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Judith Elsea

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31
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2016-09-26
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2016-09-26
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1
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  1. “Thank you, Eric. Thank you for your patience with that long discursive explanation. And I've enjoyed chatting with you today. So let's do it again sometime.”

    2016-09-26 · The Twenty Minute VC · 20VC: The 3 Things LPs Want To See From VCs & Why The Table Stakes For VCs Is Higher Than Ever with Judith Elsea, Co-Founder @ Weathergage Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  2. “It under his or her belt. That's quite an accomplishment for such a young firm. I'm calling them out just because of that reason. There are plenty of older firms out there who can't make that claim for their partners.”

    2016-09-26 · The Twenty Minute VC · 20VC: The 3 Things LPs Want To See From VCs & Why The Table Stakes For VCs Is Higher Than Ever with Judith Elsea, Co-Founder @ Weathergage Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  3. “Just pick one that we did this year and that's been on my mind for a very specific reason recently and that's Felicia's ventures and you mentioned them earlier. So we've been with Felisa's since their beginning. I cannot tell you Harry how proud we are of how this firm has grown and developed. You know, returns, of course, are all you want and then some, you know, the culture of the firm is so healthy and so vibrant. You know, you've spoken to them. They're so proud of their immigrant roots. And I think that's one reason why they resonate with such a wide variety of founders. I told you before we solve for the super scrappy teams, you know, Felicia's team is very, very scrappy and they work every bit as hard as their founders. So, you know, we love all the managers we back, but I have Felicis on my mind in particular because they were investor in Dollar Shave Club and with that recent sale. Now each one of the Felica's partners has at least $1 billion eggs.”

    2016-09-26 · The Twenty Minute VC · 20VC: The 3 Things LPs Want To See From VCs & Why The Table Stakes For VCs Is Higher Than Ever with Judith Elsea, Co-Founder @ Weathergage Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  4. “Yes, isn't that true for everything? And it's obvious that you do. So I think that's really wonderful. But besides yours, I would say that I read and listen to many of them. But on the VC side, I would say, you know, I love the content produced by A16Z. If you haven't read the content produced by Founder Collective, I highly recommend it. And of course, first round does a great job. And I'd say on the professional media side, you know, it's the usual, but recode, it's Panda, it's Dan Primec, it's Connie, it's TechCrunch. You know, all of these people, I think, have really good insights into the venture community, and I think they do a really good job of giving a rounder picture of what's going on in this part of the world.”

    2016-09-26 · The Twenty Minute VC · 20VC: The 3 Things LPs Want To See From VCs & Why The Table Stakes For VCs Is Higher Than Ever with Judith Elsea, Co-Founder @ Weathergage Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  5. “Besides yours, I guess, and really, Harry, I have to say, you've done such a great job with the 20-minute VC. I just look at what you've done, and I'm like, that's really kind of amazing. So, you know, super good on you for that.”

    2016-09-26 · The Twenty Minute VC · 20VC: The 3 Things LPs Want To See From VCs & Why The Table Stakes For VCs Is Higher Than Ever with Judith Elsea, Co-Founder @ Weathergage Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  6. “I wish I had known about the importance of the entrepreneur and the founder's opinion of VCs and overweighted that versus the importance of LP's perception of a VC brand. But back in the day, I probably overweighted LP's perception of brand and underweighted founder's perception. Now it's completely flipped for us”

    2016-09-26 · The Twenty Minute VC · 20VC: The 3 Things LPs Want To See From VCs & Why The Table Stakes For VCs Is Higher Than Ever with Judith Elsea, Co-Founder @ Weathergage Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  7. “And there was statesmanship and spycraft. And Anne, Anne, oh, by the way, if these guys ever captured an enemy ship, each crewman got carried interest on the value of the ship when they got back.”

    2016-09-26 · The Twenty Minute VC · 20VC: The 3 Things LPs Want To See From VCs & Why The Table Stakes For VCs Is Higher Than Ever with Judith Elsea, Co-Founder @ Weathergage Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  8. “Oh, oh, okay. Well, you know, I only mention it because you're a Brit, and these are historical novels about the British Navy. You know, what do I love about these books other than everything? Well, you know, the characters and the relationships and the peer yourself, these are, you know, all very richly drawn. But here's a parallel for this interview in this book. It turns out that, you know, a British worship is a lot in common with startups in the VC ecosystem. And there are a couple of reasons like the senior team had to raise capital to revision the ship. They had to recruit a lead team. They had a cohesive culture. They had to build that aboard the ship. The Navy would provide these captains with their initial strategies and objectives. But of course, you know, all of these original plans didn't survive contact with the enemy or with reality. So there were all kinds of pivots and discarded plans and improvised new ones and things like that. And there was also a lot of scientific exploration engineering that went on during these voices.”

