“There are more unicorns nowadays and the potential upside is so much bigger, so despite the COVID headwinds in 2020, venture exits were $290B.”
Trang Nguyen and Alex Bangash are co-founders of TI Platform Management, a venture capital investment firm focused on investing in innovative and disruptive companies.
Venture has rapidly grown into the largest asset class among institutional investors. A decade ago venture made up only 5% of portfolios, but now are central to investing strategy as companies have taken off in fields such as AI, crypto and cloud technologies. The upside for growth has increased exponentially. “There are more unicorns nowadays and the potential upside is so much bigger, so despite the COVID headwinds in 2020, venture exits were $290B.”
Venture opportunities are more diffuse today, so it’s more important to build better venture structures. Ten years from now, we will see venture exits continue to grow in size where a $10 million investment could exit at $500 billion.
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SPEAKERS
Trang Nguyen
Co-Founder
TI Platform Management
Alex Bangash
Co-Founder & Managing Partner
TI Platform Management
EPISODE TRANSCRIPT
John Darcie: (00:08)
Hello everyone. And welcome back to salt talks. My name is John Darcie. I'm the managing director of salt, which is a global thought leadership forum and networking platform at the intersection of finance technology and public policy. Salt talks are a digital interview series that we started in 2020 with leading investors, creators and thinkers. And our goal on these salt talks is the same as our goal at our salt conferences, which is to provide a window into the mind of subject matter experts, as well as provide a platform for what we think are big ideas that are shaping the future. And we're very excited today to welcome Trang Winn and Alex Bangash to salt talks. Trang is the co-founder of TEI platform management, a venture capital firm that backs ambitious entrepreneurs creating the world's most disruptive venture structures founded in 2015 T platform management uses its $775 million plus in AUM to invest in today's most innovative companies and tomorrow's category defining leaders since its inception TEI platform has deployed nearly $475 million to numerous emerging venture funds backed 47 funds founded by 56 entrepreneurs and enabled entrepreneurs to raise over $1 billion from LPs.
John Darcie: (01:28)
The firm has also invested directly in more than 35 companies. Trang is the former executive member of trusted insight where she managed products and grew the institutional community to more than 35,000 limited partners. Alex is also the co-founder and managing director of Tia platform fund a platform for backing founders, building innovative venture structures. Same as Trang. He's the co-founder and chairman of trusted insight. He's a founding investor in funds, such as initialized founders funds, uh, Saster among others and an early investor in companies such as true pill and standard cognition hosting today's talk and reprising her role as a guest moderator here on salt talks is our great friend. Sarah Koontz. Sarah is the founder and managing director of Cleo capital, a venture capital firm. And now I'll turn it over to Sarah for the interview. And I might chime in here, there with a few questions, uh, as I see fit Sarah, but you take it away. Awesome.
Sarah Kunst: (02:31)
Thank you so much, John. Um, and thank you so much Tang and Alex for being here, we are super excited to talk and, and hear more about ti. So, um, you know, John did a great job, but I always love to hear it directly from you. So, so trying, why don't we start with you and then we'll go to Alex would, would love to hear kind of your bio's and how you ended up, uh, you know, starting, starting TEI.
Trang Nguyen: (02:56)
Sure. Um, thank you so much or the virus, uh, today. So, uh, Tia platform management is the platform for entrepreneurs that John mentioned. Um, so we had intrepreneurs as they, em, back on the next phase update journeys, uh, whether it means starting another companies or setting up with disruptive venture platforms, such as venture studio and two platforms. So we spend a lot of time at T platform management's brainstorm with entrepreneurs about different Novo venture structures, um, that they can be valid. And in many cases for, you know, some case, we act as the founding partners of these venture firms, um, uh, Tia platform management. I also really enjoy building the team. So one of the key things that I want to highlight is that we are one of the most diverse venture firms in the industry today. So we have a global team members that is more than 50% female and 90% minority, including toady percent black and 7% Latino. Um, just in the last 12 months, um, we hit back for black entrepreneurs, um, and these, uh, you know, amazing operators and entrepreneurs like, like our south Sarah. So diversity has always been, um, uh, important to the ways that, you know, I'll foam operate and evaluate opportunities. So that's just a little bit about platform management and I told it to Alex to talk more about what we do and he's like, well, and also why we stopped the phone.
Alex Bangash: (04:37)
Great. Well, thank you so much. Um, um, for having me here set great to great to be. And thank you. Thank you, John, for the introduction. Um, so, um, I think, um, uh, as Chang mentioned, there are, you know, there are many, many amazing firms, some invest with, um, founders and, uh, uh, directly some invest in their, um, in their, uh, in funds. Um, we, on the other hand, um, we like to think we're trying to re-imagine venture capital. Uh, we're saying, how can we be partners of founders, um, through their journey? So, um, founders will start building a single company. Then sometimes they will build multiple companies as a studio. Sometimes they will build a platform such as Sarah has built and, you know, so we are saying, how can we be they're, they're their partners, we're reimagining, um, when share capital. And, um, and that kind of goes very, uh, with my background as an engineer.
