01:23:06 · Jordi Hays, John Coogan
[01:23:06] S1: I have one more. Yeah. Go for it. [01:23:07] S0: I'm interested in how much you think thematically. Obviously, AI is driving headlines every single day but there's these interesting knock on effects of deeper in the supply chain, energy, hard tech you mentioned, but also there's some excitement among early stage managers that we talk to for the coming potential of AI to accelerate biotechnology. And so maybe that looks like writing more checks into biotech companies. Maybe the bio VCs, the flagship pioneerings do better, but maybe there's more crossover from the traditional tech investors that dabbled in crypto and did some hard tech and then also do AI. Maybe they will figure out bio. But how do you think about guardrails either at the manager side or at your level of there's a way of coming, when do we need to start paddling?
01:24:01 · Hunter Somerville
[01:24:01] S3: Yeah. No. Totally. And all of our partners focus on different areas when it comes to the direct investment side. We're not like a traditional VC firm because the GPs are the core of what we do and so they lead us in the direction of where we want to go. But then we develop thematic points of view. Me, personally, I've covered more of the hard tech, deep tech categories that you're alluding to. I like those businesses. It's probably because I'm more old school and appreciate a moat and a multiyear advantage. I think a bunch of those areas you mentioned, energy specifically, mining, anything touching rare earths, refining, production of magnets, around defense, specific areas around aerospace that SpaceX may not be competitive in. All of those are places where I've liked to spend more time and I feel more comfortable. It feeds into the fun side of things because I also cover a lot of the smaller emerging managers that are doing it in deep tech and hard tech. You get the recognition of what's working at a seed level before it's overtly obvious to the rest of the market, And then you can build those relationships on the primary and secondary side more proactively. And unlike some of these massive seed and Series A AI rounds, it doesn't happen that way and as quickly and linearly in deep tech and hard tech. The seed investors can invest in one or two rounds and then people realize it's technically de risked. It's crossed the chasm. It's interesting. And then you will have very large check writers blessing that and doing really meaningful meaningful check sizes at that point in time. There are other bites at the apple that are more attainable than a really hot AI company at the very beginning. Don't get me wrong. We love both. I have other partners that are equally active on that side. The key is blending it and not making sure you're doing too much of one thing and that you're being thoughtful and bobbing and weaving accordingly. Biotech is a weird category, I would say, overall. I think over the past few years where it's been most interesting is on the crossover side because there's an ability to become pretty aggressive, almost predatory at the very late stages of some of these businesses overall and get good value or put structure in place. You've also had the ability to go public earlier and more aggressively in those categories.
01:26:28 · Hunter Somerville, John Coogan
It's created a weird dichotomy where it actually made sense for crossovers to dip down and be more aggressive. And you've not seen the same level of new fund formation in biotech as you've seen in all of these other categories that we've discussed today. [01:26:44] S0: It. Wait. Wait. [01:26:44] S3: So really quickly, crossover, you [01:26:49] S0: you mean public markets hedge funds doing private placements early stage biotechnology companies that are going through FDA approval and will ultimately IPO, not a software VC crossing over into biotech, which is also going to happen, but separate things. [01:27:08] S3: Got it. You nailed that. Exactly. It's that type, even mutual funds Yeah. That I was alluding to. But to your second point, we are now seeing sort of the formation of dedicated specialists in tech bio Yeah. That are more typically coming from the tech side probably rightfully so. Although any good cap table that does tech bio probably needs to mix the two together where you have more of the traditional old school biotech managers and then also the very forward thinking, more tech focused groups on top of that, doing it together in a syndicate variety. And then the last thing I was saying is you also just don't have as many new funds that are coming into existence in pure biotech. Tech bio will probably increase at a much higher clip than we've seen in biotech over the past three to five years.
