20VC: Tiger Global Saved by OpenAI | Coatue's New Fund: Hype or Substance | Why SBF is the Greatest Investor of the Last 5 Years | Why Big Funds are Investing in Perplexity
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Companies
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Key Quotes
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Topics
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Insights
🎯 Summary
Tech Podcast Episode Summary: Venture Capital Dynamics, AI Investment, and Market Realities
This episode of the 20VC podcast, hosted by Harry Stebbings and featuring guest Rory Sutherland, dives deep into the current, often chaotic, state of venture capital, focusing heavily on the dynamics surrounding AI investments, rapid fundraising cycles, and the performance of major funds like Tiger Global.
1. Main Narrative Arc & Key Discussion Points
The conversation pivots from the hyper-speed of modern fundraising (exemplified by the recent $120M seed round for “Owner” at a $1B valuation) to the strategic necessity of proactive deal sourcing. The hosts debate the ethics and practicality of investors being forced to commit capital within days of initial contact, concluding that success now requires maintaining a pre-vetted “heart list” of 10-20 target companies. This leads into a broader discussion about the dichotomy between Seed/Pre-Seed (belief rounds) and Series A (traction rounds), particularly in light of an 81% drop in Series A activity. The latter half shifts to analyzing Tiger Global’s aggressive 2021 strategy and how massive bets on companies like OpenAI and Scale might salvage a challenging vintage, juxtaposed with a brief, dark humor-laced commentary on FTX’s investment portfolio.
2. Major Topics, Themes, and Subject Areas Covered
- Venture Capital Fundraising Velocity: The pressure of 48-hour decision windows for large checks.
- AI Investment Landscape: Implicit acknowledgment of OpenAI’s dominance and the high capital requirements in the space.
- Fund Performance & Vintage Analysis: Evaluating Tiger Global’s 2021 vintage, late-stage vs. early-stage fund performance (e.g., 2018 vintage).
- Founder Resilience & Mindset: The necessity of building an “S-tier” startup regardless of market conditions.
- Personal Philosophy in VC: A candid discussion about commitment to the industry, even following personal health crises.
3. Technical Concepts, Methodologies, or Frameworks Discussed
- Bet Sizing Strategy: The concept that a fund with many mediocre deals (like Tiger’s 350+ in 2021) can only be saved by massive, concentrated bets on “moonshot” companies (e.g., 10-20% of the fund in OpenAI).
- Seed vs. Series A Distinction: Seed is the “believe in the team” round; Series A is the “show me the traction” round.
- High-Growth Metrics: Mention of high Net Revenue Retention (NRR) as a desirable metric for enterprise storage companies.
4. Business Implications and Strategic Insights
- Unlimited Capital for “In the Zone” Companies: If a company is hitting hyper-growth metrics, capital is effectively unlimited, even from insiders alone.
- The “Second Chance” Deal: Investors are increasingly willing to re-engage with companies they passed on earlier (e.g., 2-3 months later) if the company has shown significant growth, effectively getting a “second bite at the apple.”
- Market Correction Reality: The sharp drop in Series A funding means that B-tier startups that relied on 2021 exuberance must either drastically improve or face difficulty raising, reinforcing the VC mandate to only fund best-of-breed companies.
5. Key Personalities, Experts, or Thought Leaders Mentioned
- Harry Stebbings (Host): Drives the discussion on fundraising mechanics and biases.
- Rory Sutherland (Guest): Provides strategic commentary on deal sourcing, the difficulty of rapid assimilation, and personal commitment to work.
- Sam Bankman-Fried (SPF): Mentioned ironically as an “astonishing” early investor in both Anthropic and Cursive, highlighting his ability to spot crucial AI companies despite his later downfall.
6. Predictions, Trends, or Future-Looking Statements
- The trend of preempting Series A rounds shortly after seed funding is accelerating due to competitive pressure from top-tier firms (Sequoia, Lightspeed, GC).
- The 2018 vintage funds (late-stage focused) are predicted to perform very well because they were buying assets at lower valuations before the 2021 peak.
7. Practical Applications and Real-World Examples
- Owner’s Funding Round: Used as a prime example of rapid, high-valuation seed funding based on strong growth (40M ARR growing 10% MoM).
- Tiger Global’s Strategy: Used to illustrate how a fund with a flawed, high-volume strategy can pivot by making massive, concentrated bets on category winners (OpenAI, Scale) to save the fund’s overall performance.
8. Controversies, Challenges, or Problems Highlighted
- The Two-Day Due Diligence Trap: The challenge for investors to properly assimilate a founder and a deal in 48 hours, leading to the necessity of pre-existing relationships.
- Investor Bias: The internal struggle of whether it “feels wrong” to immediately re-engage and bid up a deal just three months after passing on it, even if the data supports it.
- Tiger Global’s Volume: The controversy surrounding their 350+ Series A deals in 2021, which is acknowledged as a strategic mistake unless bailed out by massive outlier returns.
- FTX/SPF’s Fraud: The discussion highlights that
🏢 Companies Mentioned
Excite
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tech (historical search engine)
Hubble
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tech (historical search engine)
Excel
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finance
Sasha
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finance
Tiger
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finance
Root
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tech/insurance
Fiji Sumo
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tech
Apps
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tech
Harry
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media/finance
Lightspeed GC
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finance/VC
GC (General Catalyst or similar VC)
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finance
Lightspeed
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finance
So Plan B
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unknown
Cause Google
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unknown
New York
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unknown
💬 Key Insights
"What Perplexity is selling from an investor perspective is an at-bat, a credible one-in-three, not equally weighted to be clear. OpenAI is clearly going to win, but maybe you can be third and that's where the downside is if the prize is a trillion bucks."
"There's only three players that are going to be relevant here. It's OpenAI, Anthropic, Perplexity, right?"
"The big picture here is this is an at-bat, a one-in-three at-bat at a trillion-dollar company."
"OpenAI set in the last round, you either show up with 250 million, or don't show up at all."
"I do believe we are in a world of fewer, bigger winners. And that loads up and down the entire venture-weak system."
"I am so sure the OpenAI is going to be a one and a half to two trillion dollar company right now."
📊 Topics
#artificialintelligence
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#startup
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#investment
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#generativeai
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#aiinfrastructure
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🧠 Key Takeaways
be doing as well? Or is it unique to Cotu, do you think? I think anything that works in finance gets copied immediately