    2016-09-26 · The Twenty Minute VC · 20VC: The 3 Things LPs Want To See From VCs & Why The Table Stakes For VCs Is Higher Than Ever with Judith Elsea, Co-Founder @ Weathergage Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  9. “Okay, so my favorite book is actually any one of the 20 books written by Patrick O'Brien in his Aubrey Matrin series. Do you know this?”

    2016-09-26 · The Twenty Minute VC · 20VC: The 3 Things LPs Want To See From VCs & Why The Table Stakes For VCs Is Higher Than Ever with Judith Elsea, Co-Founder @ Weathergage Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  10. “So, I have to say, I really like what social capital is doing. It's a very big fund already. So I'm not sure how it's going to play out, but their partners are super smart and they're very forward thinking. There are lots of unknowns here and their size may mitigate against them. I think they'll at minimum see and continue to see more than their fair share of iconoclastic entrepreneurs. And I think they'll capitalize that on that very well.”

    2016-09-26 · The Twenty Minute VC · 20VC: The 3 Things LPs Want To See From VCs & Why The Table Stakes For VCs Is Higher Than Ever with Judith Elsea, Co-Founder @ Weathergage Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  11. “I think his observation is perfect. That's how the good ones do it. That's how you do it right. You do establish long-term relationships. I would just back up to say there's another important difference between deciding to invest in a company and deciding to invest in a fund. In a company, you certainly hope that that's a long-term investment and the companies succeeds, but very often they don't. And the economic relationship stops there. You know, these venture capital funds are 10 or 12 or 15 year entities. And so you're involved with these venture managers for a much longer period of time than perhaps venture managers involved with the portfolio company. So these are important long-term relationships. And I think Chad demonstrates to me that he is building the groundwork for a sustainable firm.”

    2016-09-26 · The Twenty Minute VC · 20VC: The 3 Things LPs Want To See From VCs & Why The Table Stakes For VCs Is Higher Than Ever with Judith Elsea, Co-Founder @ Weathergage Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  12. “It's longer. It's much longer for most people and for newish managers. There are some exceptions to this rule, but, you know, if you were raising capital for a reasonably well regarded company, it can be as short as a week or two, right? If there's some known quantities involved, and yeah, there are cases where that could drag out. But if you're raising a fund, especially a first-time fund and you have no special extenuating circumstances like, you know, 3LPs who are going to take up the fund themselves because they've worked with you for the last five years on some other project unless you have extenuating circumstances. There is the LP process requires a period of time to get acquainted with the new VC manager and the opportunity and to calibrate them inside our network. So it just takes, it can just take a lot longer.”

    2016-09-26 · The Twenty Minute VC · 20VC: The 3 Things LPs Want To See From VCs & Why The Table Stakes For VCs Is Higher Than Ever with Judith Elsea, Co-Founder @ Weathergage Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  13. “Well, I think it's because most new fund managers have had little or no exposure to the process. Once you've done it a time or two, it becomes less experienced. There's no place to go to find out how this gets done. It's all pretty much word of mouth. You know, the second thing is that, you know, newish managers have a tendency to want to use the same process of raising a fund as they use when they make a company investment. And there are some similarities, but there's some really important differences. And, you know, the time to close cadence, the sort of interaction with the LPs, the documentations, these are three really big important differences between raising capital for a company or deciding to commit to capital, to a company, and getting an LP to decide to commit capital to your fund.”

    2016-09-26 · The Twenty Minute VC · 20VC: The 3 Things LPs Want To See From VCs & Why The Table Stakes For VCs Is Higher Than Ever with Judith Elsea, Co-Founder @ Weathergage Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  14. “Track records. And again, it's about the top founders calling the ball. These founders are much better informed than ever before in the competition to win deals is very stiff. So the table stakes for a VC firm are so much higher than they've ever been. You know, with a VC firm that maybe we bat before has not been investing a significant amount of their management fee and income and effort back into the firm and into resources to help their companies, then that firm's already behind. And then there's some other reasons that we stop backing and sometimes it's the loss of a critical team member or it's just poor execution, which probably means that we didn't choose wisely in the first place.”

