Founder of @CendanaCapital
San Francisco, California
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- Following 3,446
- Followers 7,729
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Today, we are announcing our new fund, @CendanaCapital 6. It was our fastest fundraise ever, and had interest well above our $400M hard cap. We added a handful of new institutional LPs–including for the first time, 2 public pension funds. We are particularly keen that a number of our LPs are mission driven–they are the financial engines for a number of world-class educational and not-for-profit organizations, and of course, public pension funds that provide the retirement benefits to their members. We are grateful for the trust and support of our LPs!
Armed with the pattern recognition built over the past 15 years, and the willingness to be both creative and open to refining our approach, we are super excited about the opportunities over the next few years. Chaos is a ladder–for most people, chaos leads to confusion, inaction and ultimately failure. If we remain clear-eyed about our mission, execute accordingly and become true partners along the way to our LPs and to our GPs, we are confident that we can lead the way.
More detail here about our focus:
medium.com/@CendanaCapital/a…
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Our investment thesis at Cendana Capital is that smaller funds outperform. We’ve now taken that to the nano level with our new Cendana Nano fund—focusing on investing in sub $15MM seed and pre-seed VC funds. techcrunch.com/2021/03/31/ce…
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15 years ago today, I formed Cendana Capital, with the thesis that smaller funds outperform and that Seed VC would become de facto early stage venture capital. We are clearly standing on the shoulder of some great GPs that we have partnered with over the years, and some that have become true partners and friends. I always had the faith that it was a good thesis, but being told No by perhaps 99% of the groups I met with can shake that. If you believe you have a unique insight and want to execute it, grit and determination will take you far. I’m looking forward to the next 15 years 🚀💥🥰
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LPs and GPs, it’s often said that fund size determines strategy and that’s very true for portfolio construction. But, another element on fund size is what the total value of exits need to be. A simple rule is what I’ll call the Rule of 30. This assumes that a fund owns 10% of a portfolio company on exit. Multiply fund size by 30 and that’s the total exit value the fund needs to get a 3x gross multiple.
Example: a $500M fund means it needs $15B of exit value. 10% ownership at exit is $1.5B which is the 3x gross multiple. $15B of exit value in 1 fund means 15 unicorn exits or a decacorn exit and 5 unicorn exits. Assuming a portfolio of 35 companies, that’s quite a hit rate 🤔
Btw a 3x gross multiple for a $500M fund is about a 2.6x net multiple ($1.5B less $200M of carry / $500M). Aside from deciding if that $500M fund can generate $15B of exit value, an LP will consider that 2.6x for venture vs what they can get in small buyout with a shorter timeline for distributions and perhaps lower risk.
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LPs want liquidity--and now we are here to help! Very excited to announce our new secondaries fund, for which we partnered with Kline Hill Partners Substantially oversubscribed at $105M, the intent is to deploy this capital through the end of this year. The focus will be acquiring LP interests of very early stage VC funds, leveraging our ecosystem of GPs and LPs.
techcrunch.com/2024/04/11/ce…
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Fundraising is an intrinsic element for most in the venture capital world, the continuous dynamic of providing opportunities to global investors with the conviction that your opportunity provides the solution investors seek.
Given this hyper-competitive marketplace of ideas, @CendanaCapital is thrilled to announce today that we have raised approximately $470 million in capital to deploy across our global strategies. This comprises $340 million for our US-focused Cendana 5, $67 million for International 2, $30 million for our direct investment program, and an additional $30 million for a managed account. Our assets under management are now over $2 billion.
We are thankful and grateful to our investors, new and long-standing, who have entrusted their capital with us, and we continue our mission to working with the world’s best Pre-Seed and Seed investors globally. We are also thankful and grateful to the remarkable GPs that we work with daily, working collaboratively as true partners.
We are always looking to add new members to our ecosystem so please reach out—we look forward to meeting you!
medium.com/@CendanaCapital/e…
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Best all time venture investment in absolute dollars? $20MM into Alibaba by SoftBank now worth $60Bn.
