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Ravi Viswanathan

lines on the record: 58
first: 2023-07-13
most recent: 2023-07-13
sittings or episodes: 1
sources: podcast

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“Well, it's really app now, but I would say pace yourself, especially with the intensity of venture and all the things that are coming at you, and just enjoy the ride, something my wife keeps telling me. Just enjoy building this firm, enjoy this journey, even though it has twists and turns. Those two are things I try to take to heart every day.”
2023-07-13 · Capital Allocators · Ravi Viswanathan – Venture Secondaries and Growth Capital at NewView (EP.327) · IDENTIFIED FROM THE TRANSCRIPT · source
“Again, this work ethic piece, that was something that was unequivocal and not up for discussion or debate, which sadly and unfortunately my kids are getting the brunt of that now.”
2023-07-13 · Capital Allocators · Ravi Viswanathan – Venture Secondaries and Growth Capital at NewView (EP.327) · IDENTIFIED FROM THE TRANSCRIPT · source
“Totally different circles. First, my grandfather, born in South India, a city called Madras called Chennai now. He was a lawyer. He ended his practicing lawyer at age 92, so taught me the work ethic piece. And then probably more recently and more relevant to venture, Peter Barris, who hired me at NEA. He ran NEA for 20 years. Rare blend of great investor, but also just a great operator and also just a great manager and leader really built the firm. He's a senior advisor with us. hearken back to a lot of things he's told me and used that to try to build new view in a similar way.”
2023-07-13 · Capital Allocators · Ravi Viswanathan – Venture Secondaries and Growth Capital at NewView (EP.327) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, anything on never do again is aspirational, but I'd say the quality of the CEO as I just spend time and reflect in the last twenty plus years just really investing time. And it's not something that makes TechCrunch and a lot of the media, but just the execution capabilities, the hiring capabilities of the CEO and the management team is really something that we spend a lot of time. And I try not to repeat mistakes of the past in that.”
2023-07-13 · Capital Allocators · Ravi Viswanathan – Venture Secondaries and Growth Capital at NewView (EP.327) · IDENTIFIED FROM THE TRANSCRIPT · source
“You mean aside from making bad investments? I think there's been times, and I've been guilty of this, when you're diligent company moves away from the fundamentals to, I call it noise, deal dynamics, other things that are important but not fundamental and core. So we try to make sure we're intellectually honest, and every time we do that, get the focus back into the fundamentals of the company.”
2023-07-13 · Capital Allocators · Ravi Viswanathan – Venture Secondaries and Growth Capital at NewView (EP.327) · IDENTIFIED FROM THE TRANSCRIPT · source
“We really do love traveling. I have kids that are 14 and 11, so they're enjoying time with their parents before that changes. But I also, just for my sanity, I do like to exercise. So whether it's running, biking, tennis, definitely need that working out as relief from the intensity of the day today.”
2023-07-13 · Capital Allocators · Ravi Viswanathan – Venture Secondaries and Growth Capital at NewView (EP.327) · IDENTIFIED FROM THE TRANSCRIPT · source
“The investing side continues to perform attracting really high quality portfolios and companies to our franchise, adding value to them and exiting them really that full circle. We really do focus on returns. But also I spend as much time, if not more, just on building the team because I really wanted to build a firm, not a fund. If it was just for one fund, I wouldn't have done it. But really something that far outlasts me. And that's taken a page out of my old firm. Very nondescript name on the door. And the founders did a really nice job transitioning really building that bench and making sure that we're staffed appropriately to attack this market that really we think is going to persist for the next five to ten years.”
2023-07-13 · Capital Allocators · Ravi Viswanathan – Venture Secondaries and Growth Capital at NewView (EP.327) · IDENTIFIED FROM THE TRANSCRIPT · source
“on execution. Looking at those folks and seeing these new deals, how do they compare? It's an unfair comparison because I'm comparing the best of the best in my 23 years with a net new investment, but you can still see trends and see, okay, where's blind spots that we can address? The other thing is in triaging, when you spend time with CEOs now more than ever, are they coachable? There's some meetings where we walk away and it's like, I think the CEO still thinks it's 2021. And so those are usually a very quick exit. And that's more of a rare occasion. I think people really have internalized the market we're in.”
