
[50:46] not get excited about what can be.
[50:48] But that being said, I do think there are tools in place now
[50:53] that weren't 3-4 years ago that are going to even accelerate
[50:57] that further. I think that makes it easier and
[50:59] harder. But maybe just to expand on
[51:01] that, right? As a founder, you have more
[51:04] tools, this efficient growth idea of how quickly can I be
[51:08] that individual company that reaches whatever, pick your
[51:11] valuation or revenue metric without hiring a human or do you
[51:17] think about not everyone? We've levelled the playing field
[51:20] for what used to be a specialist skill set before to now
[51:24] something that everybody has access to.
[51:27] I have to build a new mode. I have to think about that.
[51:29] So I think it, it does empower a lot of people.
[51:32] It then becomes the responsibility of the founder
[51:35] and the fund manager to understand all the new
[51:37] technology as it continues to rapidly evolve.
[51:41] As an investor, I couldn't be more excited about where we're
[51:43] going. I think we will see some of this
[51:45] liquidity come through in the next.
[51:49] I said last year, 6 to 12 months, I might use that same
[51:52] analogy, but it's it's like Howard Marks called the distress
[51:55] cycle three times in the last five years and it's been wrong
[51:58] three times. So at some point it'll hit.
[52:01] But I do feel like this coming year, we're seeing a lot of
[52:04] these companies at least announce public markets becoming
[52:07] a little softer or a little more receptive.
[52:10] So I think all of that is going to be to the benefit of the
[52:13] asset class for investors to continue to support some of
[52:17] these really interesting innovations.
[52:19] Yeah, I, I don't know how appreciably different 26 will be
[52:24] than 25. And you know, I, I remain
[52:27] steadfast that at some point we're going to see exits and
[52:30] we're going to see big exits. And I will not make the same
[52:34] mistake that I made in 2012. That might be more conviction
[52:38] and you know, the, the gestalt of 20 years of pattern matching
[52:44] and, and, and you know, again, like my in my gut or the black
[52:47] box inside my head is saying that.
[52:49] But I also think as Matt pointed out, there's some evidence,
[52:52] right, We have a different attitude in Washington toward
[52:57] M&A. We're starting to see some of
[53:00] the really large companies say, OK, it's been a lot of
[53:02] fundraising capital privately and in $100 million slugs from
[53:07] sovereigns around the world. But now if we go public, it kind
[53:10] of changes our profile in the way we can raise capital.
[53:13] So I think there's a, there's a lot of reasons to be positive.
[53:18] You know, ultimately though, Matt made the fundamental point,
[53:22] either you believe that the venture capital industry is
[53:25] backing entrepreneurs who are changing the future, maybe for
[53:29] better, maybe for worse, as it pertains specifically to AI, But
[53:35] you know, you have to have that fundamental optimism.
[53:39] And so I'm looking out a bit past 26, to be honest.
[53:42] I'm trying to figure out, you know, what are the what
[53:45] directionally, what do the next five years look like?
[53:48] And I just, again, as I said earlier in the conversation, I
[53:52] can't wake up and not be excited because I began my career in
[53:56] Internet 1.0 and I was so exciting and dynamic.
[53:59] It was fun to be a young person in in that environment.
[54:03] And I feel like it's that five times over now the the rate at
[54:07] which at which technology is accelerating and you know,
[54:11] things are commoditizing and miniaturizing so more people can
[54:15] have them in their hands. That's on the consumer side that
[54:19] also really shapes and unburns enterprises.
[54:22] And can I just throw in one thing that's a little bit of a,
[54:24] you know, the left field. But Prashanth, I know you're
[54:26] based in India. I mean, you've got so many folks
[54:29] now, hundreds of millions of of people.
[54:31] I'm looking for my iPhone. It's not handy who now have a
[54:34] smartphone in their hands who live in outside of Tier 2 cities
[54:38] and they are coming up with with products that are that small,
[54:43] medium business, small merchant, rural farming, supply chain, you
[54:48] know, just all this stuff that you know, you've got a billion
[54:52] people, you've got the third or fourth largest economy in the
[54:54] world, depending on how you measure.
[54:56] And all of that stuff is also exportable to Africa and Latin
[55:00] America, right? I'm never going to come up with
[55:02] that. No, no Silicon Valley, no Palo
[55:04] Alto entrepreneurs going to come up with those applications.
[55:06] That's sort of the world that Matt and I have lived in.
[55:09] But there's this entire untapped potential out there of things
[55:14] that I don't even remotely understand that are going to
[55:16] generate venture like returns. Couldn't agree more.
[55:19] I think that that global aspect too.
[55:21] I think a lot of times, you know, thinking about the Bay
[55:24] Area, thinking about the US, we'd lose a little bit of
[55:26] perspective. So it's great to, I think add
[55:28] that into the conversation because even, you know, in in
[55:32] the last five to 10 years and Prashant, you could certainly
[55:35] speak to it on the ground. But I feel like it is there are
[55:38] a lot of new and interesting markets, the empowerment of more
[55:42] people, which I think will be another exciting aspect of this.
[55:45] Absolutely. Yeah, I completely agree.
[55:47] I think if you talk about emerging markets, India has to
[55:49] be right up there. And as I mentioned previously,
[55:54] especially in terms of exits, right?
[55:55] If you look at our IPO market, sometimes it's hard to make
[55:59] sense even because we recently had companies that will, that
[56:03] are still making losses, but they were listed at crazy
[56:07] multiples, right? Although the multiples might
[56:10] crash over time, but still that was a successful listing.
[56:14] That itself is a big deal because that was the exit event
[56:17] and the liquidity event for the investors.
[56:19] So that market for, for the, from an investment perspective
[56:23] is mind blowing. I, I don't think it can get
[56:26] better than that. It's completely in contrast to,
[56:29] for facing in the US right now, especially in the public
[56:31] markets. India is quite the opposite
[56:34] right now. But yeah, massive opportunity,
[56:36] the demographics as well as the population on the Internet, you
[56:40] know, so it's amazing. The opportunity in India and
[56:44] other emerging markets as well as Africa as well is also talked
[56:50] about a lot. So it's interesting how all
[56:53] these shape up. And I know as global, as
[56:58] allocators, especially institutional funds, they're
[57:01] always tracking these global markets and it's always
[57:04] interesting to do that. But yeah, this this conversation
[57:08] in particular was more focused and tilted towards the US market
[57:12] because that's where most of our audience is.
[57:15] But still, it definitely adds perspective on how you look at
[57:18] global markets and if there is more alpha and some other
[57:21] geography and you have the ability to allocate that you
[57:25] definitely should. And India is certainly one such
[57:27] market right now. Thank you to both of you and
[57:31] Raghunatha for making time for our inaugural round table.
[57:35] And it's been an amazing conversation, a lot of amazing
[57:38] points shared. I'm sure it's going to be so
[57:40] helpful for fund managers to navigate this particularly
[57:45] difficult time in setting up the fund or run, running it or
[57:49] generating liquidity and so on. And, and I'll make sure to put
[57:53] all the links to your Linkedins and so on because I know both of
[57:57] you are pretty active there and keep appearing on podcast and
[58:01] posting a very helpful LinkedIn post as well.
[58:03] So I'll make sure to link those. And I thank you again, I wish
[58:06] you happy holidays. Thank you for coming on.
[58:09] Happy holidays. Thanks for having me, Matt.
[58:11] It's a really pleasure to meet you likewise interact.
[58:14] Bye guys. Bye, guys.

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