Evolution and Strategy of Venture Capital Funds

Follow me @samirkaji for my thoughts on the venture market, with a focus on the continued evolution of the VC landscape.

We are thrilled to bring you a conversation with David Sacks, Founder and Partner of Craft Ventures. Based in San Francisco, Craft was founded in 2017 and currently has over 3 billion in assets under management.

Across the last three decades, David has been incredibly influential as an investor, entrepreneur, and public thought leader. When starting Craft, he was able to draw from his deep operating background, having worked as an early leader at PayPal, and then later founding Yammer, which he sold to Microsoft for $1.2 Billion.

He is also one of the hosts of the All In Podcast, one of the most listened podcasts in the world.

We had a wide-ranging dialogue that took us through the evolution of Craft Ventures from its initial days to today, the strategic decision-making behind scaling fund sizes and team growth, and his overall views on the current outlook of venture capital.

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About David Sacks:David Sacks is Co-Founder and Partner at Craft. He has been a successful founder and investor for over two decades, building and investing in some of the most iconic companies in tech. David has invested in over 20 unicorns, including Affirm, AirBnB, Bird, ClickUp, Eventbrite, Facebook, Houzz, Lyft, OpenDoor, Palantir, Postmates, Reddit, Slack, SpaceX, Twitter, Uber, and Wish.David first got involved in the technology industry in 1999 when he joined early-stage startup Confinity, later renamed PayPal. Serving as the company’s first product leader and then as COO, David built and ran many of the company’s key teams, including product management and design, sales and marketing, business development, international, customer service, fraud operations, and HR. He pivoted the product from beaming money on Palm Pilots to emailing money on the web, and introduced the business model. When the company IPO’d on the Nasdaq in 2002, David was 29 — the median age of the “PayPal Mafia” executives listed on the S-1. PayPal was later acquired by eBay and eventually spun back out into a publicly traded company (under ticker symbol PYPL).David is well-known in Silicon Valley for his product acumen. AngelList’s Naval Ravikant has called David “the world’s best product strategist.” And has received acclaim as one of the Besties on the All In Podcast.

In this episode, we discuss:

(02:56) David Sacks discusses transitioning from being an entrepreneur with experiences at PayPal and Yammer to founding Craft Ventures, emphasizing the focus on SaaS and leveraging operational expertise to support startups.

(04:56) The growth of Craft Ventures from its initial fund to managing $3.5 billion, focusing on SaaS and marketplaces, and how fund size affects strategy

(08:15) Portfolio construction and the strategic shift towards reserving more for follow-ons to maintain company ownership and align fund size with venture focus

(10:10) The VC market's evolution shifting towards sustainable investment strategies following the 2020-2021 bubble and its correction.

(13:39) Advice for entrepreneurs to focus on capital efficiency and realistic growth expectations due to the changing investment landscape

(17:33) Predicting a continued reset in valuations and funding availability in 2024, and how startups can adjust their strategies accordingly

(34:05) Parallels and distinctions between running a venture firm and a startup, emphasizing the importance of creating a stable, transparent environment at Craft Ventures

(36:10) The significance of firm culture and talent acquisition, focusing on collective success and providing transparent, valuable support to portfolio companies

I’d love to know what you took away from this conversation with David. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Podcast Production support provided by Agent Bee

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit ventureunlocked.substack.com