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That’s a wrap on our now biannual @CendanaCapital LP/GP Summit. We hosted 110 of our LPs and GPs in Vail, and created some magical moments❤️🔥
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Amazing outcome for @honey--super happy for the team and for our portfolio fund @mucker. Also pleased to have been a direct investor--thank you @ersf!
techcrunch.com/2019/11/20/pa…
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I launched Cendana 15 years ago--it was just me for the first 4 years, then @GrahamPingree in 2014 and @Kells_Bells in 2018. Today, we are a team of 13 (and soon to be 16!). @ThomasIkeda joined us in 2021 and has consistently done a phenomenal job so today, we are very excited to announced that he has been promoted to Principal💥
We at @CendanaCapital are very excited to announce that @ThomasIkeda has been promoted to Principal. Thomas has all of the hallmarks that we seek in our team—high horsepower, high agency and an entrepreneurial mindset. And, he harnesses these powers in a thoughtful, humble, earnest and kind manner. Thomas remains based in NYC.
With eight years of experience at Cendana and Cambridge Associates, Thomas is very well-positioned to be a leader in the LP community. We are fortunate to have him play a key role in building a premier investment firm focused on generating alpha for our investors and partnering with portfolio fund GPs who are backing extraordinary founders.
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Very proud to be the anchor LP in the new Page Two as well as the first Page One. We are building the library with @jmj and @chapterone mirror.xyz/chapterone.eth/vR…
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Very excited to partner with @jaltma his new fund. Let’s just say the founder references that we did were pretty darn good 😉.
theinformation.com/articles/…?
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One metric that LPs should consider is the specific impact a single company can have on their own portfolio. One way to assess this is the look-through ownership percentage. Two contrasting examples:
Assume a $45M portfolio fund where the LP makes a $15M commitment (33% of the fund), and that fund is getting 9% initial ownership--that's a 3% look-through ownership for the LP.
Contrast that with a $45M portfolio fund where the LP makes a $4.5M commitment (10% of the fund), and that fund is getting 1% initial ownership ($200K checks at $20M post)--that's 0.1% look-through ownership for the LP.
For this LP. the first approach has 30x greater look-through ownership than the second approach--each positive exit will have a more meaningful impact to the LP's return. This is one of the reasons that from the beginning, we at @CendanaCapital have been focused on high conviction investing into portfolio funds that punch above their weight relative to their fund size.
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In venture, power law is important, but when building a portfolio, an LP needs to also move their normal distribution curve to the right to generate real alpha--and that is accomplished by manager selection.
@cartainc recently issued its report on VC performance since 2017. Given the number of clients they have, we believe it's a good source of data and we at @CendanaCapital reviewed it carefully. We compared our Cendana 3 metrics (vintages 2017-2020) to Carta's 2017 cohort, which is the most fully baked amongst their 2017-2021 data set.
Some observations jumped out, particularly in the context of moving that normal distribution curve. Our 4th quartile TVPI is 1.6x vs. 1.16x in the Carta 2017 data. Moreover, our 4th quartile is nearly the same level as the Carta median of 1.78x.
Given the comprehensive amount of data Carta compiled, we think this is a clear manifestation of how manager selection can move the normal distribution curve to the right through manager selection. Reports of venture's demise have been greatly exaggerated--manager selection is critical to generating alpha 💪 🚀
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With the IPO window closed (even though the markets are at all-time highs 🤔), and the unicorn M&A world has been muted because of the current US executive branch as well as the EU, not much has been distributed to LPs who generally want to be at least net neutral on cash flow (capital calls offset by distributions).
We are definitely seeing more partial secondaries being done by our portfolio funds, and we at @CendanaCapital encourage it if a 10-25% sale of the fund managers’ position returns a material % of their fund. In the past few months alone, we have seen two of our portfolio funds return 50-150% of their funds this way 💵
And if you are an LP looking to monetize, please reach out! We and Kline Hill Partners have a secondaries fund and are writing checks 💥
theinformation.com/articles/…
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Service firms need to figure out how to get software margins. Example: I send an LPA to our law firm (which we really like!) They have an associate review for 5 hours and create an issues list. Tbh, I think AI can do this in 1 minute. But, the law firms’ business model is to charge by the hour. Seems like the solution they need to go is to do project based fees. Charge us $10K or $5K (some other firm will offer us this, or lower). And then figure out how to get their own cost to sub $2K. Voila, 80% software margin 💥
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PSA to Seed VCs: be wary of potential LPs asking for a special deal on carried interest-it may send a negative signal to other LPs-and run if they are asking for a cut of the mgmt company. We @CendanaCapital have never asked portfolio funds for preferential economics. #OpenLP
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We at @CendanaCapital are very excited about our partnership with @paigefinnn 💥🚀
excited to announce behind genius’s next chapter - an $8.9m fund II focused on investing in the best founder storytellers.
