Kanishk Kapur

SaaS is a hotbed of opportunities for founders and investors to create disproportionate returns on capital. Amidst this growing landscape of Indian SaaS startups, a critical component often gets shadowed by the immediate goals of growth and market capture — the exit strategy. Accounting for exit outcomes over the longer term should start early so founders can optimize for the success of themselves, their employees and their investors. We at Matrix Partners India spent some time speaking with founders, corp dev professionals, investment bankers and other leaders in the space to understand the exit scenarios including M&As, PE acquisitions and IPOs (India and US) and have compiled our learnings. Link to the article in comments. Would love to hear from you if you have insights on the topic / further questions :) Avnish | Ashwin | Pranay | Vikram #SaaS #IPO #ExitStrategy

154

5 Comments

Passive Paradox - Sell a little to buy more? Helios CEO and Fund Manager Samir Arora tweeted a few months back "Adapting the dialogue from the movie Speed: There's a bomb on a bus. Once the bus goes 50 miles an hour, the bomb is armed. If it drops below 50, it blows up. What do you do? What do you do? Market to FIIs: If you sell more HDFC Banks shares, the FII ownership falls, MSCI doubles the weight of the bank in the indices, forcing many FIIs/ETFs/Index funds and funds following the benchmark to buy. If you don't sell, MSCI does nothing, and there is no additional buying... Can you understand what is happening here? MSCI is a company from the US that manages several important stock market indexes, which a lot of global investors follow. They regularly update how much each stock matters in these indexes, based on various factors like the free float. Here’s what happens: If foreign investors sell just a small amount of HDFC Bank shares, it could lead to a lot more buying. Why? Because selling a little reduces the free float. According to MSCI's rules, they would then increase the importance of HDFC Bank in their list. This forces funds that follow the list, like index funds and ETFs, to buy more of these shares to keep up with the list. Even active funds that compare themselves to the list might feel the need to buy more. If foreign investors don't sell, MSCI would keep HDFC Bank's importance in the list the same, and there wouldn’t be extra buying by these funds. Just last week, if the foreign investors had sold only 0.05% of the stock, it would have doubled the importance of the stock in MSCI's list. This would have made many ETFs and other investors, who have to follow the list, double their holdings too. Here’s a rule in the list that makes it so if a few investors sell a bit of stock, many others are forced to buy a lot more. And if they do buy more, the stock’s price would probably go up. This situation might seem odd and doesn't make sense if you think about smart investing. Essentially, the rules of the index (which is just a list of stocks) are influencing the actual stock prices, which seems backward. This kind of strict, rule-based investing can sometimes twist the market and even lead to big problems like bubbles. While index investing is generally a good approach, this example shows that it can have unexpected downsides and isn't always perfect. Simple indexes like the Sensex or Nifty work well, but the newer trend of creating indexes specially made for investing doesn't really make much sense. Investors who prefer passive funds should stick to the main, well-known indexes and avoid the more obscure ones. Follow Chakravarthy V for more such insights.

