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Dan G. shared thisTo quote Lulu Cheng Meservey, "The value of a stock is what people believe it is and could be. A stock is a story." Which is not to say that the story is an empty pitch, or a soulless marketing tool. Stories are important. As Salman Rushdie said, "We are the only animals that tell stories to understand the world we live in." When venture capitalists say they invest in people rather than companies, what they mean is they invest in stories — and a great story needs a hero. They also need a villain; a problem to solve, a mountain to climb, a dragon to slay. And if great companies form around a great story, then the formative elements of those stories can be used to identify great companies in advance. You'd just need the right mix of skill and experience. Welcome to WndrCo, founded by DreamWorks Animation co-founder Jeffrey Katzenberg and former Dropbox CFO Sujay Jaswa. It's one of the most successful VC firms that you’ve probably never heard of. The full article is linked below.
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Dan G. shared this"More people allocating capital to humanity's hardest problems means those problems get solved faster." Join Odin and help build the progress machine. Open roles below:Dan G. shared thisThe work we're doing at Odin is hard, but it'll shape what the future looks like. Odin is building the machine that moves capital as fast and efficiently as possible. I could talk about the hundreds of millions in assets handled by probably the hardest working venture operations team in the game - but you don't join this team for the numbers. You join for what they represent. Every deal we process puts capital in the hands of a founder trying to solve a hard problem. Our customers have backed companies turning atmospheric CO2 into rocket fuel, building chips that could be 10,000x more energy efficient - SpaceX, ElevenLabs, OpenAI, to name a few. You can't do that at speed without the infrastructure to make it simple. At scale, we're building a progress machine. More people allocating capital to humanity's hardest problems means those problems get solved faster. Does it take a lot to do this work? Yes. And we don't shy away from talking about it. Performance expectations are uncomfortably and intentionally high. The pace is relentless - this isn't a 9-5. Problems are complex, and if you aren't adaptable, you won't last. You have to care deeply, work with intensity, and show up every day ready to figure out things nobody's figured out before. You don't work here to slot in and feel comfortable. There's no room to be mediocre at what you do. What I love most is when a candidate hears all of that and their energy goes up. They lean in, ask harder questions, and tell me the ownership, autonomy and complexity is exactly what they've been looking for. We're hiring across Commercial and Finance. Links in the comments!
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Dan G. shared thisVenture capital has long been celebrated as an engine of innovation, but the structural incentives have systematically directed capital away from the technologies that humanity needs most. Categoeries like nuclear energy, cancer research, and fusion power require decades of patient funding that the current VC model simply cannot provide. The result is a persistent "valley of death" where promising technologies stall because they cannot sustain financing. At the same time, venture capital suffers from "negentropy"; if left alone it will naturally consolidate and concentrate. This has a commensurate effect on innovation where the most obvious ideas rise to the top, regardless of merit, taking capital away from what may be more important advances. A growing body of research points toward a three-layer public-private framework as a solution, where the government acts as... 1) ...limited partners, backing a diverse and distributed field of small fund managers — built on work from Martin Aragoneses of INSEAD, and Sagar Saxena of University of Pennsylvania. 2) ...venture philanthropists, seeding R&D intensive university spinouts via self-sustaining fund vehicles — built on work from Kyle Briggs of University of Ottawa. 3) ...guarantors of large securitised "megafunds", pooling high-risk R&D projects to attract institutional debt capital — built on work from Andrew Lo of Massachusetts Institute of Technology. These three pillars of a "national capitalism" strategy provide complimentary capacity to the private market, coordinating capital to fill the gaps that result in misallocation or stagnation. Indeed, it's increasingly clear that as western economies refocus on industrial growth and productivity, we also need new financial scaffolding to support this movement. To escape a fifty year period of financialisation, and begin a new era of broader prosperity, we need new tools that put finance back in service of innovation — rather than vice-versa. Read the full article on National Capitalism, in The Odin Times, linked below.