thank you to @agarfinks for sharing my story in Fortune, and to our LPs including @CendanaCapital, Mixi, GREE, @arashf, and @PankajKedia for their support.
and to the incredible founders we get to work with - thank you for letting me be part of your story!
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Thanks for posting @DWeisburd — one new observation we would make is that Pre-Seed is the new Seed. In our portfolio, the median Pre-Seed round is $1.5M on $7M pre and that’s where Seed rounds were when @CendanaCapital started over 10 years ago. This is where we are and will be focused 💥
🧐 Did you know that @MKRocks has single handedly convinced some of the very largest endowments in the world to invest into VC?
💡 Today, some institutions are simply not able to access VC due to their check size being too big - a problem that Michael Kim and @CendanaCapital have solved.
🎤 @eriktorenberg and I interviewed Michael Kim the legendary Founder of Cendana Capital on this and:
1⃣ How A Single GP In his fund returned over 100X+!
2⃣ Dilution math and why LP’s should obsess much more over it.
3⃣ The math behind why Michael prefers high concentration and how this effects returns.
Video clip below - Sound on.
Click “+ Follow” by my name to see more clips.
P.S. Link to full episode in comments.
#VentureCapital #VC #Startups #OpenLP
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Very good article by @rebecca_szkutak on how small Nano funds can compete and generate strong returns; let's not forget @sacca's returns on his $8M Lowercase 1--legendary! Great to see @paigefinnn's thoughts on this as well.
tcrn.ch/41WdIbG
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Data, structure and analytics are critical to @CendanaCapital as we assess new investment opportunities, and work with our portfolio fund GPs and LPs. It informs our investment approach. Today, we are super excited to announce that Fernandina Ko is joining Cendana Capital as the Director of Data Sciences and Strategy. Fer brings a comprehensive skill set in analytics, finance, and strategy shaped by her previous roles in investment banking, management consulting, and startup operations. Prior to joining Cendana, Fer was at BCG and Credit Suisse, and has also spent time working in VC and fintech. Through her broad experience, she has honed an ability to leverage data for growth and strategic decision-making in fast-paced environments. She graduated from Stanford GSB last year, and also holds a Master’s degree in Applied Mathematics. Fer will be based in San Francisco.
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Congratulations and we at @CendanaCapital are very excited to see how it has evolved! Our Nano program inspired us to brainstorm with you, @SethGB and @chadbyers to create what has become an emerging force in deep tech and American Dynamism investing!
1/ We're super excited to announce our new $40m fund, Humba Ventures II! Our singular focus is backing early-stage founders building ambitious deep tech and American Dynamism companies. codingvc.com/p/humba-ii-doub…
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Unf***ng the planet with @lowercarbon — proud to be a partner with you @sacca, an exceptional investor 🦄🦄🦄Excited to work with @claydumas and the team💥💥💥
techcrunch.com/2021/08/12/ch…
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We would be ranked 3rd worldwide among unicorn investors. Fully recognize that it’s thru our fund managers, but what is impressive is that they invested in these unicorns at the seed stage. We think it’s a real testament to our fund managers’ ability to find great founders!
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Thank you to our investors, portfolio funds and portfolio companies--we are very proud to be your partner! techcrunch.com/2017/04/05/ce…
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Thanks @DWeisburd and @eriktorenberg for inviting me on. Really enjoyed our discussion about the genesis of #SeedVC and how our thinking at @CendanaCapital have evolved, while also maintaining discipline about our investment approach💥
open.spotify.com/episode/7A6…
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We are thrilled to welcome @HillaryTyree as @CendanaCapital’s new Head of Platform and Operations. Many of you know Hillary from Silicon Valley Bank, where she worked in a similar role for the bank’s emerging managers practice. For those who don't yet know Hillary, she is talented, proactive, entrepreneurial, and of the highest integrity--qualities we seek at Cendana. Just as importantly, she is a very nice person and a pleasure to work with!