    2016-09-26 · The Twenty Minute VC · 20VC: The 3 Things LPs Want To See From VCs & Why The Table Stakes For VCs Is Higher Than Ever with Judith Elsea, Co-Founder @ Weathergage Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  15. “It's certainly true that most institutional investors consider the first commitment at least a two fund commitment, if not a three fund commitment. You know, that's because really when fund two rolls around, you don't really have enough information to make a change from fund one. And if you've done really good due diligence and you've not made a mistake, then most people do think that these are at least a two-fund, you know, a set of two-funded commitments. But there's no guarantee something could change between fund one and two or fund two and three. For us, when we decide to stop backing a VC firm, it's usually based on the loss of relevancy with founders. And we ask ourselves every time, how does this particular team find and win deals versus their top competitors? Everybody has been upping their game in the last few years. You know, there are fewer people who are coasting on”

    2016-09-26 · The Twenty Minute VC · 20VC: The 3 Things LPs Want To See From VCs & Why The Table Stakes For VCs Is Higher Than Ever with Judith Elsea, Co-Founder @ Weathergage Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  16. “Most of the time it's undifferentiation. We see managers who have spent some time in the field and have a credible record, but it's not an exemplary record after having done it for a while. For new managers, maybe the track record is short and we will underwrite that. But we find ourselves with, you know, at least notional coverage of the same opportunity set. These managers may be good and may be interesting, but it's not demonstrably different or better than the managers with whom we're already investing. And sometimes the returns are just awful or the opportunity is poorly articulated or, you know, it's just not well thought out. We don't want to be rude about it. This is, you know, people's life work. And frankly, people in this business generally, I think, are intellectually a cut above a lot of other asset classes. So nobody's terrible. You know, there's certainly people who seem”

    2016-09-26 · The Twenty Minute VC · 20VC: The 3 Things LPs Want To See From VCs & Why The Table Stakes For VCs Is Higher Than Ever with Judith Elsea, Co-Founder @ Weathergage Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  17. “We will share that data back with the people who are calling on us so we can give them a perspective of what other people have been doing in exactly the same time frame that this particular”

    2016-09-26 · The Twenty Minute VC · 20VC: The 3 Things LPs Want To See From VCs & Why The Table Stakes For VCs Is Higher Than Ever with Judith Elsea, Co-Founder @ Weathergage Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  18. “So, if people want to pitch us, they are more than welcome to do so. We want to talk to them. We want to hear what they're doing, and we want to calibrate them to see if it's a possible fit in our portfolio. So, of course, a warm introduction is always good, but we don't require it. We do look at data, though. We do want to have information about portfolio company information. And I'm not talking about operating information. I'm just talking about the basic blocking and tackling of cost and valuation and how much capital has been invested. And from that information, we look at loss ratios and multiples and which partner has produced returns and what are the sources of returns from the funds, et cetera. That's how people come to us because we have to say no a lot. We like to give something back in return if we can. And so the data that I just mentioned that we collect in our proprietary tool call weather vein.”

    2016-09-26 · The Twenty Minute VC · 20VC: The 3 Things LPs Want To See From VCs & Why The Table Stakes For VCs Is Higher Than Ever with Judith Elsea, Co-Founder @ Weathergage Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  19. “Our process is to calibrate as many managers who are in our wheelhouse. There are a number of reasons for that. One is you have to calibrate a lot of managers to know what grade looks like. And it's really important for us to assemble a portfolio of what we think groups that have the right characteristics. Of course, we're not always right, but we do have a point of view and we want to assemble a really good team on the field. And to do that, we have to have the aperture wide open to new opportunities. Harry, as you know, this is a business is once you think you have a pat hand in terms of your manager list, you're probably set up to take a fall. So we have the aperture for viewing new groups is wide open. We also have a very concentrated portfolio. And so it's hard to earn a place in our portfolio, but not impossible.”

    2016-09-26 · The Twenty Minute VC · 20VC: The 3 Things LPs Want To See From VCs & Why The Table Stakes For VCs Is Higher Than Ever with Judith Elsea, Co-Founder @ Weathergage Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  20. “Oh, yes, very much so, and there are others. There are others certainly, you know, binary capital is another one I can think of that has their own point of view and really much more attuned to founders than they are necessarily what other co-investors are as a leading indicator of should they be interested in the deal or not. And I will say the other thing we're looking for on the qualitative side is, you know, how are they building their firm? What kind of firm do they want to build? What sort of platform do they want to build? And how do they engage with LPs in useful ways? So these are all bits of the mosaic that we try to put together. And when we see these things come together, we get pretty excited.”

