YouSaid · the spoken record

Dave Thornton

lines on the record: 67
first: 2025-11-06
most recent: 2025-11-06
sittings or episodes: 1
sources: podcast

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“It's easier to think of somebody else's book. I love Michael Lewis. I am convinced that the thing that we're doing right now belongs in some chapter in the indexing of the private markets. There's a book called Trillions by Robin Wigglesworth. It was my education on the advent of the public markets indices and how even in the 50s everybody knew that you should probably be indexing and then the technology to actually do the thing didn't exist until the 80s and then it didn't become dominant until now. I feel like we're living that right now in the private markets. I mean, BlackRock just bought prequin and they're going to be putting out private equity index products first. And we're playing a meaningful role in that, I hope. I would love Michael Lewis writes some book on that and I'd love us to have one chapter reserved.”
2025-11-06 · Capital Allocators · Dave Thornton – Unlocking Venture Access Through Stock Options at Vested (EP.469) · IDENTIFIED FROM THE TRANSCRIPT · source
“For my dad, and I've never done a great job implementing it, but it was so clearly true the second he said it that I've held on to it aspirationally for the longest time, which was don't let your highs be too high and don't let your lows be too low, which having lived in the startup world for 15 years, if I could have implemented it, my life would have been bad for the last 15 years.”
2025-11-06 · Capital Allocators · Dave Thornton – Unlocking Venture Access Through Stock Options at Vested (EP.469) · IDENTIFIED FROM THE TRANSCRIPT · source
“Of a bank. He was able to convince all the retail traders that this was not the end of their job to the point that they became supporters and users of the model. One of the most fundamental things that I've learned from working alongside of and near Emilio for the last 15 years is that we're all just people solving problems. I have a computer science background and a business background. And I guess I went to law school. You could put me in one or two or maximum three categories and say these are the three things you should be doing? No. We're all just solving problems in a business and you need to figure out what you need to figure out in order to get it done. And I learned that from Amelia.”
2025-11-06 · Capital Allocators · Dave Thornton – Unlocking Venture Access Through Stock Options at Vested (EP.469) · IDENTIFIED FROM THE TRANSCRIPT · source
“Delivering any value after their capital. I hope I have the opportunity one day to do for somebody else what Randy's done for me. Emilio is the other person. Emilio and Randy and I all met each other around the same time. Emilio is my first partner in that business in which we were building the machine learning models. He is one of the smartest people that I've ever met, but in a way that really opened my eyes about what kind of things you should look for in a person that you work with. He is a mathematical statistics PhD from Columbia. It's easy to put him in a bucket on the basis of that. But when he was rebuilding our illiquid asset pricing model inside of the brand name bank, he put on every hat possible and knocked down roadblocks until that thing was algo trading. He got it through legal and compliance, which you have to imagine is a near impossibility. That's like 50% of what's hard about doing anything inside.”
2025-11-06 · Capital Allocators · Dave Thornton – Unlocking Venture Access Through Stock Options at Vested (EP.469) · IDENTIFIED FROM THE TRANSCRIPT · source
“One is Randy Wynn and the other is Emilio Sejo. Randy was one of the founders and longtime CEO of Capital IQ, but relevant to me. He was my first backer and angel investor and mentor in the first business. And he's been with me all the way through and he's taught me what it actually means to be somebody's backer.”
2025-11-06 · Capital Allocators · Dave Thornton – Unlocking Venture Access Through Stock Options at Vested (EP.469) · IDENTIFIED FROM THE TRANSCRIPT · source
“My first paid job, which I should air quote, the paid part, I was working for one of the dot-com boom nonsense companies in the 90s. It was called JoeDriver.com and my best memory of what they were doing was they were trying to just aggregate all the information you need to pass your driver's test in a given state and put it in one place. For some reason, and this should have been a harbinger of things to come, I was like, oh, I love the idea of stock options. I was getting paid $6 an hour and I was given the opportunity to have half my pay be in stock options. And I was like, yes, sign me up. Needless to say I got paid $3 an hour that”
2025-11-06 · Capital Allocators · Dave Thornton – Unlocking Venture Access Through Stock Options at Vested (EP.469) · IDENTIFIED FROM THE TRANSCRIPT · source
“Basketball is the only physical activity that I like. I will work out because I've read that it's a good thing to work out. It's good for your health. You should do it. But I miss basketball like crazy and haven't played as much, especially since COVID. I used to play a ton of poker and I really miss it. I miss being able to sit for four or five hours and play cards.”