Alex Bangash: (05:42)
So I have no financial training. Um, I started as an engineer at, uh, uh, at bell labs. Um, and, um, from there, um, when I was in business school, after starting an optical networking company, I started an advisory service and one of the key things that, so basically I was a scout for LPs. And one of my key observation is that the best, the best venture capitalists were the founders and those building great firms. So that's how I got involved with, I was lucky to get involved with the likes of founder span and Excel, India and others in their early days. Um, uh, including now you're talking about Coinbase. Um, I remember Gary tan, uh, investing, uh, leading the seed round of Coinbase, uh, at, uh, um, by sea demo day. Um, and so, uh, you know, when, when, when Coinbase was giving out, uh, uh, I think it wasn't a full Bitcoin, but some fractional Bitcoin, um, to, to folks. So, um, so today, um, no, you know, we partner with entrepreneurs and, and help them, um, help them create the next generation firms, uh, firms, which will, um, which we'll be defining. And I think our big value add is while there are many, many great investors, these investors also have to build their firms and we help them with the structures such as studios, uh, platforms, um, API based funds and help them think about those structures and help them, uh, uh, both, uh, start partners and capital partners in, in their, in their journey. Yeah, that,
Sarah Kunst: (07:28)
That's awesome. Um, and you've been great, a great partner, uh, to, to me and Cleo capital, and I know many others and, and huge congrats on, on, uh, the Coinbase IPO. I know you're in a lot of things that, that, uh, do do some crypto. So, uh, you know, that is maybe a great kind of jumping off point to, into the next question, which is, you know, what's, what's going on in the market right now. What are you seeing in terms of, of current market trends? Um, you know, trying to touch on diversity, you, you touched on, on crypto, both of those are big trends, but, but maybe talk through kind of all the different trends you're seeing right now in the market and, and what you think they mean, uh, for, for other investors who are, are looking to invest into startups or into venture funds,
Alex Bangash: (08:14)
You know, I would say, um, so, you know, I'm, um, I've been to multiple cycles. I saw the web one dot or cycle. I saw the web, you know, web cycle and maybe we're in the web three dot or right. The distributed web with crypto and, or the parallel web. And I would say that, um, with, you know, kind of every, there's always a boom and bust cycle, right. There's always a boom and bust cycle. And I did, it's no question that we are in the boom cycle right now where, you know, and nobody could have predicted it as well. Um, COVID has accelerated, um, it has accelerated AI. It has accelerated crypto, right? It has accelerated, it literally has accelerated industry, which, which were shunned by, by, um, w VCs, you know, I'm not going to name the VCs, but, um, you know, about a decade ago, um, some, some of the most prominent kind of Midas list list out of support, Hey, we do everything except health tech and FinTech because they're regulated industries.
Alex Bangash: (09:23)
And today some of the biggest opportunities are in ad tech and FinTech, right. And they they've massively accelerated. Um, now, you know, you can see from the, uh, of course not just the telehealth boom, but then the kind of the fintechs, um, eating, eating the shared, I mean, what is the square square and, uh, uh, square and Stripe and Coinbase will be bigger, you know, or are already bigger than, than Goldman Sachs. So, yeah, I think there is, there is this, there is this trend, um, well off people now finally, um, finally, uh, believing, but then there are some other things other trends and venture has become, you know, venture has become the largest asset class amongst institutional investors. So if you go back to, you know, kind of traditional investors, um, uh, almost a decade ago, or when you're used to be 5% of the portfolio, um, and, um, you know, there were, there were some kind of, um, heads of private equity who hadn't even invested in venture today because of this massive acceleration of gains and also reinvestment of, um, our, for some institutional investors, uh, tech and, uh, you know, and venture multi-state venture is Turkey in some cases, even bigger percentage of their portfolio.
Alex Bangash: (10:46)
So I think, I think those are, those are some, some of the trends, you know, that we're seeing, we're also seeing this, you know, huge bifurcation of, right. So, you know, uh, about, um, again, 15 years ago there were, um, venture, it was the, the, the conventional knowledge was venture is not scalable, you know, and, uh, you know, you'll have the benchmark say in the plaintiff backends with their small, small funds, then the goes, this is a cottage industry. It's a, it's a mentorship model and you can't scale it and you can't institutionalize it now, you know, the largest private equity fund is a venture fund, you know, and, um, the, um, some of the VC funds are raising bigger funds than some of the mid-market buyout funds. So, so I think there's this Institute position at the top. Um, and maybe, you know, in 20 10, 20 years, the biggest, um, you know, the biggest asset managers, aren't going to be Blackstone, Carlyle, you know, invest in applied or SoftBank, Sequoia, Andreessen, et cetera, as they, they, they, they create assets.