2023-07-13 · Capital Allocators · Ravi Viswanathan – Venture Secondaries and Growth Capital at NewView (EP.327) · IDENTIFIED FROM THE TRANSCRIPT · source
“Team just really dialed in. Similarly, when this downturned ahead. So that's how we triage the existing portfolio. The new portfolio, as I'd mentioned earlier, this whole product market fit referendum is really getting a sense, this continuum, whether it's nice to have versus must-have vitamin versus painkiller, whatever analogy you have. I've been seeing this movie several times and having losses still etched in my head of things going wrong. Really looking at these efficiency metrics underneath the cover that really could be good gatekeepers of product market fit, net dollar retention, things like that churn in an eroding environment, what is the resiliency and durability of this product? We try to spend time with the CEOs and management team. You know, that's one of the biggest lessons I've learned is the best CEOs I've backed in my career. They recruit exceptionally well. They're maniacal about the details. They're maniacal and focused.”
2023-07-13 · Capital Allocators · Ravi Viswanathan – Venture Secondaries and Growth Capital at NewView (EP.327) · IDENTIFIED FROM THE TRANSCRIPT · source
“Two sides of the same coin for every amazing opportunity we see in this market. We have to also look at what we have buried in the ground. The fact that we don't do that many deals, we have 45 odd companies, we've got this whole operating team that's all over it, and they're really focused and they're compensating value and not doing deals, but really helping companies. So I'll just give you one point in time in April 2020 when COVID hit and we thought, oh, wow. That downturn was like four weeks, so it was short for six weeks. But yeah, there was some worry on cash preservation and efficiencies and all those things.”
2023-07-13 · Capital Allocators · Ravi Viswanathan – Venture Secondaries and Growth Capital at NewView (EP.327) · IDENTIFIED FROM THE TRANSCRIPT · source
“Now that you're seeing a market again that looks a little bit like your early days adventure in 2000, you can imagine there being a flood more of these types of opportunities, challenges, and legacy portfolios. How do you think about triaging that landscape so that you can prioritize your time looking at the best opportunities?”
2023-07-13 · Capital Allocators · Ravi Viswanathan – Venture Secondaries and Growth Capital at NewView (EP.327) · IDENTIFIED FROM THE TRANSCRIPT · source
“So that's been an opportunity that really has emerged. We're happy to see that because we were worried in 2020. Different than how I had been trained. And so there were definitely some worrying signs, but that's definitely normalized back to something that's more long term.”
2023-07-13 · Capital Allocators · Ravi Viswanathan – Venture Secondaries and Growth Capital at NewView (EP.327) · IDENTIFIED FROM THE TRANSCRIPT · source
“Companies recognizing that you would think secondary in terms of institutions getting liquidity, but the individuals need liquidity as well. So we've effectuated large tenders where you give liquidity to employees and we run that whole process. And then you can tack on early founders and angels and exited employees and all that. And that's been a new opportunity. I would say that a real opportunity is just the explosion of venture firms realizing, okay, I have a fundraising calendar in 203 and 24. I need to do something about it. And that probably is the biggest opportunity, I would say, that's really emerged. And then on the direct side, I think this back to basics, that era of fast money, highest price terms sheet in the fastest number of days, people realize the other side of that or some of those growth firms maybe aren't with them. When companies curate their investors, we do really well. They do references on us, et cetera.”
2023-07-13 · Capital Allocators · Ravi Viswanathan – Venture Secondaries and Growth Capital at NewView (EP.327) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think it's broad based. We've exited by IPO, we've exited via strategic M&A, we've exited by financial sponsor M&A. That's going to be a very vibrant area over the next decade. And these folks like Vista, Tomobravo, and others are arming themselves with tens of billions. I think SPACs have had their run up. They've had their run down. And the hope is that they'll stabilize into another opportunity set for folks to get liquidity. I do think that down the road, I could see us exiting by a secondary, where buyers, we could also be sellers. So we view that as just yet another path to exit.”
2023-07-13 · Capital Allocators · Ravi Viswanathan – Venture Secondaries and Growth Capital at NewView (EP.327) · IDENTIFIED FROM THE TRANSCRIPT · source
“A lot of these portfolio opportunities we have, it'll be multiple portfolios from different GPs that we coalesce to a fund.”
