Why Late Stage VC?
Superstar startups are staying private longer, shifting the value creation phase from public to private markets
Average lifetime of companies that IPOed: 2008 = 6.5 years; Nowadays = 11 years (Source: PitchBook)
High post-IPO appreciation probability
More than 95% of all billion-dollar-plus VC exits in the US since 2010 have come at a valuation above the companies’ last private post-money valuations (median valuation step-up of over 1.8x, Source: PitchBook)
Late Stage effortlessly combines innovation with high impact
When you replace Early with Late Stage, the technology is already tested and iterated. Late Stage smoothly combines technological breakthrough with high impact
We invested in Flexport, for instance. The chance of a write-off is very low. The worst thing that can happen is to have temporally bought “expensive” Flexport shares. We can gladly sit on them and wait for a market mood swing
Financing & Timing, hand & hand
Since Late Stage companies carry good seeds and cash — financing is not a problem for them; they are not leveraged and some are even EBIT positive —, they can choose the IPO window; they know that investors will always cue
Outliers’ (or Malcolm Gladwell’s) effect
An Early Stage VC fund is all about outliers!
A Late Stage thoroughly thought approach has the potential to cherry pick the outliers across the alpha funds
As expected from Pareto’s law, a small number of startups, 1%, end up driving 50% of the returns.
The chances of a Late Stage investment to be in Pareto’s top bracket are obviously much higher, as well as the Late Stage investors’ ability to still grab a good chunk of the upside
Sequoia, Founders Fund, Andreessen Horowitz, Accel, GV, Bessemer, Kleiner Perkins, Benchmark Capital and a few others are the alpha generators funds in the VC industry. In the Late Stage we will be able to activate their brands and intellectual prowess
Early Stage VC funds usually have a pronounced J-curve; the “lemons” ripe early and the winners take time. Late Stage VC funds, on the other hand, do not hold the J’s belly, since they have a faster turnaround and hardly carry sour fruits
Late Stage represents a unique opportunity to buy before the faceless mass. That’s a huge advantage!
Strategic selling as important as IPO
US non-financial companies hold more than $2.0 trillion in cash that is screaming for game changing (i.e., Late Stage) opportunities
B2B Late Stage ventures with high gray mass density per (plenty of) allotted capital
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