Alex Bangash: (11:55)
Um, but on the more on the, you know, on the flip side, um, as these funds are getting bigger and bigger, they are getting farther away from the entrepreneurs. And that's why, you know, we partnered with you, Sarah, because you have this unique opportunity of, of, uh, of catering to those entrepreneurs at the earlier stage, you know, and that's why we're doubling down on formation, um, things like studios and, and seed funds and pre-seed funds, um, uh, where, uh, you know, and platforms where they are now taking the place where, um, uh, you know, kind of a traditional VC's used to do. So, um, I left, I stopped there. I know I, through quite a few different, different things I've trained. I don't know if you want to add, I think
Trang Nguyen: (12:39)
Just to add to Alex boy, so number one, we clearly see that, you know, venture capital itself is going through a rapid period of transformation and innovation, right? So, you know, as Alex mentioned, we see that, you know, as there's a boom of disruptive venture models, such as, you know, studio and, you know, as a platform models like Cleo capital, for example, right. And you know, this, um, evolution is actually, uh, this evolution is actually, uh, empowered by COVID-19 and remote work. Right. Uh, we see that, you know, chatty, she VC firms, you know, B, B side look beyond cat-like traditional VC hub. They start to develop a new way for capturing startup, right. So, you know, you see a lot of VC lawn spot, right. Um, you know, while spouse models and so on, because, you know, it's just very difficult for them, um, to fight, you know, innovation in their model and to what Alex mentioned, you know, they are further away from entrepreneurship as you know, they based Lasher upon site and invest in later shapes around finance.
Trang Nguyen: (13:52)
So, um, we definitely see, you know, the rise in venture studio. Um, we saw, you know, platforms. So to give you an example, when we first invest in, um, you know, when we started the film in 2013, I think like we can count, you know, into, um, a little handful of studio venture, maybe two of them, right. Uh, today, you know, we had by over 10 venture studio, right. Um, so venture studio is very, you know, [inaudible] and more active, but it's also very attractive to a lot of, um, introductional investor, right? So number one, the LPs, they can get access in the same type of, uh, Syria entrepreneurs, such as Elon Musk or Quito, Tio. Um, and also they, they gain access to, um, a portfolio of set up, uh, founded by Syria and entrepreneurs and, you know, the same raise money from Excel and Sequoia.
Trang Nguyen: (14:53)
So in a way, LPs can get directly to the, uh, you know, entrepreneurs without paying extra layer of fee and carry. Uh, secondly, you know, the studio venture is very disruptive in a way he's actually enabled the LPs to own more equity of the companies, uh, until series B and C, right? So as capital become planted, and as the childish venture firms have raised billions of dollars and involve investment on later stage around finance, you know, these models, uh, like studio, uh, platforms, um, become very attractive to yuppies because, you know, it's helped them with, you know, go out to exposure to early stage ventures. Right. The second chance that, you know, we see is that, you know, uh, which Alex had mentioned these, that, you know, funds have raised laughter fun side and part of that reason because they ma unicorns now they, and, you know, as a potential upside when so much bigger.
Trang Nguyen: (15:56)
Right. Um, so despite the headwinds of COVID-19, uh, in 2020, um, the venture exit in the U S is sale is 290 billion, right? So you, Hey, you know, Airbnb go public, uh, um, 100 million new, Hey, snowflake, the 33 B and then door dash at 72 V and then so on. Um, so, you know, 2020 is not just an outliner, but if you look back, you know, just in the past three, um, uh, last year numbers, like the last few years, like there's more IPO than, um, the entire decade preceding two times 18, right? So, you know, when, um, a venture fund or a venture managers or C fund managers, when they raise a fund, they should factor in number one day more unicorns nowaday. So, you know, and they also, the potential exit side is much Lasher. And the last site also has increased significantly, right.
Trang Nguyen: (16:56)
Um, just in the last five years of vital sign and also ECI valuation has increased by at least 50%. Right. We see a lot of companies went to YC demo day, and now, you know, after YC raised 20 million, um, see, first of all, it's finance or, you know, all companies that come out why sees that raise 200 million valuation. So that's kind of like the change that we see and, you know, I think like as an institutional investor, we, uh, we should be open to seed funds raising lash of one side. And at the same time, uh, seed managers also, um, should factor into a cow potential Lasher estate and, you know, raise proper funding aside for follow-on. Yeah,
Sarah Kunst: (17:39)
Yeah, no, that, that, that's totally right. And, and, you know, we, we see a lot of that in the market, I think right now that, you know, companies are going from zero to multi-billion dollar evaluations incredibly quickly and, and often, um, you know, the, the earliest investors are the ones who stand to make the most money if they have enough to, to keep doubling down and, and really be driven by conviction. I totally agree. Um, so, you know, talk a little bit about when you talk about seed funds, not, not all seed funds are emerging manager funds, but there certainly are a lot of emerging managers in NTI has been incredibly supportive of, of many very early emerging managers. And it seems to be paying off really well for you. So we would love to hear more about, um, some of the emerging managers that you've backed and, and kind of, who've gone on to do great things, as well as sort of how you think about, uh, investing in emerging managers, um, you know, for limited partners for, for larger institutional investors, um, what should they be thinking about? Because it feels like most, uh, larger institutional investors are just not adding very many emerging manager positions right now.