2023-07-13 · Capital Allocators · Ravi Viswanathan – Venture Secondaries and Growth Capital at NewView (EP.327) · IDENTIFIED FROM THE TRANSCRIPT · source
“There was one fund that really was in harvest mode. They'd had a few really successful funds, but the partners had moved on. And so there was a collection of probably a dozen high quality companies. We downselected to literally two or three that we really liked that fit our sweet spot. There was another fund that was a fintech-focused fund thought, you know what, we really would like to get DPI to be able to enable their next fundraise. And again, there's probably 10 to 12 companies. We actually just transact on one of their deals. probably one of their most exciting fintech companies. That is probably representative of how these conversations start. They want to either look at a fund or more broadly, and we will do our curation exercise and really downselect. It could be one or two, it could be five to ten. A lot of these portfolio funds will have multiple portfolios in it. NewView one was 80% was 31 companies from one”
2023-07-13 · Capital Allocators · Ravi Viswanathan – Venture Secondaries and Growth Capital at NewView (EP.327) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think, broadly speaking, it's played out really well, but the company by company hit rate would probably be lower. The portfolio hit rate was very high. But I would say that portfolio may have been broader than the ones we're looking at now, ones we're looking at now probably have less consumers, much more focused on enterprise software and fintech. And the reason the NEA portfolio was broader is that I had 15 years of know-how in these companies, even if we were consumer companies that maybe I didn't know intimately, I just knew day in and day out how they're performing, high quality of the management teams were. And so that's tough to replicate outside. So for these portfolios, I would call it much more thematic than our power ally. Now, for sure, in order to take some of these companies we're excited about, we may need to take others that are not in our core areas and we're happy to do that. But by and large, it's more focused.”
2023-07-13 · Capital Allocators · Ravi Viswanathan – Venture Secondaries and Growth Capital at NewView (EP.327) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, we have these three, and then we have another partner, Ben Fuzz, on the investing side. And then we have a really high quality group of folks that are developing. So we did this at NEA, and I was pretty heavily involved. This is the junior development program where you hire associates. And the ones that are exceptional, that you really build them organically into partners and general partners. 150 NEA, we had a really great track record of that. It's harder to do, but you can build generational diversity. You can build gender diversity. You can just do a lot of things where, and they're a lot more cohesive in the team. So we have a group of principals. Some of them start associates, but they have gone from being associates to sourcing deals, leading deals, shadowing partners on boards, and then taking on board seats. So it's that apprentice model that I learned a hundred years ago that I thought was really powerful and durable, that we're trying to impart. And the great news is over the next few years, many of those folks will become partners.”
2023-07-13 · Capital Allocators · Ravi Viswanathan – Venture Secondaries and Growth Capital at NewView (EP.327) · IDENTIFIED FROM THE TRANSCRIPT · source
“Strong signal to the company that you're getting the full power, and let me prove it to you because these folks can write checks, they can do follow ons.”
2023-07-13 · Capital Allocators · Ravi Viswanathan – Venture Secondaries and Growth Capital at NewView (EP.327) · IDENTIFIED FROM THE TRANSCRIPT · source
“Sometimes these firms that are full time, but sometimes they're part time. A lot of times they're probably, I wouldn't call it path to retirement, but the intensity is probably different than when they were operators. Probably the biggest difference is they're not full partners and sometimes they're not in the full partner meetings and they don't have the check writing capability in that if there's a follow-on or some financing, they have to go back to the partner group or their partner GP sponsor. Not always, but many times we've seen that. Actually, the first two hires Tim and David, they were called operating partners. And a year in I promoted them to partner because it was actually a disservice internally and externally because they're doing so much more. And so that subtle nuance means they get a partner. They don't get an operating partner because there's been situations where CEOs get quote unquote an operating partner. And sometimes they worry. Are they getting the full power of the venture firm behind them? This is a signal.”
2023-07-13 · Capital Allocators · Ravi Viswanathan – Venture Secondaries and Growth Capital at NewView (EP.327) · IDENTIFIED FROM THE TRANSCRIPT · source
“The portfolio side, sometimes we're buying a basket of companies, it's generally all secondary. Sometimes we don't have a strong relationship when we're chipping away building that relationship. And it's more just earning the right to be helpful, really figuring out what's in the best interest of the company, how do we create equity value, and what can we do to do that. Sometimes it's getting involved in one or more of those things. Sometimes it's pulling back and just letting them run.”
2023-07-13 · Capital Allocators · Ravi Viswanathan – Venture Secondaries and Growth Capital at NewView (EP.327) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, it's two different approaches. On the direct side, a lot of times we'll be leading the deal. We'll get a board seat or another seat. Even if we don't, we make sure to have a strong relationship with the team so we can add value. We have five partners, three of them are operators. One, finance, one product, one go-to-market, and they're not operating partners. They're full partners. They have fiduciary capability. They have check writing capability. They're fully integrated, which is another nuance and probably unique to us. So it's really engaging the company, but also we don't need to do it for the sake of doing it. So a lot of times if the company's gunning on all cylinders, the best thing we can do stay out of their way. What we found even in the high flyers in our portfolio, we can still add value. For example, how to think about an independent board as you get closer to an IPO. It's a long set of metrics, finance, operations, executive, recruitment, go-to-market. We go very deep there. Product, we go pretty deep there.”
