E77: IVP's Somesh Dash on Growth Stage Investing and Strategic Discipline
Feb 11, 2025
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Somesh Dash, a General Partner at IVP, shares insights from the forefront of growth-stage investing. He highlights the importance of strategic discipline and strong partnerships in navigating the evolving VC landscape. Somesh discusses how founders transition from early to later stages, emphasizing mental health support and effective communication. He also explores the nuances of fund construction and the current IPO landscape, all while advocating for innovation and collaboration within the venture capital ecosystem.
IVP's unique 'Switzerland approach' fosters collaborative relationships within the venture ecosystem, prioritizing partnerships over competition in deal-making.
The firm emphasizes the challenges of scaling versus initial product development, advocating for a disciplined strategy in growth-stage investing.
IVP's leadership recognizes changing dynamics in venture capital, driven by AI advancements, and remains committed to adaptive, founder-focused investment opportunities.
Deep dives
IVP's Distinct Position in Venture Capital
IVP, founded in 1980, positions itself as a growth-stage venture capital firm, primarily focusing on Series B and C investments. This specialization allows the firm to target companies that have reached product-market fit and are poised for scale. Unlike multi-stage firms, IVP emphasizes its unique 'Switzerland approach', fostering collaborative relationships with various venture firms rather than competing fiercely for deals. The firm adheres to a disciplined investment strategy that prioritizes deep partnerships with founders and limited partners, maintaining equality among its general partners.
The Value of Focus and Discipline
IVP advocates for the importance of maintaining focus in the ever-changing landscape of venture capital. The firm emphasizes that innovation and scaling present different challenges, often making scaling tougher than initial product development. This philosophy is illustrated by IVP's history of navigating multiple market cycles, demonstrating the discipline required to thrive in various investment environments. As the firm concentrates its resources on scaling businesses, it enhances its value proposition by addressing specific challenges that startups face during growth.
Building Relationships and Assessing Deals
IVP reviews around 2,000 companies annually, narrowing its focus to about 15 selected investments, indicating a highly selective investment strategy. The firm's approach to building relationships with founders is characterized by long-term engagement, often knowing them for nearly two years before investing. This depth of familiarity allows IVP to compete effectively against other firms by presenting a collaborative, founder-focused value proposition. Rather than rushing to make quick decisions, IVP fosters relationships to create a shared vision and ensure alignment over time.
Partnership and Team Dynamics at IVP
A strong partnership structure characterized by equality and collaboration defines IVP's internal culture. The firm values mentorship and a diverse team that blends experienced GPs with newer talent to maintain continuity and adaptability. This distinctive dynamic allows IVP to provide comprehensive support, not just through capital, but by leveraging expertise in various functional areas like financial management and talent acquisition. The team's ability to work cohesively while maintaining clear communication helps in making informed decisions that align with the founders' strategic needs.
Future Trends and Market Predictions
Looking ahead, IVP's leadership anticipates significant changes within the venture capital industry mirroring the evolution seen in private equity over the last decade. The rise of AI is expected to enhance operational efficiencies, potentially transforming how venture firms vet and engage with entrepreneurs. As the market continues to evolve, IVP aims to maintain its collaborative approach and focus on building strong relationships while also adapting to new investment opportunities in AI and other emerging sectors. The commitment to not just surviving but thriving in the next market cycle underscores the firm’s belief in the enduring potential of technology and innovation.
This week on Turpentine VC, we're re-releasing one of our most popular episode: Erik Torenberg’s interview with Somesh Dash. Somesh is a General Partner at IVP, shares insights on IVP's unique positioning in the venture capital ecosystem, the importance of team construction, the future of venture capital, and how IVP supports founders through scaling and strategic growth.
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IVP is a 45-year-old venture firm focused mainly on Series B and C investments, reviewing 2000 companies annually but investing in only about 15.
The firm maintains a small, equal partnership model where each General Partner has equal voting power and say in decisions.
IVP positions itself as "Switzerland" in the venture ecosystem, working collaboratively with all early-stage firms rather than competing with them.
The firm typically builds relationships with founders/CEOs for around 20 months before making their first investment.
IVP has kept its fund size consistent at $1.4-1.8 billion for the past decade, viewing fund size as an output rather than an input.
Their Twitter investment in 2009 during the financial crisis returned their entire fund, demonstrating the power law in growth-stage investing.
The firm's team construction has evolved from finance backgrounds (70s-80s) to engineering (80s-90s) to now valuing curiosity and passion for technology above specific backgrounds.
IVP believes venture capital is following private equity's evolution path, about 5-10 years behind.
The firm predicts AI will create more efficiency in venture capital's core business of investing and deal sourcing.
Despite the current market conditions, IVP believes the IPO window remains open for the best companies, particularly in sectors like security.
The firm has recently expanded to Europe with a London office, staffed primarily with transplants from California.
IVP maintains its focus on helping companies scale rather than expanding into new business lines, guided by their founder's philosophy of "disagreeing without being disagreeable."
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