Alex Bangash: (18:45)
So, so I think the really important thing to think about, and, you know, and, you know, we, we ha had you as well on the ascent, uh, thinking is like when, and when, when an emerging manager gets off, because there is so much noise in the market, right? There's so many different companies they're no longer, only at only in San Francisco. Um, you know, take, take crypto for instance, they're global companies they could be coming from NSS is coming from India. Um, you know, they're, they're, um, they're coming from different markets and the founders are, are, are global. Um, and this was true before pre COVID. Now it's also true post COVID. So I think what, what is, what is really most important and really hard to build is to build the firm to build a differentiated firm, right? So there are good investors like there were before, but being a good investor is less important today, you know, because you, because the, the deal flow is so diffused and there's still, you know, you could be part of the Stanford network or part of a, you know, a part of a, um, squared alum, alumni group, or Uber alumni group.
Alex Bangash: (20:00)
And you get some sort of deal flow, but it's so diffused right now that you need to kind of build a better mousetrap. And I think that's has been our defining, um, TCIs that we want people to build better, uh, um, better venture funds, structurally. That doesn't mean there aren't that you can't build a good friendship, um, by just a single person saying, look, I'm going to be really thoughtful. I'm going to be really disciplined. And I have a great network, you know, that was true. That was true for, you know, not going to name, name, the firms and name the great partners, but, you know, it was true from say, w you know, in the, in the nineties and till 2005, when everybody sought a particular partner today, that's not the, you know, the, you know, in, in crypto people will want different partners in SAS, they will want different partners, um, depending on yeah.
Alex Bangash: (20:54)
The seed. And then, and then they have built, you know, they've built different farms. So I think that's, what's really, really important for us is who's building something really unique. Um, you know, and that's why, you know, we, we were lucky to partner with you and Sarah, because we think you're building something, I think unique it's, it's at the inception stage, but, you know, I mean, it's, as, you know, it takes a village, it takes a lot, and it takes a very long times. So, um, sometimes that's why we, you know, represent patient long-term capital. Um, and we're not looking for some dislocation or not, not looking for some, some person who's just like, oh, that person is a great brand. And they have, they're a great board member. Of course, those people will do very well, but that's obvious the non, the non-obvious is who's building like, uh, you know, who's building a great studio, no, where they will, they will build a company who's building, you know, Visalia is great, but, you know, by sees the beginning, just like, you know, Google or Facebook was great, but then there was WhatsApp and YouTube when, you know, a tech talk and they'll always be there.
Alex Bangash: (22:05)
They'll always be the kind of the next big thing, you know, and that's what we are, what we're looking for. And sometimes we're right, and sometimes we're going to be wrong. Um, but w VC is a power log game, you know, um, one of our studios, uh, you know, two years ago made 150,000 investment and it's worth 250 million. So, you know, there's asymmetric returns since that's, if they say metric returns from, from Coinbase and, and, and, um, peer to BNB and all these other companies. And, and what's, what's even more exciting right now is that if you fast forward like this, right now, we are in one of the biggest booms ever. Um, and markets will retrench. You know, there will be a time when people say, what were we thinking? Right. Nobody will be in wanting to invest in anything. Um, but if you, you know, if you kind of fast forward 10 years, the biggest thing, and genetics exits will not be a hundred billion dollars.
Alex Bangash: (23:05)
It might be 500 billion. Right. And so if you had, if you've invested at a 10 million valuation, yeah. That $500 billion company, then you will have the, you know, the, the asymmetric returns. So that's, that's kind of the back that we're making. Those are the types of people that we, that we back and we want to be, we want to be patient, you know, we want to be patient long-term partners in rather than, you know, particular names. We there's a lot of, you know, I was very, very low lucky to get, you know, um, to get my clients into emergence. As far as find, I was very lucky that Krista, I let me hit in his foot, our spine. I was very lucky to the first capita, let me in their first farm. I was very lucky that Steve Anderson at baseline then hit his first one. Like, they're all spectacular farms. I think, you know, after seeing Chris as founder, Sarah was never see a hundred X bond again. And then I think Getty, Dan might do better with his money, you know? So they'll always be someone better, you know?