2023-07-13 · Capital Allocators · Ravi Viswanathan – Venture Secondaries and Growth Capital at NewView (EP.327) · IDENTIFIED FROM THE TRANSCRIPT · source
“Private equity we're in the buyout world, it's a very efficient market. Company A and company B based on EBITDA, based on certain metrics, you know where they trade and it's generally discount X and discount Y, they're fungible. Well, venture, it's completely different. It's when did you do your last round? The last round is whatever you could sell shares at. It could be 11x revenue, it could be 100x. There's what the last round was when the last round was and what the growth rates and the prospects of each individual company are. And we tell even our LPs and other LPs that I know that discount is important, but I can show you a 5% discount on a company that's far greater than a 50%. Since we don't know how to normalize that, we just go to intrinsic value. What's the value of business? And knowing what you know about this business and the management team and this market, what's the prospects? And can we get our target return? And that's how we think about it. And obviously that always leads to a pricing.”
2023-07-13 · Capital Allocators · Ravi Viswanathan – Venture Secondaries and Growth Capital at NewView (EP.327) · IDENTIFIED FROM THE TRANSCRIPT · source
“More art than science. There's certainly a lot of science in terms of the underwriting. That's why there's a lot of back and forth to get to something that works. Just because the last round generally was done in a different era, we just want to make sure that they understand what the market is. And a lot of folks understand it. And they said they still want to have a conversation because the other lever they have is they don't have to sell 100% of that asset. They own 15% of a Pi Flyer. They could sell us 20%, 50%, whatever it is. So they still retain some upside. And that usually is a really good sign. It means that back and forth is working.”
2023-07-13 · Capital Allocators · Ravi Viswanathan – Venture Secondaries and Growth Capital at NewView (EP.327) · IDENTIFIED FROM THE TRANSCRIPT · source
“We try to do is generally it's a discount, obviously, but we also move away from, I call it the 100X ARR club. We have a lot of very high quality companies, even some high flowers, but some of those that are such significant valuations, it's tough for us to go because it's a relationship game, we won't go and say we'll do it at an 80% discount. It just doesn't make sense for us because we'd rather not engage on that particular company because it could be insulting to the GP. Also, when you're so far off, We don't even know if that valuation can persist over time. So we actually find the sweet spot of companies we like sectors we know it's thematic, so we already know a lot of these companies have built relationships, but the last round price actually isn't crazy. And so you still need a discount, but our discount isn't so high that it's going to be insulting, but it's high enough that it works for our underwriting and for our LPs, and it could work for them. I would say on the portfolio side, there's as much, if not...”
2023-07-13 · Capital Allocators · Ravi Viswanathan – Venture Secondaries and Growth Capital at NewView (EP.327) · IDENTIFIED FROM THE TRANSCRIPT · source
“For them, sometimes I'll talk to some of the secondary buyers who are more buyout folks and maybe don't know venture, don't know the relationship aspect, they view it much more as a transaction. We view it much more as a partnership and we're willing to invest in that partnership.”
2023-07-13 · Capital Allocators · Ravi Viswanathan – Venture Secondaries and Growth Capital at NewView (EP.327) · IDENTIFIED FROM THE TRANSCRIPT · source
“Value add capabilities. And that is the best hedge against any friction in us being able to transact. So much of it is this evangelical sales. Some of these conversations we probably have talked over 50 BC firms. Some of them have been talking to them for six to 12 months, if not longer. That's the difference, really understanding what we do and what they're solving for. And every one of our deals with these GPs is bespoke. Some could just need DPI. Some may have a board load issue or a capacity issue or an NAV concentration issue. They have three companies in one of their funds accounting for 90% of whatever it is. And so for us going and working with them and figuring out what they're solving for and making sure that works for us in terms of companies we like, we get excited about. And so some of these really take quite a while, but we've done several and everyone have come back and said they wanted to do more with us just because.”