2025-11-06 · Capital Allocators · Dave Thornton – Unlocking Venture Access Through Stock Options at Vested (EP.469) · IDENTIFIED FROM THE TRANSCRIPT · source
“I don't know anything about the other 30,000 venture back startups using our data to help characterize those startups at some minimal level to the buy side of the secondary markets should be a profitable thing to do and should provide a lot of value in the world. There's one world in which we run a proper index business on one hand that's at steady state and then start trying to make the secondary markets work.”
2025-11-06 · Capital Allocators · Dave Thornton – Unlocking Venture Access Through Stock Options at Vested (EP.469) · IDENTIFIED FROM THE TRANSCRIPT · source
“I really want to put a moat around it because it's so interesting and it gives us a chance to stretch our brains almost daily. There's probably two stages for it. One is the scaling up of the asset management business, putting as much capital as we reasonably can to work without reaching diminishing marginal returns while there's no competition. Eventually competition will come. It'll erode our purchase discounts. And at that point, we have a lot of optionality in the business. We will be sitting on one of the best private company data sets that exists given the breadth at which we serve the startup employee base one of the pet ideas I have for a second stage of the business which is once the purchase discounts have been competed away and there's lots of competition is that the secondary markets for private shares right now are totally anemic maybe 100 late stage companies stock trades the primary reason that's the case is because the buy side on these markets”
2025-11-06 · Capital Allocators · Dave Thornton – Unlocking Venture Access Through Stock Options at Vested (EP.469) · IDENTIFIED FROM THE TRANSCRIPT · source
“I would say that the companies are tolerant of it, but loving it is, I think, a thing that they'll do once they realize that programmatic liquidity that they can provide to their employees is a huge benefit. Otherwise, I'd say they're neutral on it. If we hugely scale, then at some point primary venture funds are going to care because they're probably counting on some of this employee stock not getting exercise and coming back to the cap table, but I don't think we're going to be at a place where they care in any meaningful way for a long time.”
2025-11-06 · Capital Allocators · Dave Thornton – Unlocking Venture Access Through Stock Options at Vested (EP.469) · IDENTIFIED FROM THE TRANSCRIPT · source
“To do it, what we do as we're getting ready to start scaling within a given company, which might be in the next couple years, is we go to the founders or the management teams of these company and we get on our soapbox and preach the recruiting and retention benefits of doing anything useful with respect to liquidity for your employees because they currently do nothing and employees tend to treat their stock options as like paper lottery tickets that they mostly forget about during their tenure. There is a huge advantage for companies that do basically liquidity programs. And so if we can show up with a liquidity program in a box that doesn't put them out, that's how we start scaling.”
2025-11-06 · Capital Allocators · Dave Thornton – Unlocking Venture Access Through Stock Options at Vested (EP.469) · IDENTIFIED FROM THE TRANSCRIPT · source
“On our cap table called Vested. If you transact at any other price than the current Borderproof Fair Market value, we might have to reset the fair market value of our company's common stock because you told us about this little $54,000 transaction. So all these things considered, please just go and work directly with the employees. The point at which that feedback flips on its head is when we are scaling and doing $5 million of a company stock. As soon as you're doing a meaningful amount of a company's stock, then for sure they want to be involved. And for sure, we want to be involved with them. We're only operating in this lane because the companies put us there based on the scale and the capital use case. So the most likely specific scaling path for us is there are some companies that are providing liquidity to their employees in a great way. For example, Stripe and OpenAI and Gusto and SpaceX. But most of the earlier stage companies, that's just not their first priority, so they haven't figured out how.”
2025-11-06 · Capital Allocators · Dave Thornton – Unlocking Venture Access Through Stock Options at Vested (EP.469) · IDENTIFIED FROM THE TRANSCRIPT · source
“Deals directly with the employees exactly the way I described to you. We'll give you the money now you exercise and you will just owe us delivery whenever the transfer restrictions on the shares we bought lift. Afterwards, we would go back to the company and we would say, hey, we just helped Ted for $54,000. Would you mind retitling just the small set of Ted's shares that we bought? And we got feedback that should have been obvious to us but wasn't, which is on the one hand, we have no problem with TED exercising the options that he earned over the course of his tenure here, two mostly transfer restrictions exist to prevent the disincentivization of current employees. Ted doesn't work here anymore, so that's not a big deal. On the other hand, three, if you ask us to retitle this small set of shares, we're going to have to bring an external counsel to do board consents and pay them. We're going to have to explain to our board this small line item.”