From our inception over ten years ago, Cendana has sought to be a different kind of LP: one that works closely with GPs and LPs, and recognizes that our success is tied together through proactive collaboration. We believe our approach has helped our GPs and LPs in many ways, including generating alpha and expanding opportunities. We are confident Hillary will take our collaborative efforts to a higher level to help Cendana remain the leading LP in seed venture capital.
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Very happy to announce we have some more dry powder to invest in the leading seed VC funds. pehub.com/2015/01/august-asp…
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A request. I’m super proud that my daughter Anabel, a sophomore in high school, is keen on sustainability and entrepreneurship and has a launched a website to inspire other younger people. She’s interviewed @Stu_Land from @grovecollab, @martyodlin from @running_tide, among others with many more to come. Please help her journey by checking out the site and signing up 💥💥💥 #proudfather
envirotool.org/
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We at @CendanaCapital are very excited to partner with @SashaKaletsky and @Caspar_Lee at @Creator_Venture. It’s our first investment in a consumer-centric GP since we invested in @ForerunnerVC over 10 years ago.
With companies like @elevenlabs, Sasha and Caspar are at the forefront of Consumer AI investing 💥
Announcing Creator Ventures Fund II:
Our new $45m fund to invest in the next great consumer internet founders.
More below:
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Some color on what @CendanaCapital is up to & how we view early stage VC. Will be speaking at @venture_conf Nov 6th
medium.com/@Venture_conf/bei…
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Too much capital over time creates a culture that substitutes cash for creativity & discipline @epaley @fcollective
techcrunch.com/2016/10/15/ov…
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Had a fun follow-up session with @LDEakman from #FoundryNext and Joanna Rupp from the #UChicago endowment. Hopefully, we provided some good advice! Thanks @jrmarshall32 and the #SVB team for organizing this.
piped.video/xg20t3xDbrg #OpenLP
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Founders: this fundraising advice from @epaley @fcollective is as good as it gets. VCs: it applies to your fundraising as well. medium.com/swlh/a-ridiculous…
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Ultimately, LPs want to see skin in the game, but sophisticated LPs do accommodate these techniques by first time fund managers to help with their GP commitment, which can be beyond the means of most. Great overview by @Cookie!
techcrunch-com.cdn.ampprojec…
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Rule of 30. Assuming 10% ownership, simply take fund size and multiply it by 30 to derive what total exit value has to look like to achieve a 3x gross. $1b fund x 30 = $30B exit value. 10% of that is $3b which is the 3x gross. That means 1 decacorn and 20 🦄s or 2 decacorns and 10 🦄s. Quite a hit rate for a portfolio of 30-40 companies.
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We @CendanaCapital have been working with @nchirls for a long time and he is one of the best—super smart, can see around corners, aligned with founders and with LPs and has a phenomenal track record of delivering returns and distributions. Plus, he’s a super nice guy 💥
Let’s be honest, most venture podcasts are fricking hollow.
This one has more bangers than a Taylor Swift Eras tour.
⚠️ Why venture is now just a Ponzi scheme
🏦 Why VCs have been reduced to bankers
🗑️ How the big funds kill startups
My 7 lessons from @nchirls 👇
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As a test. Just withdraw $100 from my SVB checking account at a Chase ATM. 244pm eastern.
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Fund size matters, as does smart follow-on investments into the winners. A very clear explanation by @robgo @NextViewVC bettereveryday.vc/how-hard-i…
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Recently sat down with @KatieS @pboyce and @jmj to talk about the evolution of seed VC at the #UpfrontSummit - a lot has changed over the past decade + more since I started @CendanaCapital
Check out the full video here: piped.video/HAFfEd0fa-I
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We first met @jeff over 15 years ago and from the inception of @CendanaCapital over 10 years ago, we have been very happy LPs with @uncorkcap. With the addition of @bandrew, @susanwliu and @thistrippjones over the years, Uncork is one of the forces to be reckoned with in the Seed VC world!
medium.com/uncorkcapital/unc…
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We think sub $20MM funds should buy ownership upfront.l and maybe SPV later rounds. We see 2 (reserves) to 1 (initial) for funds $50MM-$100MM, 1 to 1 for $20MM-$50MM. Recycling is important for all funds.