Trang Nguyen: (24:04)
So I love it. Well, well, hopefully you're,
Sarah Kunst: (24:08)
You're saying that about Cleo capital in a few
Alex Bangash: (24:10)
Years. Exactly. Yeah. We're rooting for you Sarah. 200 X that's our benchmark
Sarah Kunst: (24:20)
Love it. That's amazing. And then, yeah, I would love to hear kind of your, your thoughts on this as well, sort of how you see emerging managers and where you think people should be, you know, should people be putting more money into emerging managers right now? Because it definitely seems like, um, because most people are, so overweighted in venture right now. They're, they're being very slow to add new managers, even though I think, you know, on the startup side, it kind of feels like we're in the early stages of, of sort of, you know, web 3.0 is Alex put it.
Trang Nguyen: (24:50)
Yeah. So, um, I actually think, um, in my opinions, and I think like with the same, with a lot of our LPs and we have one, some of the most sophisticated LPs in venture, I think it's very important that the LPs keep, you know, investing in emerging managers. Right. Um, if you look at the last decade and, you know, we, you know, TIAA platform, we actually looked at the performance of, you know, owners of funds in the last decade, by the Muslim managers own way in almost every single year, you know, the top one all the way he, you know, outperform established fund managers. Right. That's why you can see, you know, with, um, you know, another, you know, managers in Tia platform who had an as a hundred X fund. Right. Um, and then back to my point earlier about, um, a lot of childish, no VC firms has gone on and raise millions in dollars.
Trang Nguyen: (25:44)
Right. And they don't really invest in early stage venture. Right. Um, they actually invest in growth stage and competed with private equity and also hedge fund. So, you know, Chad's, you know, VC firm become grow from. And so the way for an institutional investor to actually, you know, invest in early stage, early stage ventures, actually to emerging managers, right. Because even with a lot of the cop, like early stage ventures that you see before Andreessen, right. You know, they become, you know, growth [inaudible], um, you know, [inaudible], so it's very important for your LPs to continue to invest in emerging managers so that they can hae the Hilti diversification in their portfolio, construction. And pro is that, you know, so children in ventures look salivating over time, right? So a lot of the top managers, 10 years ago, they know no longer as a top managers a day.
Trang Nguyen: (26:45)
And a lot of people, a lot of managers are not in the tier one list. I remember I talked with one of the institutional investor, um, actually just early in the weekend. Um, the lb actually show me the list of the top VC. Um, they, they want to get into, and funny enough several here, right? Incubated and snowflake. And Snope like a snowflake position in Southern Hills actually lashes and Excel on Facebook. But some of you is not in that top tier list. So the heels should be in that top tier list. So there's only children over in terms of generation. So it's important for your LPs to invest in emerging managers, because if you don't invest in the first sec, first one or second plan, you may never really get an opportunity to invest in talent for fun. And last, you know, I think investing in emerging managers is very important because it's the pathway to invest in managers with diverse backgrounds. Why, because women and racial minorities make up by growing proportion of emerging managers. Yeah,
Sarah Kunst: (27:52)
Yeah, no, I, I totally agree. And, and I think, um, a lot of smart people are listening to you on that, and there's a lot more people who need to hear that message. So I love it. Um, you know, we'd love to talk a little bit about rolling funds, um, and w w sort of rolling funds and, and studio models, and sort of all of these things that are not just sort of a, you know, kind of, Hey, we write you a check after you've been around for a year or so. And, you know, we're a two and 20, you know, tenure window venture fund. So we love to hear your thoughts about what's going on in the market. Um, you know, with rolling funds and maybe explain what that is to, to people who are less familiar. And then also, you know, Alex, you mentioned, uh, studio models, what you're seeing there, because it, it feels like there's some fundamental differences in kind of venture itself. Um, not only the kinds of companies they're backing, but, but sort of how the funds themselves are structured. And we'd love to hear kind of your take on some of that.
Alex Bangash: (28:48)
Um, I think these are some of the structural disruptions, right? So if you, if you look at what happened in the late two thousands, um, the, the cost of starting companies went down and you didn't need $5 million to buy a server and buy Oracle software, you know, um, to, to host a website. Um, so that gave rise to the micro VC super angels and by VC, right? So I think we're going to another, um, you know, even more transformative, um, uh, kind of, kind of movement today. And, and that of course has to do with local, no code. It has to do with remote work. Um, now anybody can set up a company anywhere, um, and, and they can build things and they can get funded through, through these, these things. So I think, you know, um, I am not that familiar with, with rolling funds and, and I think they are kind of, uh, you know, they're, they're, um, it, this is, again my opinion.