2025-11-06 · Capital Allocators · Dave Thornton – Unlocking Venture Access Through Stock Options at Vested (EP.469) · IDENTIFIED FROM THE TRANSCRIPT · source
“Good news on the scaling side is this is just a monster market. At the moment, around 70% of employees abandon their stock options, and employees tend to own ten to fifteen points of the cap table of a given startup. All the US headquartered venture back startups might be worth a couple trillion dollars right now, which is to say that two to three hundred billion is what's on the table over the course of a market cycle to be abandoned and 70% of it goes abandoned. So this market goes on for days. It still has a natural end, but we could scale significantly just helping employees that were leaving if there are no other macrostructural changes to the world for quite a while. We had some interesting feedback from the companies. The VCBAC startups themselves early on, which lays out our scaling path pretty clearly, rather than me just hand waving at how big the direct-to-employee market is. When we first started doing this fun strategy in our pilot fund, we would do”
2025-11-06 · Capital Allocators · Dave Thornton – Unlocking Venture Access Through Stock Options at Vested (EP.469) · IDENTIFIED FROM THE TRANSCRIPT · source
“How do you think about scaling this over time? Typically a strategy where you can take advantage of the fact that other people aren't going after the small deals and you can do that at some scale get hard to scale as a business.”
2025-11-06 · Capital Allocators · Dave Thornton – Unlocking Venture Access Through Stock Options at Vested (EP.469) · IDENTIFIED FROM THE TRANSCRIPT · source
“Oh, you get all kinds of reactions. The folks who think that you need to be in the winter picking business if you are in BC, which almost definitionally means you need to be a primary VC doing rounds for companies, they were never going to like the strategy. And one day the cash on cash returns will change their mind. And until then, probably not. For the folks that can't even get access to the asset class, this is a Godsend. And then there's probably a middle layer of LPs where the most interesting thing is less the access and the return profile and more that they know they're supposed to be in VC, but they're not sufficiently. So we see all kinds of reactions, both substantively to the strategy and also to the practicalities of the strategy and what it means for them as an investor.”
2025-11-06 · Capital Allocators · Dave Thornton – Unlocking Venture Access Through Stock Options at Vested (EP.469) · IDENTIFIED FROM THE TRANSCRIPT · source
“When you have an approach that came from such a different insight, a different methodology, then you might think of a secondaries firm that's looking for those larger businesses, what have you heard from the LP community when you've gone out to talk to people about the strategy?”
2025-11-06 · Capital Allocators · Dave Thornton – Unlocking Venture Access Through Stock Options at Vested (EP.469) · IDENTIFIED FROM THE TRANSCRIPT · source
“Value and showing an employee of a startup how his or her company's vestimate is moving relative to say a basket of competitors is a very interesting thing that will keep them engaged and paying attention to their equity.”
2025-11-06 · Capital Allocators · Dave Thornton – Unlocking Venture Access Through Stock Options at Vested (EP.469) · IDENTIFIED FROM THE TRANSCRIPT · source
“To start with, it's terrible news for startup employees, but good news for the purposes of your question this 90 day period of total distress happens to every startup employee, and we already have perfect visibility into who those startup employees are. So we don't yet need people to come to us. We can reach out to them, and we're actually quite good at it over the course of time. We need to build the brand and make sure that the original concept of Vesa, which is 3 million startup employees are already here, does manifest. We just have to be valuable to employees over the course of time. We need to make sure that there is educational content and tools that is available to them long before they need our money. We've got a tool that is going to help us a lot with the overall life cycle that we're just putting out there now. It's called the Vestimate. The Vestimate estimates the fair market value of your company's common stock, and it allows you to therefore track it over time. The tracking period is the longest period in which we can advance.”