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Our portfolio fund managers have 60+ unicorns in their current and prior funds. Seems pretty good, but need more data from the LP world @CBinsights cbinsights.com/research/best…
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Happiness (at least for an investor) is receiving an email asking to confirm wiring instructions so they can send you a distribution.
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Excited to partner with Better Tomorrow for seed stage fintech investing. Congrats @pitdesi and @iamjakestream —excited to see what’s in store tomorrow and beyond 💥💥💥 H/T @Cookie
techcrunch.com/2020/11/12/th…
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Excited to partner again with @FCollective for another 12 years! Entrepreneurs: their DNA is truly founder friendly techcrunch.com/2016/11/30/fo…
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Overall we view mgmt fees as a loan to the GPs that need to be used to execute strategy but need to be repaid before they get the upside—carried interest—which is a strong alignment of interest btw the GP and their LPs.
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Not a 20 min podcast 😉 @Kells_Bells and I did an 1.5 hour podcast with Alex Shahidi, Co-CIO of Evoke Advisors We go in depth on Pre-Seed and Seed VC and our investment approach at @CendanaCapital
Outstanding, probing questions from Alex who is a very thoughtful investor 💥
piped.video/t9dEfRIK5ls?si=CxEB…
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We @CendanaCapital love those days too--making those calls as well as receiving those calls💥
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Or maybe just have an alphabetical list of GPs who have lifetime distributions of 20x the fund, 15x the fund, 10x the fund and 5x the fund and 3x the fund. Probably 20 VCs at most. I know some would be from amongst the @CendanaCapital portfolio fund GPs.
The Midas list is silly. A better approach would be rank order VCs by the multiple of their fund they returned (ie, distributed) from an investment (or from their lifetime track record). I would suspect that most of the top 10 would be all from seed stage VCs.
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It’s been awhile and we have been busy investing. Here’s a curated Twitter list of the @CendanaCapital portfolio fund GPs ⚡️⚡️⚡️
nitter.app/i/lists/13200990554609…
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It's not often that we at @CendanaCapital have 3 portfolio funds invested in the same company, but when we do, it's a very strong signal! @knottv and @CruxOcm are using AI to optimize control rooms for companies that are critical to energy infrastructure⚡ We are very happy to be a direct investor, alongside our portfolio funds @rootvc, @GoldenVentures and @AngularVentures 💥
worldpipelines.com/business-…
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The Midas list is silly. A better approach would be rank order VCs by the multiple of their fund they returned (ie, distributed) from an investment (or from their lifetime track record). I would suspect that most of the top 10 would be all from seed stage VCs.
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An excellent in-depth interview with @Kells_Bells that starts off with her career in competitive skating. Also, a lot of inside baseball about how we @CendanaCapital think about our own portfolio construction. For most ventures, proprietary data is critical and Kelli discusses how we leverage the world-class data and analytics platform she has built 💪🏼🚀💥
piped.video/watch?v=41qoCrMt…
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Thanks @eriktorenberg for the opportunity to hear how we at @CendanaCapital think about the seed VC space!
Michael Kim (@MKRocks) of Cendana Capital, talked to Erik about portfolio construction and why it’s so important to him when he’s looking at backing a venture fund. He also explains why he’s “not looking for the ETF of seed investing.” podcasts.apple.com/us/podcas…
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New seed fund GPs: some great advice from @jrmarshall32 from the @SVB_Financial conference that @Jeff and we did. medium.com/svb-inside-innova…
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Created a new list—the amazing GPs of @CendanaCapital portfolio funds! nitter.app/i/lists/13200990554609…
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We are excited to continue our great partnership with @cshapiro @taylorgreene @laurenloktev @collabfund techcrunch.com/2018/05/29/co…
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4 $1Bn VC exits in 2016. Impressed portfolio funds @forerunnervc @k9ventures @fcollective were in
@Jet, @DollarShaveClub, @twilio & @Cruise
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Super glad to be a long term partner with @uncorkcap @jeff @stephpalmeri @Bandrew medium.com/uncorkcapital/unc…
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One advantage Seed VC funds have re secondaries is that it's not a negative signal if they want to sell in a later stage round. Multi-stage VC firms have less degrees of freedom--would you view it as a negative signal if the lead investor of the Series A wanted to sell some shares?