32

19 Comments

Wrote an exam after decades today. This is a certification exam that SEBI now requires us AIF (Alternative Investment Fund) managers to write. One of the key people in the VC firm has to write and pass them once in three years. Discovered that people with our backgrounds have a dormant ability to prepare adequately, concentrate for 3 hours (was not easy, have to say) to pass with a reasonable (not spectacular) margin. The pressure was intense, though, as one carries the burden of expectations of one’s other partners/the firm. At my age, having to go through 550+ pages of material is not just emotional atyachar – it is actual atyachar! That said, the material was not as dispiriting as I thought it would be. It is bit heavy on Category III AIFs (hedge funds) – the needless complexity those folks deal with that, quite frankly, I would not miss not knowing – but, otherwise, mostly relevant. In fact, I have recommended the material to the younger members of our team. Some other thoughts about the process: 1. Well conducted. Interface is not the prettiest but is thought through (ability to “park” questions, links to unanswered ones, results after you complete etc.). Maybe these are routine features of online multiple-choice exams, nowadays – how would I know! 2. Negative marking was wonky. It was 1/4th of a mark for a one-mark question (typically 4 choices). Mathematically, it should be 1/3rd, so that chance is ruled out (think about 100 questions and one chooses b., mindlessly). Knowing that the (negative) math was in my favour, I guessed more than I typically would. 3. There were a few questions with 3 choices (5-10%, is my estimate) – guessing even more “encouraged” in this case.  The negative marking did not “scale”, per my calculations. 4. A friend who manages a PMS (Portfolio Management Services) scheme told me that they are required to watch a video and answer 10 questions to get to a certification. Clearly, our friends at the Indian Venture Capital Association (IVCA) need to up their game. Later in the day, using limited results information provided post the test (and the marking scheme), a younger colleague and I did some linear algebra to figure out answers to questions like how many 1-mark and 2-mark questions I got right/wrong. That was fun. That said, I am not looking forward to the next one three years hence!

628

39 Comments

Cap Table Red flags in early-stage start-ups Over the past two years, we at Transition VC have evaluated close to 1,000 deep technology or Engineering start-ups in the energy transition domain in India. More than two dozen are actively working on innovative ideas and developing technologies or products with significant potential. Still, we had to reject a few start-ups due to Cap Table issues. Disproportionate allocation of shareholding percentage among the founders: Disproportionate allocation among the founders has resulted in potential conflicts leading to founder issues and the collapse of the start-ups. These human issues are complicated to solve in the later stages, and it also means one of the founders with a majority stake is perceived to have a significant influence & role, and the other founder whose role is perceived to be a supporting one. For us, at Transition VC, the maximum difference between dual founders shall not be more than 20%, i.e., the maximum disproportionate split can be 60% versus 40%. Allocation of a significant percentage of passive participants: We have observed that few start-ups gave up significant stakes to non-active participants such as advisors, universities, accelerators, or incubators, This substantial allocation of shares to passive participants hinders the start-up’s capital-raising ability in the further rounds, as the co-founders’ stake might come down significantly below the minimum stake, as every investor at each stage expects the founders to have more significant skin in the game. A single investor holding more than >30% with special powers related to exit, monetary and strategic rights is perceived negatively by the new investors, who would want to avoid existing investors having too much control over the start-up. Bringing in a strategic investor early in the game: Having strategic investors, suppliers, and customers on the cap table can be detrimental to attracting new investors, customers, and strategic partners. It is better to avoid them until they have a very minimum stake and don’t have a direct overlap. Single founders: Entrepreneurship is very tough mentally and, many times, exhausting. It can drain all your energy, resulting in burnout within a short time. Things could be smoother and more linear when building or scaling start-ups. There are a lot of ups and downs during the entrepreneurial journey; you need someone who can share your vision and passion and support each other during tough times. There is a high chance of solo founders burning out if things go south and potentially giving up. Having multiple founders in a start-up is not mandatory, but we prefer multiple founder start-ups as the key personal risk comes down significantly with multiple founders. Transition VC #start-ups #Venturecapital