Alex Bangash: (29:52)
I think they're, they're, um, um, significance, maybe overstated, but I think, you know, um, I can give you a little bit more about, um, you know, I can give you a little more about specs. I think specs are kind of very disruptive. They enabled venture capital, they enabled faster liquidity. And one of the biggest pet peeves of, um, institutional investors about venture was the long hold times. Um, now with respects to those hold times are coming down significantly. Um, and, um, the, you know, there could be, there could be a scenario where these backs, um, you know, uh, replace late stage venture. Now that is a real possibility and specs. We'll also go through the boom and bust cycle. So I think that could be a very, very disruptive as most people have raised these larger funds on the assumptions that these companies are going to stay private eight to 12 years or 13, 14 years.
Alex Bangash: (30:56)
Um, now these companies can go public after four years, three years, you know, what, even six or seven. So I th I think it's disruptive to late stage venture, um, yeah. On, on the early stage side, I think, you know, rolling funds are very significant. Um, we're not focused on that. I think it's harder for institutions she wants to, to play on it as well. So rolling ones are a little like crypto and ICO's and stuff. They're, you know, they're less controllable. Yes. Uh, uh, let's see, let you know, no, not at easy to think and, um, you know, uh, kind, kind of, um, w with crowdfunding. Um, but, but, um, what has actually happened is, um, today and Trang Trang alluded to this a little bit, um, is, uh, today founders can build a portfolio. So the cost of companies has gone down so much.
Alex Bangash: (31:51)
And with local, no code, you actually don't need a founder. Um, doesn't need to go to a VC for one to one company, you know, before a founder only could go to a VC with one company now, um, with, with all, you know, with cloud and remote work and local ordinal code and distribution tools, the founder's name. Well, um, yeah, you know, I'm going to spend half a million dollars testing out five ideas, and, you know, I don't know, I want to launch three out of five or two out of five, and I don't. So, so that's, that's kind of a unique opportunity. And then you're also seeing the same founders now, you know, you're seeing a lot of part-time funds, which was not there, and that's of course rolling funds a contributor to that. Right. Um, but I, I don't think it's the sole contributor.
Alex Bangash: (32:45)
There are VCs who will give you money. There are some MPS, or non-traditional NPS, they'll give you money that some family office, they say, yeah, well, we'll give this person money on the side because they have great deal flow while they build their companies. So, you know, um, that, that has created a, a lot of opportunity on the, on the early stage. Um, and it's also created a lot of noise. So, you know, um, I think that, of course, there'll be many, many, many, many, many winners. Um, but there will be some, some, you know, some next generation firms that will get really good at him. So, so basically there will be factories of startups, right. So I think there will be factories of startups that build these things. There'll be factories of startups that accelerate, and, and you're seeing that in Y Combinator. I mean, it's unbelievable.
Alex Bangash: (33:37)
Y Combinator does more in one demo day than what some of the w w uh, top VC, you know, some of the best names on Silicon valley have done, you know, um, in, in 20, 25 years. So, you know, they've gotten to that scale and we're going to see, and I think that's the beginning, right? We're going to see other manifestations of that. We're going to see that, and not just an acceleration, but we're going to see that in building. Um, and of course, um, you know, you saw, you saw that with what Mike Spicer did with, with snowflake. I mean, they built the incubator. It's not like the point, however, is the point, however, is that these things are not easily replicated. Right. Um, so, so, you know, it's not easy to build a Y Combinator. It's not easy to build a snowflake. It's really hard. It's not easy to build a Cleo capital. That's why you're doing it, et cetera. So,
Sarah Kunst: (34:32)
Yeah, I agree. It is certainly not easy. And you see a lot of people try and, you know, they sort of put in similar things and they don't get the same results out. And, you know, it's, it's interesting with the Y Combinator is of the world, because there've been so many, um, accelerator programs and so many incubators, and so many of them have, have failed. And, you know, I'm, I'm interested to see, I, you know, if, if, you know, with these studios, with the rolling funds, with the part-time funds, with all of these new models, you know, is it something that, that makes the overall pie bigger, or is it something where, you know, a lot of people fail and there's just sort of one or two quick, you know, breakouts in each category. And so, so it's interesting, but, you know, I personally think that overall it's, it's really positive because, you know, when you look at venture dollars, there were more and more money.
Sarah Kunst: (35:22)
There's more and more money flowing into venture capital, but the vast majority of it flows into the later stages. And, and, you know, the reality is that, that it often seems like really early stage founders are, are a little bit underfunded. And so, you know, would love to hear your thoughts on that. There's a, there's a lot of talk of sort of, there's too much money chasing too few few deals. And, and do you feel that's true, particularly on the early stage side, or do you think there's a lot more space for more great companies to be built?
Alex Bangash: (35:53)
I think there's a lot more space for great companies to be built, but I always, and this is what we do in both with funds and with companies, you know, we like the people who are misunderstood, I would never chase the fund. We always back the underdogs. Uh, we always back to people who are misunderstood, and that doesn't mean that the, you know, kind of the, um, that the top dog, so of the, the most, you know, the kind of the, the, um, the, the people who win the beauty contest won't do well in a lot of cases. They do, but that's not, that's not our DNA, that's not the people we back. Um, and you know, and a lot of times, um, you know, those are the folks that are building something really substantive and it also goes to pricing, right? So, um, the, the, the companies that are, you know, that are really hot, they tend to get overfunded and their pricing is, um, you know, um, is, um, they're, they're fully priced or, you know, priced for perfection.