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Dan G. shared thisWhatever you think the hot theme of the moment is, it's unlikely to be where the best companies emerge. Indeed, it's the emergence of those companies which subsequently draws attention to the theme. Implicitly, it's usually a mistake to raise specialised funds around these hot themes, because by the time you're actually deploying the capital you've probably missed the bulk of the opportunity. This is most clearly evident in the returns of venture capital vintages leading up to the dotcom bubble. While the bubble didn't burst until 2000, funds raised from 1997 to 1999 were also likely to have poor returns, while those raised between 1993 and 1996 were likely to do particularly well. However, LPs habitually influence the market for VC with demand signals, incentivising VCs to cater to their expectations with simple narratives about the hot opportunity of the day — rather than recognising that the opportunity is only really visible with hindsight. As a result, their returns are worse. Read more about the responsibility that LPs bear for the slipping performance of venture capital in our latest article, linked below, which includes the "hot theme" list assembled by Rex Woodbury.
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Dan G. shared thisIf you look at the state of technology, you would be forgiven for thinking that we have forgotten how to formulate new ideas. Most new companies are some reinvention of a previous era; "Uber for X" is now "Cursor for X". Even LLMs are basically just recycling cognition. Instead of creating value, the industry is focused on creative new ways to extract it. Prediction markets, cheating apps, crypto casinos, gamified trading platforms and now the "democratising access" meme for private markets. Venture-backed companies (funded largely by pension and sovereign wealth capital) are preying on vice and desperation to make money, while many of humanities major problems remain unsolved. Instead, the rewards are concentrated at the top; opportunity is unequally distributed, and the public's sentiment toward the industry is reflected by increasingly hostile policy choices (see the recent tax proposals in California and the Netherlands, the proposed end to QSBS in New York, etc) as well as populist disdain for technologists and business leaders. The next time you see some venture backed sports betting app, consider the chart below. Gambling revenue is increasing alongside houshold debt, and houshold savings have decreased dramatically. This is not a healthy state of affairs, but it is a reflection of the world we live in and the choices that have shaped it. We're missing what techno-economist Carlota Perez described as an "installation phase", or a reindustrialisation period, where technology spreads across the economy so businesses of all types can reap the benefits (e.g. increasing profitability, higher levels of employment, better pay, etc). The status quo is that a handful of companies raise billions, put their product in the cloud and charge you as much as they can for ongoing access to it. The social benefits of this model are obviously minimal. Fundementally, we need investors that are brave enough to finance the most important ideas and incentivised to proliferate the benefits. Instead, venture capital is dominated by firms that are structurally obliged to run vast rent extraction schemes to support their bloated fund economics. There's a growing consensus that we're heading for some kind of socialist backlash against the technology industry. Don't say you weren't warned.
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Dan G. shared thisHistory offers two basic lessons about investing: 1) Large swings in allocation, positive and negative, have damaging systemic consequences. In the positive case, it creates herd behavior that concentrates capital and drives down returns. In the negative, there is a "no-invest equilibrium", where herd behavior can undermine an entire category regardless of company quality. 2) Good vintages are inherently unpredictable, so trying to time allocation to the market is silly. Instead, and especially for venture capital that relies on healthy discovery and coordination of capital, it’s important that managers at all stages be consistently and appropriately capitalised across markets. LPs have been rightly disappointed by poor liquidity in recent years, with the exception of 2021. However, to some extent, the state of the market is a product of their poor allocation decisions. If you sit at the top of the capital stack, and can’t observe basic principles of investing, then you might find the buck for weak returns comes back to you.
