20VC: Homebrew's Hunter Walk and Satya Patel on Why $100M is Not Enough To Execute a Seed Strategy Today | Why They Decided not to Raise New External Funds | Where Are We in the Cycle & What is Truly F***** | Why Founders Should Take Secondaries Earlier

The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch

The Twenty Minute VC

Finance, Venturecapital, Tech News, News, Siliconvalley, Technology, Investing, Startups, Business

4.4 • 637 Ratings

🗓️ 30 January 2023

⏱️ 62 minutes

🔗️ Recording | iTunes | RSS

🧾️ Download transcript

Summary

Hunter Walk and Satya Patel are Co-Founders and Partners @ Homebrew, one of the leading seed funds of the last decade. Following 10 years of stellar returns with investments in the likes of Chime, Plaid, Gusto and many others, they decided to not accept any further LP capital and to only invest their own money moving forward through Homebrew Forever.

In Today's Discussion on Homebrew We Breakdown:

1. ) The Foundings of a Great Partnership:

What was the moment when Hunter and Satya decided they were going to go out and raise their first fund with Homebrew I?
What are the core principles that all founding partners need to align on before they start a firm together? What questions should they ask of each other?
Why does being independently wealthy coming into a partnership make the partnership easier and more efficient to operate? What changes when the partners have money already?

2.) What Changes When Moving From LP Dollars to Personal Capital:

Why did Hunter and Satya decide to not raise any further capital from external LPs?
Asset allocation-wise, how did they determine how much is the right amount to set aside for the first 2 years of investing? How many investments do they want to make with that cash?
How does investing their personal capital change their deployment pace and cadence?
How does it change their approach to reserves management and follow-on financing?
How does it change their approach to pricing? How price sensitive are they today?

3.) Analyzing the Seed Landscape Today:

Why do Hunter and Satya not think that a $100M seed fund is enough to properly execute a world-class seed strategy today?
Who is their competition with the new strategy? How does it change their relationship with large multi-stage funds? How does it change their relationship with seed funds?
Do they agree that the last generation of sub $20M micro-funds will not raise another fund in this cycle? How did their entrance impact the seed landscape over the last few years?
Why are LPs also to blame for many of the original seed managers raising larger and larger funds?

4.) Companies: Money and People are The Problem:

Why has too much money been such a problem for many Homebrew portfolio companies over the last few years? How has too much money changed their execution plans?
What happens to the "living dead" companies with many years of runway but no product market fit?
Who does this market cater to well? Who will thrive in this market?
What have people forgotten about both startups and venture in the last 2 years that we have to remember?
Why is this generation so entitled and expectant? Why are startups not a get-rich-quick scheme?

Transcript

Click on a timestamp to play from that location

0:00.0	In today's market at the seed stage in particular, a $100 million fund is a bit of a tweener.
0:05.0	You've either got to be larger to be able to write large checks and get the ownership that you need,
0:09.2	or you've got to be smaller and give yourself flexibility in terms of check size and ownership,
0:13.8	but have a small enough fund that doesn't require you to optimize all those things with every single investment.
0:19.6	This is 20 VC with me, Harry Stebbings. and last year, Hunter Walk and Satcher Patel,
0:23.7	two of the greatest of the seed investing landscape with Homebrew,
0:26.6	announced they would not raise any further external funding,
0:29.6	and they would be investing their own money from this point on through Homebrew forever.
0:33.4	Now, this is such a unique move and venture,
0:35.5	and I've wanted to sit down with them ever since they announced it.
0:38.2	And so this is an incredibly special discussion on their biggest learnings throughout the incredible 10-year homebrew journey,
0:44.3	the making and maintenance of a truly great venture partnership and the future ahead,
0:49.3	both for them in their investing capital and then also for the venture and startup landscape.
0:54.3	But before we dive into the show today, Secureframe is the leading all-in-one platform
0:58.2	for automated security and privacy compliance.
1:01.4	Secureframe simplifies and streamlines the process of getting and staying compliant to the most
1:06.3	rigorous global privacy and security standards, like SOC2, ISO-271, HIPA, GDPR, and others.
1:14.8	Secureframe's industry-leading compliance automation platform, paired with their in-house compliance
1:19.7	experts and former auditors, helps you get audit ready in weeks, not months, so you can close
1:25.8	more deals faster. Secureframe makes it fast and easy to achieve and maintain compliance, so you can focus on
1:32.7	serving your customers and growing revenues.
1:35.7	Automate your security and privacy compliance with Secureframe.
	...

Please login to see the full transcript.

Previous episode | Next episode

Disclaimer: The podcast and artwork embedded on this page are from The Twenty Minute VC, and are the property of its owner and not affiliated with or endorsed by Tapesearch.

Generated transcripts are the property of The Twenty Minute VC and are distributed freely under the Fair Use doctrine. Transcripts generated by Tapesearch are not guaranteed to be accurate.