TechCrunch recently sat down with Leading Investor from Well Known Firm to chat about their investing theses, the state of today's venture capital market, and why prices are so high for early-stage startups.
We've been hunting down Leading Investor for some time, so it's great to get their thoughts on today's startup market and the larger venture capital industry. Let's have some fun!
TechCrunch: To kick things off, the early-stage startup market has been super active lately. How has the accelerating cadence of deal-making impacted how you and Well Known Firm invest?
Leading Investor: We've made no changes to our process. Everyone who has is weak of conviction and poor of wallet.
TC: Got it, got it. The rapid-fire, early-stage market, though, does seem expensive at times. At least compared to historical norms. Are you worried about overpaying for nascent startup shares?
LI: Every deal that we've been a part of has been fairly priced. Every deal that we didn't win was overpriced. Every deal we didn't see was stupid.
TC: Cool. Sure. Let's talk about the technology market more generally. Where are you seeing the most startup opportunity? Or perhaps more simply, where are you paying the most attention today for future deals?
LI: Please consult our portfolio page. Here is a name of a startup we've backed. Here's another. Those are the hot areas and the hot companies. All other areas are ice-cold, overpriced, and generally over-hyped.
TC: So --
LI: Let me cut you off there to name drop Eric from Zoom, with whom I have a great relationship. Salesforce. Snowflake. On-demand pricing. Historical Twilio reference. Also have you read Recently Published Book? Someone gave me a copy and I read the dust cover. Books are good. I read them.
TC: Right. Turning to the venture capital market, how competitive is Well Known Firm these days? Other firms are offering more services in addition to capital than you are. Does that impact your win rate in competitive deals?
LI: Our firm's services are real and impactful and accretive. Other VCs offer services but don't deliver. You have to deliver. Delivery is key. We're like the AWS of service delivery. Except free. We only demand the right to profit from founder success while enriching ourselves as the cost of our fine, free services.
TC: All right. Let's talk about the exit market. We've seen a pretty active IPO market, and TechCrunch has heard that SPACs are getting incredibly frisky, even pinging Series B-funded companies in case they want to go public. What's your take on that?
LI: Here's a generic answer that doesn't answer your question but ensures that my portfolio companies continue to receive all possible inbound in case we need to float a company that won't make it as a venture-backed, private company. Public investors are dumb and will happily hold our bags. They are the valets of the investing world.
TC: Last question, how are returns at your firm? You've raised successively larger funds over the years. Is your IRR holding up as you've taken more capital under management?
LI: Recall that Well Known Firm invested in Very Old Company, so our returns have historically been strong. Regarding Every Deal Since Then, it's a bit too soon to tell. But recall Very Old Company that did well. That's how we do things at Well Known Firm.
TC: Sorry one more before we let you go. Your firm still only has male partners and nearly all of them are white. Why has progress been so slow in building a more diverse team at Well Known Firm?
LI: Sorry, I have a hard stop that started 15 seconds ago.