Good morning 👋
Hopefully none of you ever took a 23andMe DNA test.
The company announced yesterday they were filing for bankruptcy which means that 15 million DNA samples can be auctioned for - not good.
If you have a 23andMe account, today is a good day to login and request the deletion of your data.
Switching gears completely - today we’re breaking down how one of the best VCs brings information to his LPAC.
Let’s get into it.
Today’s highlights
Niche LPAC questions
The future of software companies
TechCrunch gets sold
23andMe is filing for bankruptcy
TOP
Questions / issues for your LPAC
Hunter Walk is one of the OG venture bloggers, and his archive is filled with alpha. Check it out for yourself here.
His latest piece on when to go to your LP is the perfect blend of niche, relevant, and timely.
Here are five examples from that piece on things that Hunter and the Homebrew team has brought back to their LPAC over the years:
Extensions on fund length as needed – everyone knows it’s taking longer to get liquid. No reason to sell winners prematurely just because of original fund length, especially given our LPs are largely cash-on-cash return focused more than IRR.
Exceeding our limits on company concentration and recycling – we are aggressive in using early liquidity to get more turns on the dollars rather than distribute. We’ve hit 120%+ recycled in most of our funds, and have gone beyond our 10% concentration limit (per the LPA) in at least four investments.
Investing in a startup across funds – while we generally don’t want to do this (for various reasons), there was an occasion or two where it made sense.
Taking early partial liquidity – Big believers in smart portfolio management and that for true seed funds, taking secondary liquidity is an important tool to be used. While this is now becoming more common, when we started exploring these opportunities it was a little more contrarian, or at least, not talked about publicly. We asked our LPAC about what frameworks they’ve seen across their venture portfolios. Not surprisingly there’s no one approach – some of their managers never sell ‘early’ while others had a rule of thumb to try and pull 1x the fund out of their ‘unicorns’ at each growth fundraise. Most encouraging was hearing from our LPAC that we should never feel pressure to sell prematurely just to create DPI ahead of larger gains. And that they trust our judgment since we knew more about the companies than they did. So nice to have longterm partners like that.
Living our values – A while back we encountered a situation where we felt that, despite our best attempts to provide an alternative, a portfolio company was making a decision that challenged our values. We sought some advice from other VC friends but ultimately wanted to do something no one recommended: sell our shares back to the company at our cost, despite an in-process financing occurring at a higher valuation. We shared this decision with our LPAC and again, received nothing but support from the LPs.
COMMUNITY
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Good venture investors need to have:
Good background knowledge and an understanding of how venture dynamics work
A source of good deal flow so that you see founders first
An elite investor network that you can share notes, deals, and other information with
Mental frameworks to understand company building, scale, and what makes a good vs. great investment
Connections to other high-quality people that become future co-workers or portfolio company employees
That’s why we built this.
2,500 other investors from places like Bessemer, Insight, Accel, and Founders Fund already use it, and we think you should too.
TWEET
HEADLINES
These Are The Fintech IPOs That Could Follow Klarna’s Debut (Crunchbase)
Private credit set for new ball game after NCAA rule changes (Pitchbook)
23andMe faces an uncertain future — so does your genetic data (TechCrunch)
Yahoo sells TechCrunch to investment firm (The Information)
MEME
LINKS
🌭 The Digital Hot Dog—Marketing in the Age of AI: Tomasz Tunguz transforms a webinar into a format he prefers
👏 How to Sell Yourself: Key points to know when interviewing and how Sheryl Sandberg negotiated her worth
🧐 DoorDash’s v1 was 8 PDF Menus on a static HTML Website: Andrew Chen talks through the lessons learned in the past decade from actually trying to put MVPs (Minimum Viable Products) into actions and what it means in the era of AI
🪄 The Wild West of EBITDA Adjustments: Earning Before Interest, Taxes, Depreciation, and Amortization is making a comeback as one of the most scrutinized metrics in finance, driven in part by a rise in IPO and M&A transaction volume
🧪 The Billion-Dollar Startup Formula—Why AI-Driven Small Teams Are Beating Giants: While AI is a game-changer, according to VC Corner, the future favors those who can stay agile while building a foundation for scalable success
Thanks for reading this far and giving us a little bit of your attention this week.
Feel free to unsubscribe whenever this stops becoming valuable to you.
- Clay
(Founder @ Confluence.VC | GP @ Outlaw)
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