84

7 Comments

The Perils of Passive Investing: Safeguarding India's Innovation from America's Mistakes ( VC PE take) Have you heard the latest? The rise of passive investing in America is like that one friend who always hogs the karaoke mic—great for them, but not so much for everyone else. Let’s break down how this phenomenon has turned the IPO ecosystem into a ghost town, leaving private equity and venture capital investors scratching their heads wondering whether innovation in the US will be investable or not! ✅What is Passive Investing? Passive investing is a long-term strategy focused on buying and holding investments to match the returns of a specific market index, like the S&P 500. People like it because it’s low fees! The catch? It tends to favor larger companies. As more money flows into passive funds, those larger firms see an influx of capital, while smaller companies struggle to get noticed. This self-reinforcing cycle means that the bigger the company’s market cap , the more money it attracts—leaving smaller firms in the dust. ✅ The Passive Investment Party ruining IPOs in America ? With passive funds pouring money into large companies—who needs to bother with those small fry trying to make it big? This has played out in the ipo market : ✳️**IPO Volume**: In 2000, there were **406 IPOs**. Fast forward to 2023, and that number plummeted to just **154**. Ouch! ✳️**Total Volume**: Back in 2000, IPO proceeds were a whopping **$98.4 billion**; in 2023, they dropped to a mere **$23.9 billion**. Talk about a diet! ✅ Why this matters to innovation? Because it hits Venture Capital and Private Equity. As passive funds focus on large companies, smaller startups coming into an IPO struggle to attract attention . This shift means fewer exits for venture capitalists and private equity funds, making their investments feel like they’re stuck in traffic on a rainy day, and their investors get antsy… ✅ The Innovation Slowdown As passive investing takes over, innovation is slowing down faster than you can say "unicorn." With big firms getting all the love, smaller startups find it harder to thrive. This ultimately stifles innovation, because innovation comes from the outside. ✳️ What India can do To avoid the pitfalls of passive investing that are likely to slow down innovation , India needs to actively promote a diverse investment ecosystem encouraging venture capital and private equity investments, which often drive innovation. By fostering an environment where smaller companies can thrive, India can cultivate a vibrant innovation landscape and prevent the stagnation seen in markets dominated by passive investments.

44

5 Comments

Indian retail options traders (along with some professional fund managers) don't get that playing the victim or crying foul about sophisticated participants won't improve their trading outcomes. The market rewards knowledge and skill, not emotions. Instead, focus on: 1. Getting educated: Success in options trading demands ongoing education. Free and paid resources abound online. No substitute for putting the hours in. 2. Develop a strategy: Impulse trades rarely succeed. Develop a well-defined trading plan that considers risk tolerance, time horizon and position sizing. 3. Respect the market: Understand risk, volatility, utilize stop-loss orders, and avoid chasing unrealistic returns. On the other side of all the complaining, many retail traders are making good returns in options. But they will always be secretive and not be active on social media. Think how big of an opportunity it is if American HFTs are entering and exploiting the Indian options market, instead of thinking that the big guys are out to eat your lunch.

15

**🚀 Transform Wealth: Ahead of the Game, Waiting for Nifty's Big Comeback!** In the last 6 months, we’ve delivered a stellar **20% ROI**, and for the year, we’re already at an impressive **29% ROI** 💹 – while **Nifty lags with a 6% drawdown** from its lifetime high. **How do we do it?** - 📊 **Data Analysis** – Crunching numbers like stock market detectives 🕵️‍♂️ - 🤖 **Smart Algorithms** – Executing trades with precision - 🧮 **Strategic Position Sizing** – Treating every rupee with respect - 📚 **Hands-on Training Program** - Financial Education is must have skill. 🚦 And here's the exciting part: If **Nifty hits its lifetime high again**, with our portfolio beta of **1.5X**, we’re ready to bag an extra **+9% ROI**. We're like sprinters at the starting block, waiting for the gun to fire! 🦸 Nifty is the slow-moving tortoise 🐢, and our portfolio is the hare 🐇 – but this time, the hare has a game plan and is racing ahead with style! At **Transform Wealth**, we turn market challenges into winning opportunities. All we need now is for Nifty to join the party and make that leap. 🎉 Come on, Nifty, don’t keep us hanging! 😉 **FinoLEDGE** -Spreading Financial Literacy *Investment & Trading Education Program* #InvestSmart #TransformWealth #WealthCreation #MarketLeaders #RiskManagement #Finoledge