2023-07-13 · Capital Allocators · Ravi Viswanathan – Venture Secondaries and Growth Capital at NewView (EP.327) · IDENTIFIED FROM THE TRANSCRIPT · source
“Portfolio side, we don't see a ton of folks doing those portfolio type deals. Now, there's a lot of press out where PurePlay venture firms are looking at secondary deals. So the individual secondary deals, people are realizing you can actually get really high quality companies at really nice pricing. Now, there's a lot of gotchas that we, after five years in this, internalize, and there's a fallacy to that. You have to really understand that. And then generally, you could be buying common. You could be buying heavily junior preferred. You could be buying stuff where there's structure. So there's all these things. That's the art part that you have to infuse into the science. You have to be careful that the certainty of closing in these secondary deals. You do a primary deal. I'm going to give you a term sheet. Okay, and we're going to close in 30, 60 days. Secondary, it's very different. There's restrictions. There's rofers. And so what we try to do really is make sure we have a really good relationship with the CEO. It's blessed by the CEO. It's blessed by the board. They see.”
2023-07-13 · Capital Allocators · Ravi Viswanathan – Venture Secondaries and Growth Capital at NewView (EP.327) · IDENTIFIED FROM THE TRANSCRIPT · source
“If you think about how growth used to be done, especially from 2018 to 2022, it just got exploded. Early stage folks are doing growth and vice versa. You have a more banded outcome set. You underwrite three to five X. You have a lower loss ratio to compensate maybe the upside as a true power law early stage franchise. Having said that, we still invest in hypergrowth. Most of our deals are well above 50% well above 100% are unprofitable. So while it's 3 to 5x, there's something where if things really alive, there is still a 10x potential, but it is more of abandoned outcome. Now, having said that, we do leave, I'd say, a small percent of our fund called 10 to 15%. We'll go early, where it's a space we know really well or a team we know really well, and we're willing to take that leap of faith and go earlier. We have that capability”
2023-07-13 · Capital Allocators · Ravi Viswanathan – Venture Secondaries and Growth Capital at NewView (EP.327) · IDENTIFIED FROM THE TRANSCRIPT · source
“These particular types of companies that you're investing in, how do you think about the risk-reward profile certainly sounds different from a venture firm power law distributions because you're purposely not going after those companies?”
2023-07-13 · Capital Allocators · Ravi Viswanathan – Venture Secondaries and Growth Capital at NewView (EP.327) · IDENTIFIED FROM THE TRANSCRIPT · source
“Its post product market fit. Most of what we do is probably series B and beyond, but I hesitate to say that because the letter designations these days really are not as meaningful. The 10 to 50 million zip code in terms of ARR scale is a sweet spot for us. I'd say half, if not more, of what we do is there. And then there's a good chunk that's even greater than 50 million. We're call it 10 to 100, where you really need to institutionalize. You're going from a hero sale to more systems and processes. You probably need a CRO or a COO. need a lot more metrics focused and you need that machinery and that instrumentation layer to get formed. We're actually very good at that and we've done that with lots of companies both in my time at NEA and at Newview. And this is where the early stage investors, they're still very powerful. But where they're exceptional is really that ideation product market fit initial scale and then that real hyperscale is where we spend most of our time”
2023-07-13 · Capital Allocators · Ravi Viswanathan – Venture Secondaries and Growth Capital at NewView (EP.327) · IDENTIFIED FROM THE TRANSCRIPT · source
“But they're value additive and they punch way above their weight. And this flexible capital has been really significant. They can do primary. They could lead the ramp, but they can also help with the cap table, help with tenders, get other folks that need liquidity out of the cap table and really drive that process. And so that really helped us formulate our differentiated approach. And to your point, a pretty crowded landscape. And then on the portfolio side, we just hadn't seen anyone really do this. There's folks that do individual company deals in these continuation vehicles, but really these curated baskets were active strategic investors and partners to the VCs. A lot of it is just 23 plus years of relationships and venture for myself and decades for my partners and colleagues. That's another big difference. Venture is still an inefficient market and it's still absolutely a relationship-based market.”
2023-07-13 · Capital Allocators · Ravi Viswanathan – Venture Secondaries and Growth Capital at NewView (EP.327) · IDENTIFIED FROM THE TRANSCRIPT · source
“For us the business lines are actually a lot more similar than different. The go-to-market and sourcing is a little bit different, but even the portfolio, these are highly curated baskets. So they're baskets of companies, and we look at each company as if it was a direct deal. And we're also highly thematic, I'd say 80, 90% of what we do is B2B software and fintech, which is where I grew up investing in. But I would say on the direct side, it really is this back-to-basics. We're much more viewed as a boutique where we do fewer deals and we don't have massive fun sizes. It's much more artisanal. Because we do fewer deals, we can build a relationship with companies for 6, 12, 18 months. And in that gestation period, we get to know them and they get to know us. And if we really get excited about it, we'll actually try to find ways to add value. Recruiting, our third partner on the portfolio management side is a go-to-market person, Chatham Chaudhary. So we actually can help these companies and they realize, oh, these folks, they don't take up a ton of space in the cap table.”