.@Jason, @MKRocks, and @DWeisburd break down how GPs should think about secondary:
-- ideal approach is scenario-based
-- idiot insurance vs. letting winners ride
-- incentives for optimizing short-term IRR vs TVPI/DPI
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1) talk to you baby as an adult and not baby talk. They learn how to speak from their parents
2) get a good gmail address now
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This is pre-seed today: “For investors, it means seed rounds are going to be the place to be. When others leave the market, it is time to get in. The uncapped note will turn into a priced $1mm round at $4mm pre/$5mm post. This is as it should be.”
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We think funds <$50MM should buy more ownership upfront & reserve 1:1 and funds >$50MM should reserve 2:1
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Let’s do this—more transparency in the LP/GP relationship! #OpenLP
sapphireventures.com/blog/op…
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Had a great conversation with @Cookie and @alexgove for their podcast @StrictlyVC Download—we discuss at the 31:57 mark how we are supporting @lo_toney at @PlexoCapital to provide an on-ramp to the LP & GP world for #HBCU students buzzsprout.com/850276/433771…
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We are very excited to continue our 💪🏼 partnership with @seanwdoolan @EmreTKaratas @virtue_vc They have shown us what excellent very early stage investing in digital health looks like, so we were happy to anchor their new fund 💥
We are thrilled to share the close of our second fund, “V2”, at $55.75M!
In V2 we intend to continue partnering with exceptional pre-seed & seed healthcare founders as an additive lead or co-lead partner. Our check sizes will range from $1-2M across 25 companies over the next 3 years.
At @virtue_vc we partner with founders in their earliest financing rounds to tackle the real, intractable problems that continue to hinder the broader healthcare ecosystem. We are honored to have the unwavering support of our best-in-class Limited Partners – and specifically our anchor @CendanaCapital – for allowing us to deepen our commitment to the next generation of healthcare founders.
In the last three years, Virtue’s Fund I portfolio companies – such as @DxSmarter, Evvy, Mural Health, Anna Health, among others – have collectively raised over $225 million, reaching a combined valuation of $1B+.
Our stage and sector specialization allows us to meaningfully support a range of startups that are reshaping how healthcare is delivered, financed, and coded.
We are at an important moment in healthcare, fueled by the convergence of rapid AI breakthroughs, shifting policies and regulatory landscape, pressure to modernize antiquated operating systems and unlock valuable clinical data assets, rising costs of care and life saving drugs, and an evolving cultural sentiment that demands more from our healthcare system.
Read more here: virtuevc.com/virtue-fund-ii-…
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It's a big XYZ day! We just announced our newest & 4th fund - but to be honest, this is the first fund we've EVER announced, which feels like reason to celebrate 🎉 Even more so - we just added 2 new partners, Art Clarke & @camillericketts, and it's all in @forbes today! Link 👇
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We at @CendanaCapital are actively making commitments to new fund managers. Portfolios will be adjusted but overall, you can’t time technology innovation. Sophisticated LPs will remain dedicated to a robust VC allocation. #OpenLP
forbes.com/sites/kenrickcai/…
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We @CendanaCapital are grateful partners with @ashmeetsidana and super excited to see what lies ahead for Engineering Capital 💥💥💥
If you want a start a company with a technical insight (bit.ly/3fouC9K), please let me know. Despite Covid, I am continuing to invest actively at the seed stage. lnkd.in/gDmbC2U
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We are incredibly happy for our great friend @saarsaar and his journey with @DoorDash 💪🏼💪🏼💪🏼💥💥💥. Founders, if you want to talk to one of the smartest (and nicest) VCs, You will do no better than Saar! techcrunch.com/2020/12/10/ea…
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Tectonic plates moving. Earthquakes in Chile, Iceland and Bay Area within 24 hours. Hope CA doesn't become literally 6 separate states
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Thanks @semil for supporting our event & for sharing your notes from the @CendanaCapital @SVB_Financial Summit! blog.semilshah.com/2017/10/1…
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Very happy for @nchirls and @alexlines @notationcapital. We like first check investors! techcrunch.com/2018/02/07/ny…
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Totally agree with the observations around recycling: a $100M fund with $20M of fees and expenses needs a 3.75x to return 3x ($300M/$80M).