2

This past week, I had an engaging conversation with Sanjoy Sanyal for Caspian Climate Conversations. We discussed my newest venture, Edhina Capital, and investment opportunities in IP-led businesses in EV and Energy sectors. CCC has captured a wealth of knowledge from various thinkers, doers, and innovators in climate technology over the last three years. It is an honour to join this formidable line-up. At Edhina Capital, our competitive strategy is rooted in Sector and Technology depth and painstaking Research for differentiated investment opportunities. Our mission is to provide vertical support to businesses. We help family offices with direct investment opportunities. Couple of arguments that formed the centre of my conversation with Sanjoy: 1. Traditional sectors of Mobility, Energy and Built Environment are transitioning to being climate resilient on the back of deep Science, Computing, Communication and Scale. These present significant investment opportunities in IP-led businesses that are disrupting the sector. 2. Nuanced understanding of the Sector, Technology and Product differentiation feeds a powerful investment strategy at Edhina that is capital efficient at Early stage as well as at the Growth stage, and renders itself to market competitive returns. Listen to the full episode for more: https://rb.gy/7fpmy8 #ClimateAction #CleanEnergy #EMobility #Sustainability #ImpactInvesting #ClimateTech #CaspianClimateConversations‍

56

5 Comments

https://lnkd.in/dMgU_xXj ebblebed, a San Francisco, CA-based venture capital firm investing in technical founders solving hard technical problems, is raising a $125m fund. According to a form recently filed with the S.E.C., Pebblebed Fund II, LP, has not raised funds, yet. The document lists Keith Adams, Pam Vagata, and Luke Byrne, as people related to the raise. The team also includes Tammie Siew. Pebblebed partners with technical founders taking engineering risk to solve hard problems, typically across AI, Computing Infrastructure & TechBio. According to the website, portfolio companies include: Meliora Therapeutics, which is advancing a next generation of mechanism-focused oncology drugs; Northflank, a developer-first cloud platform Gitpod, which is advancing cloud development environments, always ready to code. Door Robotics, which is developing drones for 360-degrees content capture Orchid Health, which is advancing whole genome sequencing for IVF embryos Select Star, focused on intelligent, automated data discovery Dylibso, which is creating software products to help developers build with WebAssembly Lynq, an AI powered workflow automation platform provider Krea AI, which generate and enhance images and videos using AI Oxen AI, which helps manage users datasets so they can replace lines of code with better data Storyteller, which enables anyone to create high quality videos and audio with AI two unnamed stealth companies

1

Absolutly loved reading Jas Shah recent edition of his newsletter - "𝗧𝗵𝗲 "𝗪𝗵𝘆𝘀" 𝘄𝗮𝘆𝘀 𝗼𝗳 𝗯𝘂𝗶𝗹𝗱𝗶𝗻𝗴 𝗮 𝗗𝗶𝗴𝗶𝘁𝗮𝗹 𝗕𝗮𝗻𝗸" (link in comments). With interest rates on the decline, the "Whys" will continue to hold importance, alongside the "Hows"—how to sustain profitability for small balance sheets and drive revenue through fees and operations. On that note, we'll be hosting a panel discussion later this month to dive into these challenges in depth. If this sounds like something you’d be interested in, let me know. #Fintech #DigitalBanking #Profitability #RevenueStreams #FinancialServices