2023-07-13 · Capital Allocators · Ravi Viswanathan – Venture Secondaries and Growth Capital at NewView (EP.327) · IDENTIFIED FROM THE TRANSCRIPT · source
“And by the way, some of them are very successful doing this. Just invest in a lot of companies and not really pay attention to necessarily helping them. We just had a different point of view that company building can still exist. We call it scale up versus startup. So that was all infused at the birth of the firm.”
2023-07-13 · Capital Allocators · Ravi Viswanathan – Venture Secondaries and Growth Capital at NewView (EP.327) · IDENTIFIED FROM THE TRANSCRIPT · source
“That was 2018-2020. We actually bifurcated into two separate funds dedicated for each, direct investing could be primary, could be secondary. That dexterity for us is really powerful, especially taking advantage of market dislocations like we're in right now, and then portfolio acquisitions. And so that took a bit to really crystallize that strategy and that transition. What helped was day one, we had 31 companies that we went to and said, look, you may not have a lot of follow-on under the NET tent because you're an older fund. Guess what? We'll reset the clock. We'll provide follow-on. We'll provide value add capabilities. My first two hires were ex-operators in my companies, one, Tim Connor, four times CFO, the other David Yew, 25-year product veteran, because we also wanted to infuse a lot more company building in the growth stage, because five years prior to that, and especially after 2018, this high velocity dealmaking really exploded.”
2023-07-13 · Capital Allocators · Ravi Viswanathan – Venture Secondaries and Growth Capital at NewView (EP.327) · IDENTIFIED FROM THE TRANSCRIPT · source
“Some of the principles we want to adhere to is we really thought this was a white space that we resisted in the early days being called a secondary firm. And actually, if someone asks us, are you a venture firm, a growth firm, or a secondary firm, we basically say Cheekly reply all the above and none of the above. We sit at that hybrid. We actually think that's where the white space is. Being able to think like a company builder, doing growth deals, company builder being a venture capitalist, but using secondary as a way to do it strategically and thoughtfully. What that means is we wanted to make sure we had a primary practice investing in direct deals because they feed off each other in that we're very operational and we're very thematic. And that's also something that's not really done in the secondaries world. In order to be operational and to be thematic, we need to have a portion of our first fund be blind pool for new deals, deals we could lead, we could follow the differences because we're a registered advisor. We could lead deals but have secondary components in them as well.”
2023-07-13 · Capital Allocators · Ravi Viswanathan – Venture Secondaries and Growth Capital at NewView (EP.327) · IDENTIFIED FROM THE TRANSCRIPT · source
“So once you brought these assets in to take this from a one-off secondary into what it's become, an asset management business, where did you crystallize your strategy and describe what it was that you'd be doing going forward”
2023-07-13 · Capital Allocators · Ravi Viswanathan – Venture Secondaries and Growth Capital at NewView (EP.327) · IDENTIFIED FROM THE TRANSCRIPT · source
“Two pushbacks from new LPs. One, this was such a foreign concept. They'd never seen such a big venture secondary that wasn't a closeout fund or something else. That was one. The second is they were trading in discounts that were far greater than the discount for this group of companies. And that was just because, well, when you're dealing with lesser companies, the discounts are higher. And some folks just couldn't grock, well, wait. This is a higher quality group of companies, so hence the discount needs to be much more mild. And then there's some existing LPs that thought, wait, this discount is too high. So it's one of those things where the best negotiations are on both sides are not 100% satisfied. And I think one of the articles that came out, they interviewed a bunch of LPs, and that was some of the sentiment, which led me to believe it worked out because there was not one group that was ecstatic and the other despondent.”
2023-07-13 · Capital Allocators · Ravi Viswanathan – Venture Secondaries and Growth Capital at NewView (EP.327) · IDENTIFIED FROM THE TRANSCRIPT · source
“Was really the process, and obviously I was conflicted, so it was really the new LPs that came in, and this is public knowledge, but Goldman Sachs and Hamilton Lane were the leads. Goldman was the lead, and Hamilton Lane was co-lead. They priced it, and we need to make sure that all the parties knew that this wasn't a basket of dog companies, it was really quality companies, and that it wasn't a forced sale that need to make sense on all levels. And so that was the whole process. And I was just facilitating and making sure that all the pieces were in place to make it happen.”