2025-11-06 · Capital Allocators · Dave Thornton – Unlocking Venture Access Through Stock Options at Vested (EP.469) · IDENTIFIED FROM THE TRANSCRIPT · source
“That's right. And we don't believe you can either. One question that follows that theme that you might ask is, why don't you just take your five favorite companies? Why does it need to be the top 20%? And the answer is because I wouldn't believe that the top five was really the top five at a decently high level of Zoom, all of the work that we've done to date, both on benchmarking our actual portfolio and on robust backtesting has suggested that we can believe that the top 20% of companies as determined by our selection model are really the top 20% of companies. The way that we think about the power law is, one, it's real. Most of the returns are going to be driven by the big generational companies. Two, picking winners is very hard. Combining those two points, you need to be in every credible deal. We think our selection model does a really good job helping us to identify the pond to fission, and it's our job to go try to get one unit of everything.”
2025-11-06 · Capital Allocators · Dave Thornton – Unlocking Venture Access Through Stock Options at Vested (EP.469) · IDENTIFIED FROM THE TRANSCRIPT · source
“In a power law business, you wouldn't think from the outside you could put a pricing model together and it would have any accuracy because what you really care about are those power law winners. So how does it work?”
2025-11-06 · Capital Allocators · Dave Thornton – Unlocking Venture Access Through Stock Options at Vested (EP.469) · IDENTIFIED FROM THE TRANSCRIPT · source
“Would probably do the same thing and offer the same price. We need to be ready at the point that we get meaningful competition to move up on price, which is a function of how much we believe our pricing model. The more employees we serve, the more data exhaust we collect, especially the stuff that is truly proprietary to this business and you can't get anywhere else. The more comfortable we're going to be moving up on price 10% to win deals once we live in a world where there's competition. And that's a pretty good asset management mode because that means that we're going to be moving up on price to win the best deals and our portfolio is going to have the best stuff in it. And whoever copies us, they'll raise a first fund successfully and then”
2025-11-06 · Capital Allocators · Dave Thornton – Unlocking Venture Access Through Stock Options at Vested (EP.469) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's a data mode. There's no question about it. It's interesting. Our selection model is fundamentally a pricing model that we use for selection. The model predicts the exit price of a private company's common stock as a ratio to the price at which it most recently sold preferred stock to investors in its last round. One way to fix intuitions on what that thing is capturing is it's capturing how much growth is left in a company before its exit. It is fundamentally a pricing model. At the moment, what we are doing with respect to all of the employees that walk in the door is we're saying it's not the easiest thing to have deep price opinions on up to tens of thousands of VC-backed startups. But the one price that we know exists and has been produced independently and has been approved by the company's board and even has a little bit of a discount baked into it is this fair market value. If anyone were to rip off our trade, they”
2025-11-06 · Capital Allocators · Dave Thornton – Unlocking Venture Access Through Stock Options at Vested (EP.469) · IDENTIFIED FROM THE TRANSCRIPT · source
“The biggest risk is that it is a relatively attractive strategy and competition is going to show up as soon as the IPO window stays open for long enough that the non-distressed M&A markets and the secondary markets start also producing their own versions of liquidity events, we are going to have competition. The biggest risk for the strategy is that we don't put a moat around it before some very well heeled asset management firm decides it's also a good idea.”
2025-11-06 · Capital Allocators · Dave Thornton – Unlocking Venture Access Through Stock Options at Vested (EP.469) · IDENTIFIED FROM THE TRANSCRIPT · source
“I can say that in one of our more recent funds, we had $236 positions. That's $236 employees that we helped across 167 companies, I think it was. In the next funds that we run, which are going to be a little bit bigger, my goal would be to have closer with 1,000 positions and maybe 600 or 700 names.”
2025-11-06 · Capital Allocators · Dave Thornton – Unlocking Venture Access Through Stock Options at Vested (EP.469) · IDENTIFIED FROM THE TRANSCRIPT · source
“Cash returns were historically. Let's sort them by that and let's let the algorithm figure out where the natural cutoff is.”