16

3 Comments

Marlin Alpha Hedge Fund Roles: 𝐋𝐨𝐧𝐝𝐨𝐧, 𝐒𝐢𝐧𝐠𝐚𝐩𝐨𝐫𝐞, 𝐇𝐨𝐧𝐠 𝐊𝐨𝐧𝐠 1) 𝐄𝐪𝐮𝐢𝐭𝐲 𝐋/𝐒 𝐀𝐧𝐚𝐥𝐲𝐬𝐭 – 𝐒𝐡𝐢𝐩𝐩𝐢𝐧𝐠, 𝐅𝐫𝐞𝐢𝐠𝐡𝐭𝐬, & 𝐀𝐢𝐫𝐥𝐢𝐧𝐞𝐬 𝐋𝐨𝐜𝐚𝐭𝐢𝐨𝐧: London • 4-8 yrs. • Collaborate closely with a PM & Associate PM to drive coverage expansion in key sectors, particularly Shipping, Freight, and Airlines industries. • Prior experience in Shipping, Freight Logistics, or Airlines is critical. Deep understanding of supply chain dynamics, maritime logistics, and air transport networks is highly valued. • Contribute to the fund's focus on old energy ecosystems, with a direct impact on industries reliant on global shipping, freight operations, and airlines. • Initial coverage will focus on the EU, with the opportunity to expand into the USA market as strategies develop. • Open to candidates from both buy-side and sell-side, with a clear path to managing your own carve-out within 2-3 years. 2) 𝗘𝗾𝘂𝗶𝘁𝘆 𝗟/𝗦 𝗔𝗻𝗮𝗹𝘆𝘀𝘁 – 𝐔𝐒 & 𝐓𝐚𝐢𝐰𝐚𝐧 𝗦𝗲𝗺𝗶𝗰𝗼𝗻𝗱𝘂𝗰𝘁𝗼𝗿𝘀 𝐋𝐨𝐜𝐚𝐭𝐢𝐨𝐧: Singapore • Based in Singapore, focused on semiconductor markets in the US and Taiwan. • Requires 4-7+ years of experience in the semiconductor sector, with strong knowledge of industry cycles, supply chains, and key players in the US and Taiwan. • In-depth technical understanding of semiconductor technologies, hardware trends, and growth dynamics in end markets like consumer electronics and automotive. • Collaborate closely with senior investment team members to support critical investment decisions within the US and Taiwan semiconductor space. • Contribute to the firm’s expansion into emerging semiconductor markets, with insights into evolving industry regulations and trade policies. 3) 𝗝𝘂𝗻𝗶𝗼𝗿 𝗟/𝗦 𝗘𝗾𝘂𝗶𝘁𝘆 𝗔𝗻𝗮𝗹𝘆𝘀𝘁 – 𝗜𝗻𝗱𝗶𝗮 𝗚𝗲𝗻𝗲𝗿𝗮𝗹𝗶𝘀𝘁 𝗖𝗼𝘃𝗲𝗿𝗮𝗴𝗲 𝐋𝐨𝐜𝐚𝐭𝐢𝐨𝐧: Hong Kong Focus: Generalist role, with a 𝙥𝙧𝙚𝙛𝙚𝙧𝙚𝙣𝙘𝙚 𝙛𝙤𝙧 𝘾𝙤𝙣𝙨𝙪𝙢𝙚𝙧 & 𝙁𝙞𝙣𝙖𝙣𝙘𝙞𝙖𝙡𝙨 • Located in Hong Kong, with coverage of various sectors in the Indian market, especially Consumer and Financials. • Open to buy-side/sell-side analysts, as well as Investment Bankers or PE Investors looking to transition into Equity Investing. • Requires 3-5+ years of experience in Indian equities, with strong analytical skills and understanding of India’s economic landscape. • Support senior analyst with detailed investment models, market analysis, and assessments of regulatory and macroeconomic trends on sectors. • Conduct in-depth company research and sector analysis, identifying growth opportunities and assessing fundamentals in consumer and financial sectors. • Offers career growth potential toward independent coverage and deeper sector expertise as the role develops. Interested or know someone who might be? Contact me directly on 𝐧𝐢𝐤𝐡𝐢𝐥@𝐦𝐚𝐫𝐥𝐢𝐧𝐚𝐥𝐩𝐡𝐚.𝐜𝐨𝐦 for more details and to arrange a confidential discussion. #HedgeFund #EquityResearch #Investment #MarlinAlpha #ExecutiveSearch