On reserves, we @CendanaCapital advise the smaller seed funds to get as much ownership they can with their first check.
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Founders and VCs: Growth, but at what cost? Superb insights from @epaley @fcollective techcrunch.com/2017/10/26/to…
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It may be tempting to sell part of your mgmt co to an anchor LP, but we @CendanaCapital view this as a negative signal to other LPs. Discounted economics limited to the first few funds make more sense, but the mgmt co should be off-limits. #openLP
theinformation.com/articles/…
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Nice to see the @CendanaCapital portfolio funds are in 9 of these 25 companies forbes.com/next-billion-doll…
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Range in @CendanaCapital portfolio funds is $25MM to $35MM per partner and also pacing of 1 new investment per quarter per partner. So 3 partners = $90MM fund with 36 investments.
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Founders: the search for optimal Founder/Investor fit means your lead seed round investor may not be from your zip code @davidbeisel @NextViewVC forbes.com/sites/valleyvoice…
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The data shows that in our portfolio a seed fund should get about 10% of their fund size as a target initial ownership. $75M fund should be getting at least 7.5% initial ownership. For pre-seed funds, it’s about 20% of fund size.
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With artificial general intelligence, you could have a @CendanaCapital AI that interacts with a prospective LP AI, figures out if it’s a fit, generates a super detailed investment memo, negotiates the LPA, completes sub docs, and determines optimal allocations. This could be done in a few minutes.
Same for prospective portfolio funds. Through the investment period, the Cendana AI meets automatically with any prospective portfolio fund, and negotiates the LPA, makes the appropriate investment for the targeted Cendana portfolio construction.
Tax and audit are done in a minute and automatically. Fund administration and banking too.
People are not involved in these scenarios 🫢 🤔
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Congratulations to @ManuKumar @K9Ventures---a tremendous outcome for @auth0! We are grateful to be your partner! techcrunch.com/2021/03/03/ok…
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Great post by the team at @oper8rio Fundraising is hard, but understanding what different LPs seek is critical.
oper8r.substack.com/p/framew…
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My daughter Anabel has been working on her initiative to get young people interested in entrepreneurship and the environment. She just launched a fundraising effort for her partner organization @saveSFbay. I would appreciate it if you would consider a donation 🙏🏽💥
gofund.me/cc49ba33
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Very excited to continue our partnership with @tnachen @EssenceVenture who as the article says his "domain expertise, business savvy, and humility make him an
indispensable partner for startups" A great partner to us and to founders!
businessinsider.com/tim-chen…
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Great story on @kirstenagreen @forerunnervc. We @cendanacapital aren't afraid to make big, early bets!
nytimes.com/2017/03/26/techn…
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A new decacorn created with @airtable! Congrats to @freestylevc — investing in your summer interns was a great strategy 😉🚀💥
bloomberg.com/news/articles/…
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We at @CendanaCapital are very excited to be the anchor LP for @joshuabrowder, who is a quiet force of nature. Being on the selection committee for the Thiel Fellowship, Josh has has a keen sense of identifying amazing founders 💥
Sequoia Capital, Marc Andreessen and top institutions back New $30m Browder Capital Fund Four:
Today, I’m excited to announce that I’ve raised Browder Capital Fund Four, a $30,000,000 fund backed by Sequoia Capital, Marc Andreessen, Chris Dixon, Arthur Patterson (founder of Accel), Walter Kortschak (founder of SignalFire) and some of the world’s top institutional investors, including Cendana Capital, General Endowment Management, Level Ventures, Hummingbird Ventures (Nomads), and Slipstream.
I’m an accidental investor.
In 2018, I stopped out of Stanford to take the Thiel Fellowship. One in ten Fellows goes on to build a billion dollar company.
That’s how I met Adam Guild.
I didn’t have a fund. I didn’t have any real savings. But my Thiel Fellowship payment had just hit my bank account. So I decided to invest it into Adam’s company as his first investor.