01:27:08 · Hunter Somerville, Jordi Hays
[01:27:08] S3: Got it. You nailed that. Exactly. It's that type, even mutual funds Yeah. That I was alluding to. But to your second point, we are now seeing sort of the formation of dedicated specialists in tech bio Yeah. That are more typically coming from the tech side probably rightfully so. Although any good cap table that does tech bio probably needs to mix the two together where you have more of the traditional old school biotech managers and then also the very forward thinking, more tech focused groups on top of that, doing it together in a syndicate variety. And then the last thing I was saying is you also just don't have as many new funds that are coming into existence in pure biotech. Tech bio will probably increase at a much higher clip than we've seen in biotech over the past three to five years. [01:27:57] S1: Sure. How do you handle breaking up with with managers as an LP? Feels like really like I mean, it's tough on the direct side too. If you back a founder, they come back for more money and you say like, you know, you have to sit it out for whatever reason, it's not great. But on the fun side, it's like you've been with them through basically multiple, almost multiple companies in some way, and maybe they had a bad sort of period, but they came back from it, and then it's bad again or whatever it is. But, like, what is that actual process like having, I'm sure, had to do it on a number of occasions?
01:28:32 · Hunter Somerville
[01:28:32] S3: It's like what every person I dated before I got married said to me, it's it's not you. It's me. You know, in this scenario, there's always the ability to to stop backing a manager based on your pacing and how quickly funds have come back to market and your lack of available capital. If you're a fund of funds, you're raising your own money. If you're an endowment, you have a denominator effect to consider. And you are also all suffering from the fact you're not getting enough money back from a DPI standpoint. And so, it's more of a realize results, return money, we'll have more money to deploy and consider you or others when that happens as an easy out. But we tend to be much more transparent and objective. I just think that's the type of people we are. We try to benchmark it against other managers. We've backed. I mentioned we work with over 300 or so groups. We have a very robust dataset where we can actually show people in vintages how they would compare on a generalized anonymized basis against other people both in terms of TVPI and then also what they've returned back. We recognize that TVPI or total value over paid in capital is subjective. It's based on valuation practices, so we pierce through down to the underlying asset level and try to create a real apples to apples comparison where we know how five managers are carrying the same company and we come to our own conclusion on what that valuation should be. But if you give people objective kind of criteria on how they compare against others that you work with, it's hard to debate that. Ultimately, they get, like, two or three funds to prove it anyway because you're not going to come into one fund lily pad hop out of it and be done immediately unless they have some kind of catastrophic situation at the team level or organizationally where they've really screwed something up or have lost your trust as a counterparty. Otherwise, you're going to get a few funds if you raise them every two years to prove it. Then, ultimately, like, the results will tell the story. And we love our partners, and there are deep friendships on top of of everything else. But as an allocator and as a fiduciary for other people's money, you ultimately need to let the results point the way.
01:30:51 · Jordi Hays, John Coogan, Hunter Somerville, Ken Ono, Bar Winkler
[01:30:51] S1: You're like, help me help you have a number of liquidity events and then I'll maybe give you some of that money back. That makes sense. I know. Good great great explanation. [01:31:01] S0: Well, thank you so much for taking the time to come chat with us. This is fantastic. Let's do it again soon. [01:31:05] S3: My pleasure. [01:31:06] S1: Yeah. This was really Thank you so much guys. [01:31:07] S3: Appreciate you having me on. [01:31:08] S0: Have a great weekend. [01:31:09] S3: Have a great [01:31:09] S0: Have a great day. We'll talk to you soon. Goodbye. [01:31:12] S1: You too. [01:31:13] S4: You got [01:31:13] S1: a bunch of Hunter fans. You got a bunch of Hunter fans in the chat. [01:31:16] S0: Business is AI. Their business is securing it. CrowdStrike secures AI and stops breaches. Yeah. Huge huge fans in the chat. Thank you to everyone who was hanging around and chatting, giving us feedback. We appreciate it. Our next guest is Var Winkler from Wonderful, co founder and CEO, and first appearance on TBPN. How are you doing, [01:31:37] S1: Bar? [01:31:38] S0: Mister Wonderful. Mister Wonderful. What's up? Are you doing? Welcome to the show. Congratulations on the news. We'll get to that. But first, let's start with an introduction on yourself and the company. [01:31:50] S2: Great. Thanks for having me. Yeah. I'm Bar. Just moved into New York a few weeks ago. Nice. And landed from Delhi about two hours ago from a sixteen and a half hour flight, so [01:31:59] S0: Wow. [01:32:00] S2: Still working from my living room and [01:32:01] S1: Branding. Yeah.