2025-11-06 · Capital Allocators · Dave Thornton – Unlocking Venture Access Through Stock Options at Vested (EP.469) · IDENTIFIED FROM THE TRANSCRIPT · source
“Went back and forth on this when we were building the model in the first place. Originally, we were like, let's just take the tier one VCs. And then there's a pause. I was like, okay, who are they? I know some names, but really who are the tier one VCs and are their results and are there performance out there? First, you have to actually agree on who top quartile VCs are, which is not that obvious and easy a thing to do. Second, around the time that we were doing this, the markets were heating up and then crashing. And we heard whispers that particular funds within even some of the top tier firms that everybody would agree with the top tier firms were battling pretty significant go-to risk. And we were just like, I don't know if we should be incorporating brand names as a major predictor in our algorithm. Instead, what we did was split the baby and we said, we do have a sense for what their cash on cash returns have been historically. Let's analyze whether cash on”
2025-11-06 · Capital Allocators · Dave Thornton – Unlocking Venture Access Through Stock Options at Vested (EP.469) · IDENTIFIED FROM THE TRANSCRIPT · source
“And so you really do want to be. Because it's so hard. That's the commentary on portfolio construction for stage. The commentary on sector was, interestingly, we end up getting the sectors that are the VC-backed companies in exactly the proportions that you'd expect to get them. It's mostly tech companies and it's meaningful sleeves of healthcare, B2B, B2C, small sleeves of energy and financial services.”
2025-11-06 · Capital Allocators · Dave Thornton – Unlocking Venture Access Through Stock Options at Vested (EP.469) · IDENTIFIED FROM THE TRANSCRIPT · source
“Really is few and far between that those deals make their way into our portfolio. So we're mostly BC, DE, is where a lot of the weight is. We're actually comfortable with that. The thing that was scary to us from a stage perspective when we were starting this was softbank tiger Kotu D1 had bid up the late stage companies significantly for a while, especially in 2020 and 2021. And we were nervous about the companies whose liquidation preference stack was so high that the common stock of the company should be at risk. So we have a natural bent towards wanting the early and mid-stage companies in the portfolio. We also have done a ton of reading on whatever empirical literature has been built on how good people are at picking winners and what we've determined is winner picking is very hard, especially in the early and midstages of the asset class, which are where the dominant amount of the companies in our portfolio are.”
2025-11-06 · Capital Allocators · Dave Thornton – Unlocking Venture Access Through Stock Options at Vested (EP.469) · IDENTIFIED FROM THE TRANSCRIPT · source
“A really interesting question. At the beginning, we said to ourselves in our pilot fund, let's see what happens. What we ended up seeing as the natural shape of our portfolio is we saw that the stage weights, so private companies raise funding rounds and usually like angel precedes seed series A, B, C, D, EFG, until forever. We saw that the natural weight and distribution by stage was roughly uniform from A through call it F plus with a little bit underweight in the earlier stages and a little bit underweight in the later stages just to fix an intuition on why that is, series A is usually your first scaling round. You don't have a lot of employees, but also nobody's leaving. Series F plus, those are the companies that are more likely to have proper secondary markets. OpenAI, Stripe, and SpaceX, and they will do tenders for their employees.”
2025-11-06 · Capital Allocators · Dave Thornton – Unlocking Venture Access Through Stock Options at Vested (EP.469) · IDENTIFIED FROM THE TRANSCRIPT · source
“For the purposes that we're putting all of our interesting data to, which is helping us understand which companies are good, we need to continue doing proper regression, not proper machine learning models and not bring in the LLMs and try to have them do work for us. I do think that one, the use of unstructured data, getting it ready for the machine learning model, if we wanted to take the tens of thousands of message conversations we've ever had with people on LinkedIn and we wanted to turn that into signal, LLNs would be excellent for that. We've currently got an activity internally going on that is doing just that. Two, I think that external facing messaging, especially as we start spinning up the equity education part of our business again, we're going to have the ability to write a lot more content and spend our expertise and time editing it as opposed to writing it from scratch, which can take 95% out of 100% of the time.”
2025-11-06 · Capital Allocators · Dave Thornton – Unlocking Venture Access Through Stock Options at Vested (EP.469) · IDENTIFIED FROM THE TRANSCRIPT · source
“Doing small deals. We're helping the rank and file startup employees out. $100,000 doesn't become $50 million. People don't have the opportunity to think to themselves, this is enough money that it's fine if I nuke my career. I could live in Aruba for the rest of my life. The third is that we're doing stock option funding. So it is way more often the case than not that our counterparty owns more shares than we do and therefore they meaningfully participate in the liquidity event. And that's the reason we get the thank yous. Now they have a million dollars and they just shipped us $700,000 and that's a good deal for them. Now they have a million dollars they wouldn't have.”