Alex Bangash: (36:52)
Um, and the, the, the best opportunities are the ones that are, you know, that are a thing. So, you know, not to name names, but actually 18 months ago, um, last year, you know, we had three, three lending companies in our portfolio, and we were like, very concerned, everybody we talked to, they were like, oh, every time there's a change in the credit cycle, the first first companies to go, um, the lending companies just get completely wiped out, right? They have, they get no second chance. And, you know, just a year after that today, I think two out of the three have raised a billion dollars to a billion dollar valuations. Um, and lending is, is, uh, a heart again, it's called buy. Now, BNPs buy now pay later. So it's funny how things that are out of favor will become, become in favor. And, you know, also the, the trick, the trick is to find those, um, you know, those, uh, um, founders who are building substantive companies, not the, not the ones that are building popular companies, and sometimes the C becomes a popularity contest, right? So it's all the heart people in San Francisco. Oh, well, they have this in their portfolio. We need to have a similar company in their portfolio. So, um, unfortunately VC is, you know, VC and LP is not a courage game. It's not a courage of conviction. And that's what we thrive on. You know, we, we like to back the, you know, back managers and companies with the courage of our conviction.
Trang Nguyen: (38:27)
Right. And I agree with Alex on, in terms of there's a lot of space for early stage companies being built and, you know, on the institutional side, really, like if you look at last year to 10 20, the majority of the LPs capital actually go into later stage and, you know, e-stop leaps managers given the uncertainty in the market. Um, but you know, and I think Sadie mentioned about Y Combinator, you know, you know, you see a lot of on salary does come and go and walk. My leader has a brand and network effect. Um, but you know, on the studio venture side, she thinks they space for a lot of studio ventures and they are not competing with each other because, you know, the studio is formed by proven entrepreneurs and, you know, they have factory creating multiple companies. So they, you know, there's more, um, successful and, you know, um, proven in Syria and entrepreneurs, um, you know, we expect to see more studio in the future and that's where a lot of startups can be formed.
Sarah Kunst: (39:33)
Yeah, I agree. I think that there's just, there's so much in front of us when it comes to building awesome companies and, you know, I focus mainly on the us. Um, but, but, you know, as, as Alex, as you mentioned, kind of about the global kind of, you know, rise of so many amazing companies, um, where outside of the U S are you guys excited about right now, where are you looking? Where are you investing? Um, and, and, and where should the rest of us be looking?
Alex Bangash: (40:00)
Yeah. So, you know, the, the, the really exciting thing is that the lines are getting blurred. So we say, well, we can only invest 25% outside the U S so just earlier today, um, we talked with an Indian entrepreneur, um, he he's, he's building a, uh, you know, a company in the blockchain space, the com he, he he's an Indian, he was an India entrepreneur incorporated in Marta, and now has companies headquartered in San Francisco. So, you know, is that an Indian company, is that it is funded by an Indian VC? Is that an Indian company? Is it a European European investment or is it, so these lines are incredibly getting, you know, getting blurred and look at UI path is going to go public. Is that, is that a Romanian startup, or is it, uh, you know, is it a Silicon valley startup? So, and thankfully, so, because that's how it should be, you know, we want to back people with global ambitions, like global ambitions, and why should it be, you know, in, I think most LPs have been trained when they invest in private equity and in Sub-Saharan Africa, it's Sub-Saharan Africa, when they invest in Eastern Europe, it's, it's Eastern Europe, CDPs, then Europe currency risk.
Alex Bangash: (41:17)
When you invest in, um, you know, Eastern European, um, we seek, you know, venture company, they are global, they could be incorporated in Delaware today. We're seeing amazing companies from a SAS company, SAS and infrastructure companies from Chennai India, you know, who would have thought that China is going to be a part of SAS and, and, and developer facing tools. So, so, and, and those companies aren't incorporated in India, they are incorporated in Delaware. So, so that's the point. And you're seeing that in, in, in crypto. And so across the board, I think, you know, amazing, amazing companies coming out of Europe. Um, you know, and then the flip side is also true to the one we were talking with one of our partners and they said, you know, you know, you know what addicts today, the contrarian thing is to invest in Silicon valley because Silicon valley is so out of favor, hardly VCs have left the area.