4

Marlin Alpha Hedge Fund Roles: 𝐋𝐨𝐧𝐝𝐨𝐧, 𝐒𝐢𝐧𝐠𝐚𝐩𝐨𝐫𝐞, 𝐇𝐨𝐧𝐠 𝐊𝐨𝐧𝐠 1) 𝐄𝐪𝐮𝐢𝐭𝐲 𝐋/𝐒 𝐀𝐧𝐚𝐥𝐲𝐬𝐭 – 𝐒𝐡𝐢𝐩𝐩𝐢𝐧𝐠, 𝐅𝐫𝐞𝐢𝐠𝐡𝐭𝐬, & 𝐀𝐢𝐫𝐥𝐢𝐧𝐞𝐬 𝐋𝐨𝐜𝐚𝐭𝐢𝐨𝐧: London • 4-8 yrs. • Collaborate closely with a PM & Associate PM to drive coverage expansion in key sectors, particularly Shipping, Freight, and Airlines industries. • Prior experience in Shipping, Freight Logistics, or Airlines is critical. Deep understanding of supply chain dynamics, maritime logistics, and air transport networks is highly valued. • Contribute to the fund's focus on old energy ecosystems, with a direct impact on industries reliant on global shipping, freight operations, and airlines. • Initial coverage will focus on the EU, with the opportunity to expand into the USA market as strategies develop. • Open to candidates from both buy-side and sell-side, with a clear path to managing your own carve-out within 2-3 years. 2) 𝗘𝗾𝘂𝗶𝘁𝘆 𝗟/𝗦 𝗔𝗻𝗮𝗹𝘆𝘀𝘁 – 𝐔𝐒 & 𝐓𝐚𝐢𝐰𝐚𝐧 𝗦𝗲𝗺𝗶𝗰𝗼𝗻𝗱𝘂𝗰𝘁𝗼𝗿𝘀 𝐋𝐨𝐜𝐚𝐭𝐢𝐨𝐧: Singapore • Based in Singapore, focused on semiconductor markets in the US and Taiwan. • Requires 4-7+ years of experience in the semiconductor sector, with strong knowledge of industry cycles, supply chains, and key players in the US and Taiwan. • In-depth technical understanding of semiconductor technologies, hardware trends, and growth dynamics in end markets like consumer electronics and automotive. • Collaborate closely with senior investment team members to support critical investment decisions within the US and Taiwan semiconductor space. • Contribute to the firm’s expansion into emerging semiconductor markets, with insights into evolving industry regulations and trade policies. 3) 𝗝𝘂𝗻𝗶𝗼𝗿 𝗟/𝗦 𝗘𝗾𝘂𝗶𝘁𝘆 𝗔𝗻𝗮𝗹𝘆𝘀𝘁 – 𝗜𝗻𝗱𝗶𝗮 𝗚𝗲𝗻𝗲𝗿𝗮𝗹𝗶𝘀𝘁 𝗖𝗼𝘃𝗲𝗿𝗮𝗴𝗲 𝐋𝐨𝐜𝐚𝐭𝐢𝐨𝐧: Hong Kong Focus: Generalist role, with a 𝙥𝙧𝙚𝙛𝙚𝙧𝙚𝙣𝙘𝙚 𝙛𝙤𝙧 𝘾𝙤𝙣𝙨𝙪𝙢𝙚𝙧 & 𝙁𝙞𝙣𝙖𝙣𝙘𝙞𝙖𝙡𝙨 • Located in Hong Kong, with coverage of various sectors in the Indian market, especially Consumer and Financials. • Open to buy-side/sell-side analysts, as well as Investment Bankers or PE Investors looking to transition into Equity Investing. • Requires 3-5+ years of experience in Indian equities, with strong analytical skills and understanding of India’s economic landscape. • Support senior analyst with detailed investment models, market analysis, and assessments of regulatory and macroeconomic trends on sectors. • Conduct in-depth company research and sector analysis, identifying growth opportunities and assessing fundamentals in consumer and financial sectors. • Offers career growth potential toward independent coverage and deeper sector expertise as the role develops. Interested or know someone who might be? Contact me directly on 𝐧𝐢𝐤𝐡𝐢𝐥@𝐦𝐚𝐫𝐥𝐢𝐧𝐚𝐥𝐩𝐡𝐚.𝐜𝐨𝐦 for more details and to arrange a confidential discussion. #HedgeFund #EquityResearch #Investment #MarlinAlpha #ExecutiveSearch

