The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
00:33:48 · Harry Stebbings, Sameer Dholakia
[00:33:48] S1: Can you help me understand? I totally agree. When when you have the 1.75, does that have reserves baked in, or is the idea that you have no reserves there and then you double down from the 4,000,000,000, which is growth? [00:33:59] S0: Both. We we absolutely have reserves baked in to the 1.75, but we don't want to just be, like, doing pro rata checks. Like, in the companies that we believe are taken off, we want to back up the truck as we've done, like we just announced around with Elise AI where, you know, we were gonna be investing nearly $200,000,000 that we just announced. And and so, like, when we see the winners that we think are in big markets are gonna build great companies, like, we're like, yep. Let's go. [00:34:22] S1: What does that look like then, that interplay? And do you worry about the signaling risk of, like, Samir jumping all over one company and not another company?
00:34:22 · Harry Stebbings, Sameer Dholakia
[00:34:22] S1: What does that look like then, that interplay? And do you worry about the signaling risk of, like, Samir jumping all over one company and not another company? [00:34:33] S0: No. I don't. I just... At the end of the day, I believe the truth will set you free. Just like... If the signaling risk is they haven't backed up the rock of my company yet, the signaling there is simply, yeah, the business hasn't yet demonstrated that it is gonna be going like this. That's okay. I led one of those. It takes a while. It's hard to build businesses, man. Like, I don't I don't worry about the optics on stuff like that because I've been in the seat, and I think I think the entrepreneurs and the CEOs, they know the business they have. They know what they're working on. They know what they have to do to take it to the next level. And if they're not yet at the next level, I don't think they're, most CEO entrepreneurs aren't gonna wanna try to pretend that they're not. [00:35:11] S1: So you have $4,000,000,000 then in growth going to your segment of the market. How does that look? When you look at the portfolio there, how concentrated is that? What does the check size look like? What does the reserves look like? I'm just fascinated how you construct a $4,000,000,000 portfolio.
00:35:11 · Harry Stebbings, Sameer Dholakia
[00:35:11] S1: So you have $4,000,000,000 then in growth going to your segment of the market. How does that look? When you look at the portfolio there, how concentrated is that? What does the check size look like? What does the reserves look like? I'm just fascinated how you construct a $4,000,000,000 portfolio. [00:35:27] S0: It's incredible because the numbers are obviously kinda... Are staggering. They're they're large. But I I don't think that the the fundamentals are are perhaps not all that crazily different in that we still wanna have concentrated bets. And so what that means is a concentrated bet means, shoot, we may write 200 to $400,000,000 into a given opportunity, into a given company if we have that much conviction. And it'll probably be over a couple different rounds, couple few rounds, but you're still looking for a a relative concentration, whatever it is. [00:35:55] S1: What percent of the fund would you be happy to go up to for a single company? [00:35:59] S0: Five to 10% is sort of what I think our average check size will be for late stage growth, to be clear, for our for our late growth funds. Early growth is a little bit different, but but late late growth, five to 10% feels fine. And I'll just tell you, our last growth fund, our our century two, I think we had 20% into one name. The name was Anthropic. I feel pretty good about it. So we will flex it up if we believe it is a generational company. [00:36:22] S1: Do you have an early growth and a late growth? [00:36:24] S0: We do. Yeah. Fucking... [00:36:27] S1: The fuck?
00:36:27 · Harry Stebbings, Sameer Dholakia
[00:36:27] S1: The fuck? [00:36:28] S0: Early growth is very different than late growth. It's so different. Okay. Tell me. Me. Tell me. Go ahead. [00:36:35] S1: They're both growth. [00:36:36] S0: No. No. No. No. When [00:36:40] S1: we do an early growth, mid growth, a not so late growth, a late growth, a pre IPO... [00:36:45] S0: You got to draw. I will concede, Harry, that there is a arbitrary distinction cut off line somewhere, but I will tell you qualitatively, there is a big difference between investing in a company that is in there in the 20 to 40,000,000 of revenue range or is between, you know, call it, I don't know, 500,000,000 to a billion dollar valuation versus I'm coming into a fireworks at 15,000,000,000. That's a... I mean, you're talking about a very different stage of company. What you know about the business is different. The risk profile is different. The check size is gonna be different, all the things are gonna be different. [00:37:20] S1: I get all of that, but I think what matters is your multiple on invested cash. And actually, I think if you look at, say, a fireworks, I think the upside is just freaking enormous. [00:37:30] S0: Enormous. Yep. Sure.
00:37:30 · Sameer Dholakia, Harry Stebbings
[00:37:30] S0: Enormous. Yep. Sure. [00:37:32] S1: And I adore and I adore the Ligure, but by nature, I think the upside is just less because it's a vertical market. It's not intelligence for the world. I mean, I think Max would agree with that. It is law. And even if it's tax and compliance as well, it is still relatively verticalized. And so I think your multiple on invested cash is what you should be looking at, which I would argue would be the same, actually. [00:37:56] S0: I agree with you that many of the opportunities that we are investing in... Because we are only trying to invest in the very best in both of those stages of early growth and late growth. I do believe that on both sides of those, you can find ten and twenty x companies. We want nothing less than a five, and that's a really high bar in growth. [00:38:14] S1: What did you do from your early growth that's not in your late growth that you rue not putting in your late growth?
00:38:14 · Harry Stebbings, Sameer Dholakia
[00:38:14] S1: What did you do from your early growth that's not in your late growth that you rue not putting in your late growth? [00:38:20] S0: Oh, that's a good question. I'm really excited about another vertical AI company called Field Guide that is in, it's AI for auditors. Right? So we've done AI for doctors with the bridge and AI for lawyers with Evenup and, Legora, and and Field Guide is AI for auditors. And I did that one early. They were, I think, they were sub 10,000,000 of ARR at the time we invested. It's probably a little under a $200,000,000 entry price, and they are just ripping. They are growing really fast. I'm really excited for them and and proud of them, and we haven't yet been able to back up the truck. Their inflection has been extraordinary. I think like a lot of companies post this January, February magical time when the models took a leap forward, all of a sudden, their solution became wildly more compelling, and and the uptake is is showing it. [00:39:10] S1: I'm gonna push you, but is that really a generational company? Like, no offense. Yeah. It's it's it's fascinating. But no. No. But, like, fireworks is. Cognition or factory could be [00:39:22] S0: Sure. [00:39:22] S1: Like like, and, again, I mean it with zero disrespect to field guide. It can be a phenomenal bit... A $1,020,000,000,000 business. But to be in the late growth, as Excel calls it, like, the leader's fund for Excel, is this really the generational?