Alex Bangash: (42:17)
So, you know, I think there will be, there will be innovation coming out of everywhere. Um, uh, you know, um, people serving these different markets and you, you, you know, so, so SAS tools, developer tools, they're global, um, but then sometimes fintechs, you need, you know, in fintechs, you will need fintechs for each geography. You will need them, the neobanks from Brazil car deported over to Southeast Asia, you know, so you will see, see, um, see kind of fintechs geography by geography, and you could build, you know, huge companies in each geography in, in India, in Europe, in Latin, in, in, uh, you know, um, in lending companies and Neo banks and payments companies and insurance companies. So, so I think, um, you know, the regulated industries will be more geography by geography. Um, but you will have see global companies come out of, uh, you know, a lot of, uh, um, uh, um, a lot of geographies in, and you're seeing right, you said, Coupang come out of Korea and, uh, FreshWorks come out of India. And so, so,
Sarah Kunst: (43:31)
So Silicon valley is your favorite new emerging market. That's
Alex Bangash: (43:34)
What I heard. Yeah. If you want to take the country and a contrarian approach right. And say, yeah, you're the most country. And think you can do is invest in Silicon valley. Know
Sarah Kunst: (43:44)
Exactly. No, I, I love the global approach. I think that, you know, that it's so shortsighted to think that, um, you know, where, when you look at where people live and, and, you know, especially the younger generations, uh, where they're concentrated geographically, it feels that there is like a lot more investing to be done, um, in areas outside of the U S and Europe. So I love that. Um, this has been great. Um, do you have any kind of last thoughts for us as we wrap up? What are you most excited about right now in the tech world?
Alex Bangash: (44:18)
Um, you know, um, I, I think, um, I'm just most excited about, you know, how all this will unfold, right? So I don't know whether there will be a bloodbath and I, I, there's always this boom and bust cycles, you know? Um, but what I know is that venture, unlike all these other asset classes, um, you know, we've seen that venture is actually getting bigger and bigger and the big, the big VC funds will do great that emerging managers will grew date. The new models will look great, right. There's room for everyone to grow. Um, and then also, I, I think that, that, um, you know, venture is, what's so exciting is that venture is one of the few places which does well by doing good. Right. So I think we're seeing the resurgence resurgence of kind of, um, um, climate focused funds. And maybe this time they're better, you know, now we're building the infrastructure, we're building the Lego blocks, we're building the developer facing tools. They API is the AC SDKs to, to take on the challenges of, of climate. It's not, you know, the, uh, the, the kind of the climate one Dato, uh, clean tech, uh, uh, you know, investing that we saw. Um, so I think that's, what's most exciting. Um, and it's also been, you know, um, it's also kind of uplifting, like when share is the thing, which is, you know, doing, doing, doing good while doing well. So that's, what's
Trang Nguyen: (45:48)
I think to add to Alex boy, I think, you know, just last year we see, you know, the, um, you know, the exit of snowflake kind of proven out studio motto investing. So, you know, I think like for all of us STI platform, we're very excited about, you know, S more entrepreneurs setting up, you know, new venture structure. We got to enroll in a lot of more, um, you know, Novo structures and, you know, many of them will result in, you know, exceptional returns. So, um, you know, we just spoke with the wonder, well, fund managers last night that, um, create amazing platform like jar south side, um, hope two times 18 vintage fund is already at 8.5 X, and there's a lot of room to grow from there. Yeah. Yeah. That's amazing. That's super exciting. Well, those are very exciting numbers to end on. So thank you guys so much, um, for coming on and hopefully we get to see you at assault conference in person soon as well.
John Darcie: (46:50)
Absolutely. I just got out of the way and let you guys run, cause it was such a good conversation. So, uh, thanks again, Sarah, for introducing us to Alex and Trang and thanks for joining salt talks. And like Sarah said, we were getting back, hopefully the in-person a conference game starting in September in New York. And you're talking about being a contrarian, Alex and investing in Silicon valley innovation. We feel the same way about New York city. You know, New York city has been called dead once or twice. Uh, but, but we're, you know, putting our flag back in the ground here and, uh, we're going to come back with our conferences and, and get, get back into the city and I'm actually in the office today. So it feels good to start getting back to it,
Alex Bangash: (47:28)
But thank you for having us. Thank you. Thank you so much, Sarah. And thank
John Darcie: (47:32)
You everybody for tuning into today's salt. Talk with trying when and Alex Bangash from TEI. Just a reminder. If you missed any part of this talk or any of our previous salt talks, you can access them all on our website. It's salt.org backslash talks, and also on our YouTube channel, which is called salt tube. We're also on social media on Twitter is where we're most active at salt conference, but we're also on LinkedIn, Instagram and Facebook. And please spread the word about these salt talks. Especially if you have a young aspiring technology or venture investor, I would point them to this great conversation here today. They can learn a lot about taking sort of a contrarian mindset and how to find, uh, like Alex and train. We're talking about true entrepreneurs and not just engaging in that popularity contest. That's so often the case in Silicon valley, but on behalf of Sarah, this is John Darcie signing off from salt talks for today. We hope to see you back here against them.