2023-07-13 · Capital Allocators · Ravi Viswanathan – Venture Secondaries and Growth Capital at NewView (EP.327) · IDENTIFIED FROM THE TRANSCRIPT · source
“I affectionately refer to it as I went on three different roadshows. One is we actually went to our LPAC at NEA just to, we wanted to make sure that they blushed and they all thought it was really interesting idea. Actually, someone's actively managing the portfolio, so kudos to you. We need to make sure that it made sense in terms of pricing. And then I went on Roadshow with new LPs. We did it such that we wanted to make it a clean break. Everyone was going to get a check. And then there'd be a bunch of new investors that would jump in and really form new view and a lot of them could be the same investors, but different groups, a secondary group or different vintage funds. The third very important roach I went on is the companies because this was very new for the companies and we need to make sure that they were comfortable and we had a rule we said if they resisted this is dead in the water because that was a constituent that we couldn't have as unhappy or dissatisfied.”
2023-07-13 · Capital Allocators · Ravi Viswanathan – Venture Secondaries and Growth Capital at NewView (EP.327) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's done well. So I think that's Adventure really hadn't thought of it that way. It is really nice to see that that is changing. We spent a lot of our time, I call it in software speak, evangelical sale. It's really educating the market. And it's not a negative competition. It's actually a positive connotation. I think the LPs will serve them well by doing that. It really stems Ted just how venture has emerged and really persisted over the past decades.”
2023-07-13 · Capital Allocators · Ravi Viswanathan – Venture Secondaries and Growth Capital at NewView (EP.327) · IDENTIFIED FROM THE TRANSCRIPT · source
“Really gets down to ethos of venture firms. I was trained in venture. There's the power law phenomena. It's the IPO bust. And then, of course, there's strategic M&A. And then this financial sponsor M&A started happening probably 10 years ago. Never really thought, well, we can just sell to other firms. It just wasn't really how venture capital was built. On the flip side, if you go to the buyout world, it's this evolution of man, the lower middle market folks get companies and they sell to the middle market folks, sell to the large cap folks. And you have that virtuous cycle. And actually you have situations where in large cases every set of constituents”
2023-07-13 · Capital Allocators · Ravi Viswanathan – Venture Secondaries and Growth Capital at NewView (EP.327) · IDENTIFIED FROM THE TRANSCRIPT · source
“Companies, what's the TAM? The market size. I felt that it was a massive market. And I saw the pain point. And you could do it in a strategic, thoughtful, value additive, partner-friendly way versus this trade mentality that was happening up until then in Venture.”
2023-07-13 · Capital Allocators · Ravi Viswanathan – Venture Secondaries and Growth Capital at NewView (EP.327) · IDENTIFIED FROM THE TRANSCRIPT · source
“Trend line that bigger funds are being raised faster and faster was not unique to us. And frankly, there was a lot of firms that had far more accelerated paths than we did. I saw that across industry. I also saw the generational shift happening. A lot of the things that were happening with NEA, I saw firsthand at other firms. And I also saw other firms just hadn't even gotten around to thinking through that. Now, obviously, that's a very different story five years since. That was probably a big determiner for us to say this isn't just an isolated incident. And then if you also look at, again, venture sectors, it's so underpenetrated. In private equity, it's about 2% penetrated. And that's doubled in the last decade, 1% to 2%. So that still has some room to grow. Venture is 0.3% penetrated. And that market, our estimation, we've done some analysis 50 to 100 billion just in what we're doing. So if we are to practice what we prestort.”
2023-07-13 · Capital Allocators · Ravi Viswanathan – Venture Secondaries and Growth Capital at NewView (EP.327) · IDENTIFIED FROM THE TRANSCRIPT · source
“Then IPR bust. You're going to have these, we call them needle movers, these iconic companies that really define venture capital and define venture capital firms. The quest is about that versus we've got really good companies. How do we make sure that we get a return, a quality return out of that? And so I think part of it was ethos. Part of it was just it didn't make sense strategically. And part of it is I actually thought there was a real opportunity here. And I tested this with a lot of my peers and found that this was not just unique to NEA. This was really this dislocation was happening across venture, which also made sense.”