2025-11-06 · Capital Allocators · Dave Thornton – Unlocking Venture Access Through Stock Options at Vested (EP.469) · IDENTIFIED FROM THE TRANSCRIPT · source
“Delivery that was owed, and it was just economically rational for that person to fight it tooth and nail and disappear. Those were the two things that we saw as potential issues, but knowing that those were not issues for us, we proceeded forward and lived our lives. We have had thus far a 100% delivery rate on enough liquidity events that the sample sizes you can trust the number. We're over 60 and changed liquidity events that we've collected on with no hair whatsoever, inclusive of reasonably large ones. We typically get thank you notes from our counterparties. I'll give you my two or three cents about why the delivery rates have not been an issue for us. One is that the moment that the transfer restrictions on private shares become not a thing, it's almost always around some sort of a liquidity event, which is to say at the moment you owe us something, you have it. This isn't a credit risk type problem. The second is”
2025-11-06 · Capital Allocators · Dave Thornton – Unlocking Venture Access Through Stock Options at Vested (EP.469) · IDENTIFIED FROM THE TRANSCRIPT · source
“We totally obsessed about this as a problem at the beginning, and we've now become so comfortable with it we don't think about it twice. Originally, we were like, okay, delivery risk is going to be the main risk in this business. We need to get our head around this type of contract that we're using and how it's historically been used and what its delivery and non-delivery rates have been. We found only two examples in the entirety of all the canvassing that we did where non-delivery became a thing. One was an example where somebody didn't actually own the options in the first place. Whoever bought from them didn't validate they were the proper option holder, which is a super easy thing to get around. You just need people to show you their option grant management account and go to the source, which we do. The second was instead of doing option exercise, somebody forward sold all of their stock in a particular private company, and then it had a monster liquidity event. And there was a $50 million.”
2025-11-06 · Capital Allocators · Dave Thornton – Unlocking Venture Access Through Stock Options at Vested (EP.469) · IDENTIFIED FROM THE TRANSCRIPT · source
“Options with which is the capital use case, and then you will be titled to $100,000 and you will owe us delivery of the $33,000 that we bought whenever it is that the transfer restrictions on those shares lapse or are nullified.”
2025-11-06 · Capital Allocators · Dave Thornton – Unlocking Venture Access Through Stock Options at Vested (EP.469) · IDENTIFIED FROM THE TRANSCRIPT · source
“To the ordinary income tax regime. And then there is the tax related to actually doing a transaction with us. So our specific transaction is that we're buying some of your shares, which means there's a capital gain event, potentially. Those are the three components. If you've been at a company for a long time, the biggest component is usually the second, which is the tax associated with your exercise. If you've been at a company a shorter time, it's usually the exercise cost. I'll give you a numeric example. If you have 100,000 options at a $1 strike price and tax doesn't exist, so you need $100,000. Let's say the current board-approved fair market value of the stock is $3 a share. We will typically be buying at $3 a share until you have 100 grand. In that case, we would buy $33,333 of your shares. Our money will go out the door today. You will now have $100,000 that you will immediately turn around and exercise all $100,000.”
2025-11-06 · Capital Allocators · Dave Thornton – Unlocking Venture Access Through Stock Options at Vested (EP.469) · IDENTIFIED FROM THE TRANSCRIPT · source
“Single most important piece is how much money they need all in to do their full exercise. The pieces of the money are what is your total exercise cost, which is just a strike price times however many options you have across however many grants you have. Then there is the tax cost, which is the tax that is actually associated with the act of exercising. That is typically applied to the paper gain between the current board approved fair market value of the stock as of the moment you're exercising and whatever your strike price is, which is a disaster. There's no reason that that should be taxed. You can't turn your stock into money when you buy it. It's kind of messed up, but it is what it is, and it's hard to change laws. Let's just assume that that's going to continue forward for a while. If you have incentive stock options, that gain will be applied to the alternative minimum tax regime if you have non-qualified stock options. It'll be applied.”
2025-11-06 · Capital Allocators · Dave Thornton – Unlocking Venture Access Through Stock Options at Vested (EP.469) · IDENTIFIED FROM THE TRANSCRIPT · source
“Startup all the way through when they might need our money in that 90 day window of total distress. We're about to start refocusing on equity education to bring people in early so that they think of us when it's time.”