    2016-09-26 · The Twenty Minute VC · 20VC: The 3 Things LPs Want To See From VCs & Why The Table Stakes For VCs Is Higher Than Ever with Judith Elsea, Co-Founder @ Weathergage Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  21. “Point of view, they're connected with founders in important ways, and they will go their own way and more concerned about what these cutting edge founder teams are doing and less about who else is in the deal.”

    2016-09-26 · The Twenty Minute VC · 20VC: The 3 Things LPs Want To See From VCs & Why The Table Stakes For VCs Is Higher Than Ever with Judith Elsea, Co-Founder @ Weathergage Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  22. “But in more informal, you know, sort of one to one GP to founder ways. The use of data now, I think, in the VC process is a really powerful change. And the people we like are using data in a very systematic and important way. And both to find deals and win deals, but also to help the companies succeed. And then, you know, of course, the teams that we like are doing the usual blocking and tackling, the helping the company make connections, to hire great teams, find customers. Another sort of important thing that we're looking for is, you know, the VCs and teams that we like in addition to solving for scrappiness, they're a whole lot less concerned about social proof, about what other VCs are doing. You know, one of our favorite groups call this, you know, aversion to investing on borrowed conviction. These teams that we like are really have a”

    2016-09-26 · The Twenty Minute VC · 20VC: The 3 Things LPs Want To See From VCs & Why The Table Stakes For VCs Is Higher Than Ever with Judith Elsea, Co-Founder @ Weathergage Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  23. “You know, I'll tell you there's a lot that excite us. What we're really trying to find here is the teams that are well regarded by founders. And we like VC teams who are just scrappy as hell. The VC teams that we love are very proactive. They're winning high quality diff deals. They're putting founders first and they work every bit as hard as the founding team to help the company succeed. new characteristic or newer characteristic that we're solving for is these VCs are using data in a very smart and a very systematic way and they're using data both to find and evaluate new deals but also to accelerate a company's growth and you know that didn't really happen in the past you know certain vcs would you know have a somewhat systematic approach to their relationships with entrepreneurs and they would help you know in material ways”

    2016-09-26 · The Twenty Minute VC · 20VC: The 3 Things LPs Want To See From VCs & Why The Table Stakes For VCs Is Higher Than Ever with Judith Elsea, Co-Founder @ Weathergage Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  24. “It depends on who's social proof. So we find that founders and entrepreneurs are leading opinions, are the leading indicators of the relevancy and potency of a VC's brand. We find that many LP's opinion of a VC's brand is actually a lagging indicator. The most powerful form of social proof for us is the opinion of entrepreneurs and much less so the opinion of other LPRIs.”

    2016-09-26 · The Twenty Minute VC · 20VC: The 3 Things LPs Want To See From VCs & Why The Table Stakes For VCs Is Higher Than Ever with Judith Elsea, Co-Founder @ Weathergage Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  25. “At the end of the day, it is all about cash on cash. Fortunately or unfortunately in venture, at the end of the day can be very far away. So one needs interim measures to evaluate fund opportunities. And if you're strictly looking at the numbers, we use the same things that everybody else uses IRRs, TVPIs, DPIs, benchmark comparisons, et cetera. But of course, those interim measures won't provide the whole picture either. So we have to evaluate many other things and construct a mosaic of the opportunity. What is the quality of the portfolio at this stage? You know, one good signal is do other GPs covet this portfolio? Is the portfolio on strategy? Which partners produce these returns? Do we think they can repeat? But Harry, when we're evaluating these opportunities, the view of the entrepreneurs or founders is the most important part of our process.”

    2016-09-26 · The Twenty Minute VC · 20VC: The 3 Things LPs Want To See From VCs & Why The Table Stakes For VCs Is Higher Than Ever with Judith Elsea, Co-Founder @ Weathergage Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  26. “Well, it is. Our reaction to that is if you want exposure to the kinds of opportunities I just outlined, you know, they generally do come from young private companies and many of them are venture back. There are a lot of venture funds out there, but of course there, and we think a broader number of them will our position to produce really good returns. However, you know, the opportunity set for top quality opportunities in venture in both the US and I'm sure in Europe is not a large one. And so for us, we provide a vector into that world. And we like to think that we earn our key by doing something for our LPs that they can't do for themselves or they can't do for themselves in the quantum in which they would like to have exposure. People find that this is an important aspect of their portfolio and it's difficult.”

