The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
00:51:12 · Harry Stebbings, Sameer Dholakia
[00:51:12] S1: I totally agree with you there, and I think people oscillate too much on the... Oh, they'd be so upset if you told... I think founders are actually very rational and and smart about it. [00:51:19] S0: Rational. Look. Well, I mean, you tell me. How... What percentage of the founders that when you... That you're working with that get to crazy late stage don't take any in secondary themselves as the rounds of financing go through. Most of mine are, and and they're doing the right thing for their families. Right? And I tell them to. I'm like, shoot. You should probably sell a little bit here, bud, to make sure that, you you know, you're financially secure for your family. And I think that's great. No problem. [00:51:44] S1: I think it makes better founders. I completely agree with you. You think with a much longer [00:51:48] S0: term vision to swing for the fences. Right? [00:51:50] S1: Yeah. Yeah. Completely agree with you. Can I ask, do you think we see the number of IPOs drastically reduce as Stripe shows that public markets can be harder than private markets if done well? How do you think about that?
00:51:50 · Harry Stebbings, Sameer Dholakia
[00:51:50] S1: Yeah. Yeah. Completely agree with you. Can I ask, do you think we see the number of IPOs drastically reduce as Stripe shows that public markets can be harder than private markets if done well? How do you think about that? [00:52:04] S0: Only a few comments here. One, I believe that it is a permanent structural shift that companies will stay private longer. The asset class of private venture capital is just that much bigger. There are that many more dollars in the market, and that many more firms, that many... I mean, it's just... So they will stay private longer, and I think that is a given. And I think, you know, you'll see crossovers that are spending more time here. I think LPs are allocating more to the asset class because they get that. They can't reap the rewards of this generational boom if they're waiting for them in the public markets. Most of that, run up will have already happened in the private markets. So I absolutely believe that is true. I also believe that we will see an unlock in the IPO markets next year, later next year, and in 2028. I think a lot of companies will go public, And I just think we've had this... You know, the window has been shut for so long. [00:52:57] S1: Can I ask you why will that unlock happen? What what will cause it?
00:52:57 · Harry Stebbings, Sameer Dholakia
[00:52:57] S1: Can I ask you why will that unlock happen? What what will cause it? [00:53:00] S0: You know, I'm an economist by training, man, and, so supply and demand is a thing. It's just a thing. So And what's gonna happen, in my humble opinion, is you'll see a bunch of great businesses go public that will have a lot of success in the market, but there will be an obvious appetite from investors in the public markets to get pure play AI exposure, and they don't want it from just a few companies. They're gonna want it in dozens or hundreds of companies that are pure play AI exposed. And I just think the supply and demand... The demand will be so incredible that they will be willing to pay price, and then supply and demand works. Prices move, and I think we'll see a lot of companies that's... The the window will be open. A lot of people will come out. I'll say one last point on the IPO thing, which is having done it myself, I believe it makes for a better company. Deeply believe. Like, you you run a tighter ship when you are a public company. I always used to say at SendGrid, I was... I said, we need to be IPO worthy. Before when we were building up to our IPO, I was like, we gotta be IPO worthy. And what does that mean? I mean, it is a high bar to withstand the scrutiny of the public eye. That is hard. To, like, quarter in, quarter out predictably deliver on what you say you will do is hard, but you build a really rigorous and operationally disciplined machine. And I hope a lot of companies will will take take advantage of that. I do.
00:54:20 · Harry Stebbings, Sameer Dholakia
[00:54:20] S1: Do you still buy that? And what I mean by that is, like, you know, when you look at a lot of... Yeah. Canva released their numbers. And when they release their numbers or the great numbers, you can have similar kind of reactions. Like, the expectations have just shifted, and these companies have those expectations anyway. And I would argue that actually Stripe is able to do a lot of things because of their private nature that Adyen is not able to, which make them structurally advantaged. I think you are enabled to be better because you're private rather than the discipline. [00:54:52] S0: Yeah. Look. I I hear that. I think there's... There are pros and cons to anything. I think you're right. You do... You have latitude to make, you know, like, big product investments. You can go, you know, deep in the in the red for periods of time. If you think you need a shift, I gotta take a big hit, whatever. Like... But on the flip side, there are things that you can do as a public company. Like, I have a currency. I can go do m and a. I can... There are lots of... There there are pros and cons on both sides. [00:55:15] S1: I get you, but Stripe doing M and A for OpenRoot of $8,000,000,000. I mean, they they wanted to buy, obviously, PayPal for $55,000,000,000. Like, you you have that now. You have liquidity for employees and investors. I'm just wondering, actually, are we seeing really the winnowing of that IPO attractiveness? [00:55:34] S0: Yeah. Maybe. I I don't know. I just... When I talk to our companies that we're invested in
00:55:34 · Sameer Dholakia, Harry Stebbings
[00:55:34] S0: Yeah. Maybe. I I don't know. I just... When I talk to our companies that we're invested in [00:55:38] S1: They still wanna go public. [00:55:39] S0: Yeah. They still... It is... And by the way, in certain in certain markets, it's a badge of credibility. Right? Like those companies, their customers care. They're like, okay. These guys are legit. They're real. They're at scale. They're public. Like, you know, it connotes something. [00:55:52] S1: Ironically, for things like Aura, I think it also totally makes sense of consumer brand, one where retail wants to be part of it. Do you think retail should be a much larger part of the LP base of venture funds? If we have so much more gains now in private markets, do you think retail should play a large part in the LP base of venture? [00:56:10] S0: Harry, I I think it's hard to argue in terms of the, you know, what we would call kind of the democratization of access to that. I think it's hard to argue against. I do. [00:56:19] S1: What what do you... Because I I... Okay. Because I could argue against it. Sorry. I mean, really, I... I'm going for it. Because I do... You... Honestly, Bessemer is a very overfunded product. There's so many people that want access to it. If you just had a random people's fund, I don't know if it would beat out the hospitals and pension funds. And so then you have adverse selection, and then retail just goes into shit funds would be an argument.
00:56:19 · Harry Stebbings, Sameer Dholakia
[00:56:19] S1: What what do you... Because I I... Okay. Because I could argue against it. Sorry. I mean, really, I... I'm going for it. Because I do... You... Honestly, Bessemer is a very overfunded product. There's so many people that want access to it. If you just had a random people's fund, I don't know if it would beat out the hospitals and pension funds. And so then you have adverse selection, and then retail just goes into shit funds would be an argument. [00:56:43] S0: By the way, I... Retail should only go into, back to our earlier part of the conversation, either giant global platforms with brand and leverage and and power or super, super specialized folks, and you know you're taking risk. And if that doesn't feel comfortable for the retail investor, they shouldn't play because it is a high risk game. And, you know, there's a lot of argument in this day, especially when the public markets have been ripping like they are. If you're a retail investor, just put it in the public market and don't take the liquidity hit and just let it compound in the public markets. But but, yeah, obviously, I believe when I look at our portfolio of companies, I'm like, these things are gonna continue to grow and compound and deliver gains that are not accessible in the public markets. And so that's where I would go. [00:57:23] S1: Can you paint... And one of my favorite companies, period, is Fireworks. I think Lynn is generational. Can you paint the bull case for how this is a $250,000,000,000 business?