Yesterday, that company, Owner, announced their Series C at a $1 billion valuation.
Since then, I’ve been lucky to back many of the best young founders across previous funds (Whop, Wander, Assured, Pilgrim, Yuzu Health, Micro1, among many others), including other unannounced pre-seeds to unicorns. Indeed, Browder Capital is an investor in more Thiel Fellows than any other person or fund, including 50% from last year’s class (2023).
While many funds back dozens of startups at once, often chasing hype, I prefer to go all in on one overlooked technical founder at a time. I’ve hosted 19 year old strangers at my apartment, put their visas on my personal credit card, co-signed their first leases. Whatever it takes to get them to start their company.
Fund Four will double down on that mission: becoming the first believer to rare individuals who build billion dollar companies from scratch.
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Had a great time talking to @TurnerNovak about early and late stage venture, and about how we think about the ecosystem that we have created at @CendanaCapital. It went on for almost 2 hours 💥
Episode #93: Michael Kim @ Cendana
@MKRocks is the Founder of @CendanaCapital, making anchor investments in very early stage VC funds.
We talk 204x DPI funds, characteristics of the top performing venture investors, how Cendana does diligence on fund managers, portfolio construction best practices + Michael’s 60x rule, and why a high ownership to fund size ratio drives outlier returns.
We also get into how VCs are using AI, the competition between Seed and multi-stage investors, why US endowments are under siege, and how secondaries are driving most early stage venture returns today.
Michael also opens up about the early days of starting Cendana, the 18 month grind raising Cendana Fund 1, the day he almost died, and ranking in the top 2% globally in Call of Duty.
Shoutout to @infoarbitrage, @kevinhartz, @semil, @jeff, @Beezer232, @jaltma, @jmj, @pitdesi, @nwischoff, @tedalling, and @Rick_Zullo for their help putting this together.
Thanks @boltdotnew for supporting this episode (check out their Hackathon with $1m in prizes!)
Full episode here on X, or grab a link in the replies.
Timestamps:
4:24 The day Michael almost died
5:10 Call of Duty & video games
9:34 Hiring @ Cendana
10:31 How Cendana uses structured and unstructured data
16:51 How VCs are using AI
19:55 Why secondaries are driving most early stage venture returns
22:01 Deciding when to sell secondaries
24:28 Best performing venture funds ever
27:26 The best VCs have amazing access to the best founders
33:42 Why Cendana backs Solo GPs
35:57 How to invest over time and hype cycles
41:35 Why multi-stage firms are investing earlier
44:45 Cendana’s current thesis: High ownership % to fund size
45:51 Why Cendana started backing non-lead VCs
48:41 How Cendana does diligence on fund managers
52:22 VC NPS Scores and Ron Conway’s Silver Bullet
53:49 Good vs bad new VC firm strategies
56:36 Determining defensibility of a strategy
57:57 “Messy middle” software buyout fund
1:03:25 Portfolio construction best practice
1:08:11 Michael’s 60x Rule
1:14:28 How Seed funds compete with multi-stage funds
1:20:05 Should you collect logos writing small checks?
1:21:07 Becoming an LP for the city of SF
1:24:42 Taking 18+ months to raise Cendana Fund 1 in the GFC
1:26:48 Warehousing the first Cendana Fund 1 investments
1:29:56 How to do a first close
1:34:29 Why it’s hard to kill a VC firm
1:37:00 What happens to ZIRP tourist fund managers
1:40:22 How to raise a Fund 2 or 3 today
1:42:07 “US endowments are under siege”
1:44:55 What the best GP LP relationships look like
1:46:41 What Fund of Funds get wrong
1:50:43 The three most interesting trends in venture today
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Totally true but would argue that GPs are in it for the carry, which they don’t get until all called capital is repaid (including mgmt fees). So a $1bn fund does have $200MM of management fees. Which means they do better on mgmt fees until they return 2x (20% carry on $1bn)
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Our thesis is that smaller funds outperform and as a corollary, smaller funds with relatively larger ownership will really outperform.
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Building a very large stand alone generational brand—that’s the vision! Congrats @Casper @Pkrim portfolio company of @LererHippeau (and @CendanaCapital). bloomberg.com/news/articles/…
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