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Dan G. shared this"The more you raise, the more you spend, and spending a lot of money can be disastrous for an early stage startup. Spending a lot makes it harder to become profitable, and perhaps even worse, it makes you more rigid, because the main way to spend money is people, and the more people you have, the harder it is to change directions." In the quote above, Paul Graham describes a simple principle that more founders and investors should understand, which holds true all the way from inception to IPO: There is an appropriate amount of funding (relative to your stage) to achieve the greatest chance of success, which essentially means raising just enough capital to test and hit risk milestones with minimal overinvestment. Raising too much, or too little, are both associated with increased failure. This is demonstrated across numerous studes: 1 - Startup Genome's "Premature Scaling" report, which analysed the Pre-Seed and Seed rounds of more than 3,200 high tech startups and found that overinvestment was a major killer. 2 - A paper from Zayed University studying 7,481 technology startups, from Seed to Series C, which found a similar convex relationship between capital raised and post-money valuation. 3 - Papers from the a) University of Iowa and the b) Central University of Finance and Economics which find a similarly convex relationship between the quality of IPOs and a) the availability of venture capital funding, and b) the pre-IPO growth of venture-backed companies. If you goal is to build a generational company, you should be aiming for extreme capital efficiency. Raise just as much as you need in private markets, where the cost of capital is high, and transition to public markets as soon as the cost of an IPO is lower than the cost associated with your capital needs. According to Meritech Capital, that transition is probably somewhere >$250M ARR, with 30-40% growth and improving business economics, depending on the inherent risk of your business. (e.g. for SpaceX the transition to public life has been delayed by extreme idiosyncracy.)
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Dan G. shared thisIt's hard to find a better example of what venture capital should look like than 1517 Fund. Danielle Strachman and Michael Patrick Gibson have been the first believers in many of the greatest and gnarliest tech success stories. The source of their power is a philosophical rejection of lazy thinking. Essentially, if the greatest entrepreneurs are outliers, patterns and credentials must therefore be irrelevant. It sounds simple, but living that principle as an investor means sailing into headwinds. There's no simple narrative to sell LPs, the future is never clear, capital coordination is difficult, and your capacity cannot endlessly scale. It's the harder path, but it's the only true path to greatness as a venture capitalist. Success is extremely idiosyncratic; there are no shortcuts. You might reach this conclusion by studying the library of research on venture capital. Or, you could reach it much more quickly by just meeting a few of 1517's portfolio companies.
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Dan G. shared thisHot categories like AI have a seductive halo effect. LP appetite increases the available capital, the volume of transactions grows, confidence rises, fundraising friction falls. Money flows faster and everything goes up and to the right. In these moment, most venture capital managers seem to forget that their job is managing risk. If venture was a perfect market, all investors would have access to roughly the same returns regardless of stage. But they don't, because it isn't. Earlier investors consistently deliver better returns than later investors because they are able to exploit how inefficiently the market prices risk. Simply put, managing more risk means generating greater returns. "Venture capital and buyout funds with more idiosyncratic risk exhibit higher returns. For venture capital funds, the quartile with the lowest idiosyncratic risk has a quarterly alpha of -1.09%, the highest an alpha of 2.52% per quarter." - The Price of Diversifiable Risk in Venture Capital and Private Equity, by Michael Ewens, Charles M. Jones and Matthew Rhodes-Kropf The performance edge available to venture capitalists stems from investing in novel ideas, moonshots, scientific breakthroughs. The extreme idiosyncracy of frontier technology. It does not come from jumping on hot categories where idiosyncratic risk is eliminated by herd dynamics.
Dan G. commented on a post
11h
The Storytellers:
https://blog.joinodin.com/p/the-storytellers
Additional credit to excellent episodes with the WndrCo team from Molly O'Shea of Sourcery and Logan Bartlett of The Logan Bartlett Show which provided a lot of valuable context for this write-up and are linked throughout.
