The Distribution by Juniper Square
00:02:42 · Brandon Sedloff, David Wachter
[00:02:42] S1: Excellent. Well, we're gonna talk a lot more about W Capital, what you do, how it all fits together. But because we're here at IPEM, I'm curious. You're recording this on the second day. Any takeaways from the conversations that you had yesterday, your meetings? Kinda what are you what are you hearing? What are you feeling from from the show? [00:02:58] S0: So huge energy this year. A lot of meetings yesterday, about seven or eight meetings. I also spoke on a panel. So I think there's a lot of energy. I'm most excited about the energy around the secondaries market. I started in this business a long time ago before secondaries were cool, and a lot of new data that was discovered during my panel yesterday. And our meetings are with everybody from large sovereigns in The Middle East to family offices around Europe. So the content is super interesting, and the engagement is very exciting. One interesting benchmark, which I was very excited about, is two of the largest investors I met this past week are looking to allocate 25 to 30% of their entire private equity book to secondaries. Wow. So a major, major growth in the amount of capital entering the market, which is kind of rewarding after a lot of years trying to pioneer and develop this market.
00:02:58 · David Wachter, Brandon Sedloff
[00:02:58] S0: So huge energy this year. A lot of meetings yesterday, about seven or eight meetings. I also spoke on a panel. So I think there's a lot of energy. I'm most excited about the energy around the secondaries market. I started in this business a long time ago before secondaries were cool, and a lot of new data that was discovered during my panel yesterday. And our meetings are with everybody from large sovereigns in The Middle East to family offices around Europe. So the content is super interesting, and the engagement is very exciting. One interesting benchmark, which I was very excited about, is two of the largest investors I met this past week are looking to allocate 25 to 30% of their entire private equity book to secondaries. Wow. So a major, major growth in the amount of capital entering the market, which is kind of rewarding after a lot of years trying to pioneer and develop this market. [00:03:59] S1: Yeah. And we're gonna talk about kind of the pioneering that you've done. But before we do, I just wanna go back to the beginning. And I always like to start with, you know, a little bit about you. How'd you get into the business? You know, go go back to the beginning. Did you grow up in a family where you knew you were gonna end up on Wall Street or that was your dream? Or what was your what was your personal journey?
00:03:59 · Brandon Sedloff, David Wachter
[00:03:59] S1: Yeah. And we're gonna talk about kind of the pioneering that you've done. But before we do, I just wanna go back to the beginning. And I always like to start with, you know, a little bit about you. How'd you get into the business? You know, go go back to the beginning. Did you grow up in a family where you knew you were gonna end up on Wall Street or that was your dream? Or what was your what was your personal journey? [00:04:17] S0: Wow. Okay. So I grew up on Long Island. My dad was a garment center guy. So he hustled. He traveled a lot and way before most of the world was sort of doing business globally. And he was an engineer. I went and was an engineer in school. And when I graduated, I finished business school and wanted to go into tech. So, I went to Lehman Brothers and said, want to do tech. And they said, well, we don't have a training program in our tech department, but we do in investment banking. Do you want to meet them? So I went upstairs and talked about tech with investment bankers, and they're like, you're hired. So I said, okay, I'm not going into tech. I'm going into finance. So ended up with a fifteen year career in investment banking and then always had the desire and the motivation to do something entrepreneurial. And after experiencing the growth of the IPO market and the tech market in 2001, I left Wall Street to start a firm to provide liquidity to the tech and growth market.
00:04:17 · David Wachter, Brandon Sedloff
[00:04:17] S0: Wow. Okay. So I grew up on Long Island. My dad was a garment center guy. So he hustled. He traveled a lot and way before most of the world was sort of doing business globally. And he was an engineer. I went and was an engineer in school. And when I graduated, I finished business school and wanted to go into tech. So, I went to Lehman Brothers and said, want to do tech. And they said, well, we don't have a training program in our tech department, but we do in investment banking. Do you want to meet them? So I went upstairs and talked about tech with investment bankers, and they're like, you're hired. So I said, okay, I'm not going into tech. I'm going into finance. So ended up with a fifteen year career in investment banking and then always had the desire and the motivation to do something entrepreneurial. And after experiencing the growth of the IPO market and the tech market in 2001, I left Wall Street to start a firm to provide liquidity to the tech and growth market. [00:05:25] S1: So I wanna go back to... You wanted to be in tech. You ended up in investment banking. Maybe help me define what was tech then, and what what what was it that you thought you wanted to do? Because I don't necessarily see the parallel between tech and banking. Obviously, maybe that's the whole point of the story.
00:05:39 · David Wachter
[00:05:39] S0: So the crossover was... So at the time, it was sort of the Apple two and the beginnings of what was sort of dial up Internet. So you could log in and play games and get information like the weather, very basic stuff. But I, in fact, did start a business to distribute dial up Internet data services. So kind of precursors to the Internet. And literally drove around Boston after coll... During college, delivered startup kits. So... But I was very passionate about computers and engineering and tech. And I coded. I I was paid to write databases for small businesses and loved it. And then when I did start at Lehman Brothers, a guy who was one of the pioneers in tech investing joined to run Lehman's tech department. And he was the... He's the guy that took Apple public and Intel public and Lotus one two three. And I'm like, okay. Instead of learning from the bottom up, I can learn from the top down. So I stuck with Wall Street a couple of years after he joined Lehman Brothers. He tapped me on the shoulder and he said, let's get out of here. I'm gonna go restart a successor firm to a successor firm to what was L.F. Rothschild. So I did tag along with him, spent nine years there as the head of banking and effectively the number two, and then was recruited away to a bigger firm, Jefferies. I ran tech banking at Jefferies. And while there, I saw that there were a lot of companies getting funded and overfunded, and then the internet bubble burst. And I said, what are... What's everyone gonna do with all these companies? So I left, hung a shingle called W Capital. I couldn't come up with any more of a creative name than the letter w for my last name and started sourcing deals and ended up fortunately getting financing from Goldman on a deal by deal basis and bought portfolios from small places like Intel and American Express and Ford when the CFO said, just get rid of all of the stuff you guys did over the last few years and ended up getting positions in some really cool companies like OpenTable and Pandora and RiskMetrics and some real winners. And that led to sort of committing to being a liquidity provider in the private capital markets and refined it more and more over the years. A lot of refinements because it was a very nascent market when we started.
00:08:27 · Brandon Sedloff
[00:08:27] S1: Yeah. Well, that makes a lot of sense. And if we had hours, I would love to pick your brain and hear all the stories, from the tech banking days, but, you know, that'll be another conversation. So W Capital. So when you started it, you just talked a little bit about the situation, tons of liquidity, the bubble burst. Kinda what... You know, for our listeners who... You know, secondary... You know, secondaries and liquidity solutions are a big topic right now. You just mentioned all the excitement from the meetings, but a lot of people may not understand kind of the origin of this space. So maybe walk me through some of the different refinements and iterations that happened from what you saw when you started W Capital and, you know, through to today. I mean, obviously, you know, high level, but it... It'd be interesting just to understand kinda how the industry has matured and evolved.