The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
01:07:21 · Harry Stebbings, Rory O'Driscoll
[01:07:21] S3: Oh, yeah. Mother of god. Why the fuck did you take the guy who was competent out of this business? [01:07:26] S0: No. You're exactly right. Tom had done the founder thing. The company was doing a 100,000,000, losing a 100,000,000. They hired this guy. He kills it. And then they replaced him in the last few months. And it's like, And I think all the venture investors are going, we didn't sign up to have a nonexec chairman replace the guy we backed. [01:07:41] S3: Totally. Guys, there's two different spectrums here in terms of venture. Bessemer raised a fresh $5,750,000,000 to the point of you only need one. Well, they think you need near close to six, but a very, very modest $1,750,000,000 seed fund, Jason. So seed isn't for suckers when you're when you're when you're doing about 40,000,000 a year in fees. It ain't for suckers, baby. And then on the flip side, you've got NFX now just investing GP capital, not taking a new LP capital in new funds. So two different ends of
01:07:41 · Harry Stebbings, Jason Lemkin
[01:07:41] S3: Totally. Guys, there's two different spectrums here in terms of venture. Bessemer raised a fresh $5,750,000,000 to the point of you only need one. Well, they think you need near close to six, but a very, very modest $1,750,000,000 seed fund, Jason. So seed isn't for suckers when you're when you're when you're doing about 40,000,000 a year in fees. It ain't for suckers, baby. And then on the flip side, you've got NFX now just investing GP capital, not taking a new LP capital in new funds. So two different ends of [01:08:17] S2: the spectrum there. Well, Bessemer thing is just what Jack's talked about at the beginning, the learnings of benchmark and going big on growth early. I think it's probably the same story. I mean, Bessemer, they weren't menlo into Anthropic, but that was a great one. Right? The growth team accelerated. They blew up the whole teams there, Samir and the whole team. It's been a win. So of course you put more money into it, right? I think they said the seed early was still mostly growth. But even there to Jack's point, it's 2026. Imagine a seed around is 30,000,000. How many can you do with reserves in a 1,750,000,000 fund if you can't count on recycling? 30? With one to one reserves? You can't even... You need... Even a billion starts to sound small for seed funds if you believe 30,000,000 is a seed and it... You know, that that barely gets you TechCrunch article. So the math sounds right even if the returns may, you know, maybe some work.
01:08:17 · Jason Lemkin, Harry Stebbings, Jack Altman
[01:08:17] S2: the spectrum there. Well, Bessemer thing is just what Jack's talked about at the beginning, the learnings of benchmark and going big on growth early. I think it's probably the same story. I mean, Bessemer, they weren't menlo into Anthropic, but that was a great one. Right? The growth team accelerated. They blew up the whole teams there, Samir and the whole team. It's been a win. So of course you put more money into it, right? I think they said the seed early was still mostly growth. But even there to Jack's point, it's 2026. Imagine a seed around is 30,000,000. How many can you do with reserves in a 1,750,000,000 fund if you can't count on recycling? 30? With one to one reserves? You can't even... You need... Even a billion starts to sound small for seed funds if you believe 30,000,000 is a seed and it... You know, that that barely gets you TechCrunch article. So the math sounds right even if the returns may, you know, maybe some work. [01:09:02] S3: That's why Rory's a pre seed investor today with his 900. Friends and family round, Rory's the first shackles in. [01:09:09] S1: Yeah. That's me. Exactly. [01:09:10] S3: And then and then NFX shutting shop to externals?
01:09:10 · Harry Stebbings, Jack Altman
[01:09:10] S3: And then and then NFX shutting shop to externals? [01:09:14] S1: I mean, I I agree on the... Like, both of these moves make sense. Like, you know, for Bessemer, it is the market around you, and they've got, you know, a long history and tons of LP trust. And if you wanna play the game, why not just go bigger and play the game? And then on the NFX side, you know, the homebrew guys, I think, did this before, and that works out really wonderfully. And I think it it probably changes the texture of how the game feels. And I think people also really care about that. When you're not managing external capital, you get to do things without any explanation to anybody. And I think that, you know, there... There's probably some ways in which that lets you, you know, freeze up your activities. But I also think some people just get to a place where they prefer it, and they wanna say, you know what? This ownership stuff, I don't care. I wanna put a 100 k into, you know, into JEV or something like that. And that's hard to defend out of a seed fund. But if you're investing your own capital, it lets you do it. So I I do also think back to the prior point, I think money is a big driver, but I think there are also non financial drivers for a lot of these things. So makes sense.
01:10:11 · Jason Lemkin, Rory O'Driscoll, Jack Altman
[01:10:11] S2: The only thing I thought about this has to do with NFX. I mean, I get the appeal of investing your own capital, right? And I think frankly, I think anyone investing that has some resources has thought about at least a little If you've got a little bit of money, I'm like, F the L pack and all this while just to invest my own money, especially if I have a hot hand, I'll get into these great deals and you know, I'll get 100% instead of 25% or 20%. Everyone's thought about it. Only thing I always thought about, if it's such a great idea, why didn't Peter Thiel do [01:10:37] S0: it? [01:10:38] S1: Well, Peter Thiel did put a huge amount of his money into each founder's fund. [01:10:41] S2: But not all but not all of it. [01:10:42] S1: Right? No. Not all of it. I think [01:10:44] S2: It's just an it's just an example, right, [01:10:46] S1: of not doing all of it. Right? I think you're right. Mean, I think what he would say is if you wanna build a firm, you need outside capital. You need salary to pay people. You actually need kind of the tension with stakeholders outside your firm to do it. So I I think if your aspirations are firm building, then you would say, I'm gonna put in as much of my own money as I can because I believe in the strategy, but, you know, as much LP capital as we need. So that would be my guess.
01:10:46 · Jack Altman, Jason Lemkin, Rory O'Driscoll
[01:10:46] S1: of not doing all of it. Right? I think you're right. Mean, I think what he would say is if you wanna build a firm, you need outside capital. You need salary to pay people. You actually need kind of the tension with stakeholders outside your firm to do it. So I I think if your aspirations are firm building, then you would say, I'm gonna put in as much of my own money as I can because I believe in the strategy, but, you know, as much LP capital as we need. So that would be my guess. [01:11:08] S2: Yeah, it's like 30% of the fund that he funds or something like that. But the NFX thing I did notice, I think they said goodbye to the team in the note. So to Jack's point, yeah, it's easier if you don't want to have a team, right? If you don't want to have And a... They have life goals too. It's not just the money. You can fund the salaries, but they have life... I mean, they want to be partners. [01:11:25] S0: I totally agree with what you just said, Jack, Pitt. Like, you're building a firm, you have junior people, they want to have a goal, they want to have a career. You have to take outside money. You got to do all the things. I I think, by the way, the beauty of putting 30% of your own money in is you can look the LPs of the eye and say, thank you for your opinion. But as the largest LP investor here, I'm very comfortable putting 20% of my fund in SpaceX in 2008. So duly noted that you're concerned, but hold that thought for eighteen years and you'll be glad.