2

🔍 Just six months ago, adding Palantir Technologies (PLTR) to our portfolio felt like a bold move. The stock had a history of volatility that gave many fund managers pause. But what happened next has been a case study in rapid and 𝘴𝘵𝘦𝘢𝘥𝘺 growth. In only 183 days, Palantir has gone from our recent acquisition price of $𝟮𝟱.𝟬𝟮 per share to a current value of $𝟱𝟬.𝟳𝟲—over a 𝟭𝟬𝟮% 𝘂𝗻𝗿𝗲𝗮𝗹𝗶𝘇𝗲𝗱 𝗴𝗮𝗶𝗻. 📈 What happened..? 𝗧𝗵𝗲 𝗣𝗲𝗿𝗳𝗲𝗰𝘁 𝗚𝗿𝗼𝘄𝘁𝗵 𝗧𝗿𝗮𝗷𝗲𝗰𝘁𝗼𝗿𝘆: We love companies that start out at 40-60% growth rates, dip down into the low 20% range, and then re-accelerate back into the 30-40%+ zone. Palantir’s growth rate recently re-accelerated to 29.98% in the latest quarter, up from the low teens last year. This kind of upward trend in revenue growth often signals strong fundamentals and scalability. Palantir is following this exact pattern—showing resilience and setting the stage for continued momentum. 𝗖𝗮𝗽𝗶𝘁𝗮𝗹𝗶𝘇𝗶𝗻𝗴 𝗼𝗻 𝘁𝗵𝗲 𝗔𝗜 𝗗𝗲𝗺𝗮𝗻𝗱 𝗦𝘂𝗿𝗴𝗲: Palantir is perfectly positioned to ride the AI wave. Their AI Platform (AIP) provides real-time analytics and predictive capabilities, empowering clients across commercial and government sectors to tackle challenges from cybersecurity to logistics optimization. CEO Alex Karp sums it up:  "We absolutely eviscerated this quarter, driven by unrelenting AI [artificial intelligence] demand that won't slow down. This is a U.S.-driven AI revolution that has taken full hold. The world will be divided between AI haves and have-nots. At Palantir, we plan to power the winners." 𝗖𝗮𝘀𝗵 𝗙𝗹𝗼𝘄 𝗧𝗿𝗮𝗷𝗲𝗰𝘁𝗼𝗿𝘆: Here’s where it gets interesting. Companies like Palantir that endure the “cash flow valley of death” emerge stronger and more financially resilient on the other side. Palantir’s free cash flow (FCF) has been accelerating in sync with its revenue growth—a major green flag for us. 𝘞𝘩𝘺 𝘍𝘊𝘍 𝘔𝘢𝘵𝘵𝘦𝘳𝘴: Free cash flow (FCF) is the lifeblood of a high-growth company, as it represents the cash remaining after operating expenses capital expenditures (CAPEX). For Palantir, this surplus FCF enables substantial reinvestment into growth without external funding - supporting strategic acquisitions, expanding market presence, advancing R&D, and fueling other initiatives that drive long-term value. 𝘈 𝘝𝘪𝘳𝘵𝘶𝘰𝘶𝘴 𝘊𝘺𝘤𝘭𝘦: As Palantir’s revenue growth accelerates, its FCF grows, creating a feedback loop where cash generation funds further innovation and expansion. This positions Palantir to become increasingly self-sustaining, even in the face of market fluctuations. In short, we’re watching Palantir navigate through a classic growth cycle while building financial resilience through robust free cash flow. It’s a combination that suggests both near-term gains and long-term potential. It’s these kinds of investments that define our portfolio. 🙌 What's been your best-performing stock in 2024 so far?