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Dan G. liked thisA thrill to get some of the brightest minds I’ve had the chance to work with over the last ten years, together in the same room. Last week, Taboo Ventures, Frontierial, The Tenth Man, and Odin hosted 'Autonomy Economy', an invite-only, Chatham House Rule, cross-sector summit to showcase industries operating on the fringes. Guests were rising-star founders, family offices, venture capitalists and journalists interested in heavily regulated sectors or [formerly] 'taboo' industries. These untapped entrepreneurial spaces are complicated by policy, institutional resistance, or reputational concerns but are being driven or radically altered by secular trends and evolving social norms. In this case, the core trend being analysed was bodily autonomy, which is a wide ranging topic with sub debates spanning ethics, morality, human nature, emerging technologies, and what we can do with our bodies for health, joy, dignity or financial return. From regulated consumer goods (from vice to functional) to the creator economy (the new media empires and less-SFW platforms) and stigmatised healthcare (fertility, mental health, sexual health), experts tackled issues around de-banking, shadow-banning, chronic under-research, access to capital, and age-gating. We are *extremely* grateful for everyone who participated, and took a chance on a novel concept run by a group of overly enthusiastic futurists. Christina Maria Hummer (Best Nights VC), Annie Goman (Btomorrow Ventures), Patrick Newton (Form Ventures), Finn Age Hänsel (Sanity Group), Deirdre O'Neill (Hertility), Paolo Pio (Exceptional Ventures), John Boghossian (Kadence Bio), James McGann (Unmind), Anna Butterworth (Ultra Violet Agency), Melanie Goldsmith (Root), Eoin Bara (Tipple), Cormac Folan (Two Wombats), Solomon Friedman (Ethical Capital Partners), Sarah Bain (Ethical Capital Partners, Alex Kekesi (Aylo), Dr Henry Blest (Polari Labs), Christian Tooley (Contradict Capital), Daniel Sargent (Mintstars), Jenny Kleeman (The Guardian, BBC Radio 4), Olivia Solon (Bloomberg), and Louisa Burwood-Taylor (AgFunder). Special thanks to our principle backer Ken Robertson (The Tenth Man) for believing in the vision, to Mary Lin and Patrick Ryan (Odin) for plugging in the European VC network, and to our private lunch sponsors the team at Gama Glória law. And it couldn't have happened without our unflappable producer Cecilia Lacombe, and Taboo Ventures super-connectors like Claire Mongeau and Jasmin Thomas. If you want to know what was discussed behind closed doors, you better sign up for the next one. Open to senior executives, founders and investors at autonomyeconomy.eu.
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Dan G. liked thisDan G. liked thisVenture capital is corrupt. I'm saying it because nobody else will. Most VCs will throw their portfolio companies under the bus at the first opportunity. Their job is to extract equity from you and maximize their return at exit, often at your expense. They don't care about you. They care about their 2 and 20. That's why we built the Mensarius Oath. A code of ethics for investment professionals that goes higher than the law. The law is the floor. If you're hanging out at the floor, that's not where you want to be. We want to stand on higher ground. We want our managers to be beacons for how this industry should operate. And here's the kicker: our ethical funds are outperforming the unethical ones. Our fund of funds is doing roughly a 3.3x in under three years. Turns out doing the right thing is also the smart thing. Comment C21 to learn how to launch an ethical VC fund.
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Dan G. liked thisDan G. liked thisAs the firm matures, a concave phase emerges. The GP’s brand becomes legible to LPs, embedding expectations about what the firm is meant to be. Capital has been raised against a story — sometimes against an illusion of learning — where markups are mistaken for returns and a rising tide for manager alpha. Strategy hardens into identity. The GP is no longer free to be interestingly wrong; they are forced to be defensibly safe. https://buff.ly/7ZHnPHe
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Dan G. liked thisDan G. liked thisSome personal news: After 15 years of building Entrepreneurs First full-time, today I transition to non-executive Chair. I’m immensely proud of what we’ve built and am so thankful to our team, our investors and our founders for the journey so far. Three years ago, Alice took over as CEO and since then the company has gone from strength to strength - as evidenced by EF’s recent fundraise at a $1.3bn valuation. Clearly we should have done this long before! I have been incredibly fortunate to have such a force of nature as a cofounder and I’m excited to support her and the team in this new role. I'll still be spending a day a week at EF. As well as working closely with Alice, Tom and Jonny on EF’s biggest priorities, I’ll be advising our most promising AI founders and companies. My increasing focus over the last three years has been AI and, in particularly, trying to make the transition to powerful AI go well for the UK. More to come... I’m looking forward to exploring ways to contribute to UK tech sovereignty, as well as continuing in public service via Advanced Research + Invention Agency (ARIA), in the years ahead. PS: I shamelessly stole these photos from Alice - I like to think we've aged well...
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