2023-07-13 · Capital Allocators · Ravi Viswanathan – Venture Secondaries and Growth Capital at NewView (EP.327) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's a great question. It's one that we actually did think about, but I think what it came down to, a lot of these companies were in older funds, but interestingly enough, another big dynamic was companies were the lead partner or general partner was no longer there, just by how venture firms work, which is based on the power law where there's a lot of companies in a portfolio. And especially in this era, most general partners had a lot of companies who are generally overloaded. It doesn't get easily assimilated. So they were great candidates, as or as I'd mentioned, these companies were older funds. We did the analysis for us to have a group of folks come in and really manage that. It just didn't make sense in terms of the motion for the firm. The motion for the firm was really raised funds and really go after some of these opportunities that could be fund makers. And then to have the infrastructure in place to do it, I also think it's apart from the ethos of a venture capital firm. Since the dawn of venture capital, it's been”
2023-07-13 · Capital Allocators · Ravi Viswanathan – Venture Secondaries and Growth Capital at NewView (EP.327) · IDENTIFIED FROM THE TRANSCRIPT · source
“Because this is a secondary, so it needs to be under the auspices of a registered investment advisor, an RIA. And NEA wasn't an RIA back then. They're actually an RIA now. And for me, that was the epiphany. It was a light bulb moment. It was 20 years coming full circle and went to GP Group Scott Sandell and said, I really would love to do this. And that was the birth of NewView. We raised capital. Funnily enough, almost all of the LPs were NEA LPs. And we closed Q4 of 2018. That was the birth of NewView, so to speak.”
2023-07-13 · Capital Allocators · Ravi Viswanathan – Venture Secondaries and Growth Capital at NewView (EP.327) · IDENTIFIED FROM THE TRANSCRIPT · source
“The power law phenomena, which is still very much the case in Venture. And sadly, we also knew the bottom performers because it took up a lot of time. It was this big middle region that we wanted to get our hands around. And we discovered a bunch of companies that were really high quality companies, but just for a variety of reasons, either they were in older funds or the lead partner was no longer there. We just weren't paying as much attention. They're also generally quite well run. So we thought, should we do something about this? Why don't we spin them off? I did some research and I thought, oh, this has been done before. And interestingly enough, it hadn't. And this is that redux to 20 years earlier where secondaries inventure were still perceived in a negative way. And it was never really strategic. It was much more transactional, more of a trade. So we thought, why don't we spin this off? It gives liquidity to any ELPs, but it's a quality enough product slash set of companies that would attract new LPs. And then this is really Q1 of 2018. We couldn't do it within.”
2023-07-13 · Capital Allocators · Ravi Viswanathan – Venture Secondaries and Growth Capital at NewView (EP.327) · IDENTIFIED FROM THE TRANSCRIPT · source
“The catalyst really started as this grand portfolio management exercise. This is in 2017, and NEA was a single global fund. We did everything underneath that fund. That means that as a GP group, and there's 10 or 12 GPs at any point driving the firm, we really had to make sure that we were on top of the various strategies, sectors, et cetera, within the fund. So we noticed, not unlike our peers, that we were raising the funds were getting bigger and were raising faster and faster because of the market opportunity commanded as such. Companies for sure were staying private longer. Instead of seven, eight years was 10 to 12 years. So you had this portfolio that was growing. We also had a generational shift. They had done a nice job of that with probably a dozen partners and GPs had retired or left. So we wanted to make sense of the portfolio. And I raised my hand among the GP group and said, you know, I'd love to drive this. We all knew the top one, two, three percent of the companies. It's going to really be the fundmaker.”
2023-07-13 · Capital Allocators · Ravi Viswanathan – Venture Secondaries and Growth Capital at NewView (EP.327) · IDENTIFIED FROM THE TRANSCRIPT · source
“A lot of it was not rocket science, it's just learning from my elders building a relationship, coffees, dinners, lunches, whatever with the CEO at the management team. Because what you're doing is you're building trust and respect and you're building this Goodwill bank such that when tough times happen, you have the agency and license to ask the tough questions and you've crossed the threshold in that the CEO and the management team really knows you as someone that just wants the best for the company. Dick Cramlock would say, when you have a problem or an issue with a company, just go back to one fundamental question. What's in the best interest of the company? And it's a very simple, almost throwaway phrase, but I've actually invoked that more times than I can even recollect, especially in some of these trying times.”
2023-07-13 · Capital Allocators · Ravi Viswanathan – Venture Secondaries and Growth Capital at NewView (EP.327) · IDENTIFIED FROM THE TRANSCRIPT · source