5

I used to think LPs only invested in emerging VC / PE firms for better returns. That’s true…sort of They obviously first and foremost want high returns, but in building our firm and studying the industry I’ve learned that LP motivations are more nuanced than that To understand why an LP really might invest in us, I start with the assumption that they could invest that $ in Blackstone (or a similar large PE firm with top quartile track record) What could we offer that is incremental, and how should we position ourselves in that way? 1. Smaller funds can be higher upside — LPs may be looking for higher risk / higher return opportunities, so we have to emphasize the path to outlier returns. This means discussing not only their expected value but also the distribution of outcomes, and how that might differ from the rest of their portfolio 2. Harder to partner with successful firms later — LPs are often looking to build long-term partnerships with firms that will be around for many fund cycles, and that is about more than just returns. It’s important to emphasize not just the strategy of this fund but also the vision of the firm we’re building 3. Co-invest opportunities — Some LPs don’t care about co-invest, others only invest in funds for co-invest. When speaking with the latter, we emphasize that we have a disciplined and repeatable process to generate and share co-invest opportunities (easy to say, harder to execute) 4. Learning and thought partnership — We have LPs that invested in us because they have conviction in or personal passion for health & wellness and want to learn more about the ecosystem. For these folks we might talk through investment opportunities they see that are in our industry, or invite them to industry events. We also spend a ton of time writing quarterly letters to help them track the industry and learn from our companies It takes years to know where our returns will ultimately shake out, and we’ll have no reason or permission to exist if they aren’t good In the meantime it’s crucial to recognize and deliver on these other needs of our LPs, to provide the experience that they signed up for

94

6 Comments

Generalist funds are outpacing specialist funds with returning cash in this market cycle per PitchBook. While the outlook is brighter, we are realistically still in a down cycle for private markets. My guess is that there has not been a lot of cash returned to LPs over the last few years. However, funds and companies with greater exit optionality are currently carrying the day. From the article: "The turnabout in relative positions is a result of specialists being restricted to established exit routes including IPOs and strategic or corporate acquisitions, while generalists have more options for exits and may have exposure to different market regions and sectors, giving a higher probability for distributions." This will be a growing issue as many funds begin to push up against their 10-year mandate. Endeavor Colorado #privateequity #venturecapital #entrepreneurship #founders #startups #investing #innovation https://lnkd.in/ghH9CYhG

13

Continuing on the question of what themes have driven India SaaS over the last decade: one of the themes has been the me-too model in SaaS - this has been a majority of early-stage financings historically in India. I think starting a new company today with this model may be tough, given rise in keyword costs and intense competitive clutter. The model has assumed: - target a large, mature market - build 60-80% of functionality (or pick off a part of the workflow) with some technical innovation - offer at a fraction of the price of the market leader - target SMB first, then work your way up to lower mid-market - aggressive GTM through SEO, SEM, self-service and remote sales - differentiate through price and support - category leadership is not the goal - 10 years to $100mm ARR (if successful)- which is ok-ok growth rate, not top quartile

189

28 Comments

🔎 A graph every VC manager should be following right now. PE's exit to investment ratio has hit a ten year low Most LPs invest a multiple of their VC allocation in PE. The less liquidity coming from larger buckets, the less divestments that can be made into the asset class 🔮 Similarly if this starts picking up, the allocation doors could start to re-open... #VC #venturecapital

169

12 Comments

The interest rate differential hits its lowest in 17 years, tipping in favor of the US. At the macro level, the US economy paints a picture of optimism, yet it's the finer details at the micro level that unveil the true state of affairs. On the flip side, the Indian Rupee stands firm with resilient fundamentals, presenting a compelling case for appreciation. With the Fed meeting due this week, all eyes are on what stance they will adopt post-meeting? CR Forex MD-Amit Pabari FRM, in his latest video decodes the factors that could impact the USDINR, and strategies for importers and exporters! Click the given YouTube video link and follow us for more updates! https://lnkd.in/gBpyWBry #Rupee #RupeeVsDollar #rupeevalue #INR #impex #trader #investment #forexmarket #fed #forextrading #forexlifestyle #forextrader #forexsignals #fx #fxtrading #globaleconomy #globalgrowth Rina Pabari

16