    2016-09-26 · The Twenty Minute VC · 20VC: The 3 Things LPs Want To See From VCs & Why The Table Stakes For VCs Is Higher Than Ever with Judith Elsea, Co-Founder @ Weathergage Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  27. “If entrepreneurs and investors get it right. And so this is the economic underpinning of my interest and venture. You know, there is this enormous renaissance in innovation, both IT and life sciences now. And it's extraordinary, and we think it's quite durable. It will be quite long-lasting and meaningful. But really, how do you get exposure to these opportunities? Well, there's almost only one way to do it, and that's through young private companies, and many of them are venture-backed. So there's an intellectual underpinning to my interest, but there's also an economic underpinning to my interest.”

    2016-09-26 · The Twenty Minute VC · 20VC: The 3 Things LPs Want To See From VCs & Why The Table Stakes For VCs Is Higher Than Ever with Judith Elsea, Co-Founder @ Weathergage Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  28. “Ride sharing would allow so many people to profit from their unscheduled time and previously underutilize resources. And certainly no one knew at the time that doing all this would work the auto and insurance industries and really material ways. And now they're moving into self-driving cars and trucks. And all of that can end up reshaping cities and warping our notion of public transportation. So, you know, not every startup has this Uber scale impact. But most large company incumbents are really just worried about how many shares are going to buy back every quarter. It's really entrepreneurs who are working hard on the stuff that really push society forward. Most of the time they fail, but sometimes they succeed. And I just really honor that struggle. You know, that's sort of the intellectual underpinnings of my interest and venture and the startup and the creation process. But there's money to be made.”

    2016-09-26 · The Twenty Minute VC · 20VC: The 3 Things LPs Want To See From VCs & Why The Table Stakes For VCs Is Higher Than Ever with Judith Elsea, Co-Founder @ Weathergage Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  29. “Hard to get excited about your job if you had to spend time wondering if Walmart was going to miss or beat earnings by a penny. For me, my introduction to venture came through the Kaufman Foundation. But the startup world is so much more interesting and potentially rewarding than anything I was doing in public equities or frankly even a lot of the other asset classes that I've trafficked in. And I think that's because entrepreneurs are taking these big risks every day, trying to create new stuff. And some of it's trivial, but some of it's extraordinary. And I just think that's fascinating. And if you'll permit me an example of that, because I often, you know, use Uber. And Uber is an extreme example of pretty much every pathology you can think of. But really, no one knew that the limo and taxi business needed disrupting, certainly, much less that it could even be done with all the regulatory barriers and certainly no one knew at the time that”

    2016-09-26 · The Twenty Minute VC · 20VC: The 3 Things LPs Want To See From VCs & Why The Table Stakes For VCs Is Higher Than Ever with Judith Elsea, Co-Founder @ Weathergage Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  30. “Yes, you're right, it's certainly not a traditional career path, especially back when I started. But I've really always been interested in how things work and how things fit together and by economics and the various motivations of economic actors. And, you know, somehow the investment business lends itself to that kind of curiosity. So I've been in the investment business for quite some time now, including stints as a portfolio manager of public equities, as a CIO of Ewing Marion Kaufman Foundation and now is one of the four co-founders of a VC and Growth Equity Fund of Funds called Weather Gauge Capital. So parenthetically, we started WeatherGauge in 2006. We're on our fourth fund and we have some 960 million dollars of assets under management. But what really interested me in venture was when I used to run a public equity portfolios, after a while it was really”

    2016-09-26 · The Twenty Minute VC · 20VC: The 3 Things LPs Want To See From VCs & Why The Table Stakes For VCs Is Higher Than Ever with Judith Elsea, Co-Founder @ Weathergage Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  31. “I'm very excited to be here, Harry. I love what you're doing and thrilled that you would ask me to participate. Thank you.”

    2016-09-26 · The Twenty Minute VC · 20VC: The 3 Things LPs Want To See From VCs & Why The Table Stakes For VCs Is Higher Than Ever with Judith Elsea, Co-Founder @ Weathergage Capital · IDENTIFIED FROM THE TRANSCRIPT · source