E8: Kleiner Perkins and Penn’s Endowment on India, loss ratios, and the rise of secondaries
Mar 22, 2024
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Topics include India's startup ecosystem, Carta's 2018 startup class data, IPOs in tech industry, M&A, rise of secondaries, investments in AI-focused companies, and disruptions in the healthcare industry.
India's startup ecosystem is thriving, attracting global interest and fostering tech hubs comparable to Silicon Valley.
Successful Indian startups are tailoring products for global markets, showcasing a shift in strategic focus.
Selective follow-on funding and strategic portfolio management are crucial for optimal long-term returns in venture capital investments.
Deep dives
Investing in India's Growth Potential
India's potential as an investment frontier with a burgeoning middle class and significant urbanization is discussed. Despite past infrastructural challenges, recent improvements have transformed cities like Hyderabad into tech hubs comparable to Silicon Valley.
Startups in India Embracing Local Market Focus
Successful Indian startups are highlighted for catering to local market needs, such as Flipkart and Freshworks. The shift towards developing products for global consumption is noted, reflecting a diversification in startup strategies.
Venture Investment Strategies and Portfolio Management
Investment strategies focusing on high conviction initial investments and selective follow-on funding are emphasized. Portfolio concentration towards top performers and the importance of strategic portfolio management revealed for optimal long-term returns and fund performance.
Trends in Venture Capital Investments
Venture capital funding trends suggest that companies aiming for half a billion in revenue typically take around 10 years to achieve this milestone, showcasing the challenge of accelerating growth. The availability of private capital offers entrepreneurs the option to delay going public, impacting the journey to an IPO. Secondary markets provide opportunities for investors to gain liquidity by selling portions of their positions before companies go public, illustrating the potential for significant returns before IPOs.
Evolution of Secondaries and Fund Strategies
The surge in secondaries investments reflects the maturing venture capital asset class, offering a counter-cyclical option when the IPO market is turbulent. Continued growth in secondaries raises questions about the long-term impact on venture liquidity and investment strategies. Some investors opt for series A strategies over secondary funds, emphasizing a focus on foundational investments for sustained portfolio growth amidst shifting market dynamics.
David Weisburd hosts Mamoon Hamid, Thomas Scriven, and Jason Calacanis to discuss India’s startup ecosystem (00:52)), Carta’s 2018 startup class data (21:38), IPOs in the tech industry (35:56), and much more!
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Timestamps:
(0:00) David Weisburd intros Mamoon Hamid, Thomas Scriven, and Jason Calacanis
(00:52) India’s startup ecosystem
(6:31) Traction and support for Indian startups
(14:52) Sovereign wealth funds and their place in the ecosystem today
(21:38) Deep dive into Carta’s 2018 startup class data, loss ratios, and investment strategies
(35:56) The future of M&A and IPOs in the tech industry
(44:29) The rise of the secondary market
(1:01:48) Rapid-fire segment on recent investments