2025-11-06 · Capital Allocators · Dave Thornton – Unlocking Venture Access Through Stock Options at Vested (EP.469) · IDENTIFIED FROM THE TRANSCRIPT · source
“Specifically, by putting an end date next to their tenure with a company that we like, we will know about them immediately and we will proactively and automatedly reach out typically also on LinkedIn. When they raise their hand, which they do at very high rates because we're solving a super acute problem that most of them usually have given up on by the time we find them, we'll direct them to our website. They'll provide the relevant information for us to make a quote. They will take a look at the quote and then submit it back to us as a deal for our approval. That's the sourcing motion right now. It is entirely proactive and entirely predicated on finding employees that have recently left companies that are currently on our list. There's still a little bit of general brand awareness that's out there in the world, so people find us anyway. But that's mostly what we do. How I think about this long term, though, is we need to be valuable to people at all stages of their startup equity lifecycle from when they are first considering joining us.”
2025-11-06 · Capital Allocators · Dave Thornton – Unlocking Venture Access Through Stock Options at Vested (EP.469) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yes, it's an interesting full circle, by the way. We started off with a website that brought people in that ended up asking us questions then as a relatively early stage company moving into the world of asset management, it was important that we stay focused. And so we stopped working on the equity education piece and we started working on the, let's make sure that we're good at deploying and making sure that the employees are having a good experience as they come in. There was a period where we were entirely focused on that, which that period ends roughly right now. I'll explain sourcing during that period and then I'll talk about how we want to source going forward. The sourcing right now is we've got a set of companies that we like based on our selection model. We are sitting on top of job website data, think of LinkedIn. And we are paying attention to the employees of the companies that we like. And as soon as we see, they update their bio in some relevant way.”
2025-11-06 · Capital Allocators · Dave Thornton – Unlocking Venture Access Through Stock Options at Vested (EP.469) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's hard because real hypothesis testing requires that you live long enough to see your investments do well or poorly and the private markets have been super quiet for the last three years. The liquidity events that are the final arbiter of whether you've done something right or wrong and can update yourself, that feedback loop has been pretty slow in the last bit instead the way that we do it is with really robust out-of-sample back testing.”
2025-11-06 · Capital Allocators · Dave Thornton – Unlocking Venture Access Through Stock Options at Vested (EP.469) · IDENTIFIED FROM THE TRANSCRIPT · source
“That's fine. It's another thing if they try to sell all of their shares and look like they're running away from the company as fast as they can. It's an example of the types of employee signals that are available.”
2025-11-06 · Capital Allocators · Dave Thornton – Unlocking Venture Access Through Stock Options at Vested (EP.469) · IDENTIFIED FROM THE TRANSCRIPT · source
“As in, thanks for the free option, it's not good enough, but even if you put money on top of that and gave me some walkaround money, I'm still not doing this. So you see the full gamut in some of the unsolicited reactions that we get from the employees. You will also see their behavior on our website, which is where they come to structure and submit their deal, and we give them the option to counter on price. You lose some of the purchase discounts when there is a price counter, but it's also a great signal and evidence this belief in the company. We also currently do a transaction where we're buying the minimum number of the shares that they're about to exercise their way into in order to get them all the money they need to do all of their exercise. We view that as somewhere between neutral and positive selection because they're only parting with the shares that they have to in order to buy as much stock and own as much stock as they can, but we also give them the opportunity to sell more than the minimum. It's one thing if they sell 5,000 dollars worth more than the minimum.”
2025-11-06 · Capital Allocators · Dave Thornton – Unlocking Venture Access Through Stock Options at Vested (EP.469) · IDENTIFIED FROM THE TRANSCRIPT · source
“Been early exercising my options at every available opportunity with my own money. So thanks, but I don't need your help, which is as good as it gets. I've also seen things as crazy as I wouldn't exercise my options if you paid me.”
2025-11-06 · Capital Allocators · Dave Thornton – Unlocking Venture Access Through Stock Options at Vested (EP.469) · IDENTIFIED FROM THE TRANSCRIPT · source
“Get the founder out of their sales job. If a company just fired 50% of its people quietly, it's going to zero. Those are the moment in time differentiated data sets. And then we've got the stuff that we collect from and through the employees. And some of these I'm not going to be able to talk in too much detail about, but just to give you an example, we reach out to them typically on LinkedIn. They will respond to us sometimes with a thanks. I'll check out the website. Sometimes they will just dump their brain out in an unsolicited way. You see things that are as high signal as”
2025-11-06 · Capital Allocators · Dave Thornton – Unlocking Venture Access Through Stock Options at Vested (EP.469) · IDENTIFIED FROM THE TRANSCRIPT · source
“Or are they running away and does every round look like it's a new set of people? That I view as the table sticks stuff. There's a set of differentiated data which lives in the middle, which is not ours, is not proprietary, but to the extent that somebody wanted to build this stuff on their own over the next few years, it's doable. One is a set of financial performance estimates that we have for private companies that are based on state and local tax and labor filings. For idiosyncratic VC-backed startups, they're never particularly accurate, but they also have a lot of signal in the trend. They're always consistently inaccurate for the same company. And so if they go up, that means something. There's another differentiated data set, which is built around employee flows to and from companies. So if a company just hired its first CFO, that's an incredible signal. If a company just hired its first non-founding sales team, that means they found product market fit and it's on repeat and they...”
2025-11-06 · Capital Allocators · Dave Thornton – Unlocking Venture Access Through Stock Options at Vested (EP.469) · IDENTIFIED FROM THE TRANSCRIPT · source
“I would characterize it as three streams. I munged two of them into the non proprietary stuff. There's what I view as the table stakes data, which is financing trajectory for a private company. Just is it going up into the right or not? It's very important that it is because in the venture asset class, you don't know how the company's going to do until the music stops, but before the music stopped, it better be going up and to the right. Financing terms, the terms at which investors buy preferred stock in a private company matter a lot for how much risk the common stock is at investor quality. By investor quality, I'm not saying that we need to know that the name of the investors backing this company are Sequoia and Andreessen, but we need to know that they have historically produced good cash on cash returns. Investor behavior, are they continuing to do their pro rata in subsequent rounds and stay involved with the company and put more capital into it and double down on their winner?”
2025-11-06 · Capital Allocators · Dave Thornton – Unlocking Venture Access Through Stock Options at Vested (EP.469) · IDENTIFIED FROM THE TRANSCRIPT · source
“Sitting on, which is that if you help a broad base of startup employees, you will end up with a ton of differentiated data on private companies that may or may not be out there in the world otherwise. We got the band back together from that first business where we built the machine learning models and we built a private company selection model powered by a bunch of the stuff that you'd expect us to have as investors and a bunch of the stuff that was coming inbound with and through our startup employee counterparties once we had the ability to effectively point at the top 20% of VCBA startups buying into that portion of the asset class at discounts becomes a really compelling product then with that fairly compelling product it's much easier to point to the investor market and say okay everybody who's been locked out of this asset class we have a real thing for you now”
2025-11-06 · Capital Allocators · Dave Thornton – Unlocking Venture Access Through Stock Options at Vested (EP.469) · IDENTIFIED FROM THE TRANSCRIPT · source
“We realize that there were some reasonable purchase discounts that were available to us in helping these startup employees. Specifically, we can get exposure to the common stock that they're buying usually at the independently produced company board approved fair market value of that company's common stock, which tends to incorporate a discount for lack of marketability because common stock of private companies never trades anywhere. The first thought that we had was, oh, well, if we can get stuff at a discount, let's not help the folks that are leaving the clearest dumpster fires that are obviously going to zero. Let's see if we can buy the rest and help in a broad way diversify it on concentrated and fairly cheap. The first concept was a VC index at a discount. A couple years in, we realized that there was a second source of interesting alpha that we were”
2025-11-06 · Capital Allocators · Dave Thornton – Unlocking Venture Access Through Stock Options at Vested (EP.469) · IDENTIFIED FROM THE TRANSCRIPT · source
“Let me walk backwards for a second. There are many different transactional structures that have evolved to help people who need funding for their stock option exercise. All of them have one commonality, which is that you usually end up with exposure to the underlying common stock that you're helping the person buy. You're getting some access to the equity of a venture-backed startup. The first thought that we had was there's probably people that have been locked out of the venture asset class writ large that might think this is an interesting way to get exposure that they otherwise couldn't get exposure. Now, that thought did not go too much further at that moment because to us the real trick was figuring out how we could be good investors. The access is interesting, but it's a power lie as a class. A lot of companies go to zero. You've got to figure that out first. We ended up with two evolutions in the business that get us to where we are today. The first evolution was”
2025-11-06 · Capital Allocators · Dave Thornton – Unlocking Venture Access Through Stock Options at Vested (EP.469) · IDENTIFIED FROM THE TRANSCRIPT · source