20VC: Ryan Caldbeck on Why The Business Model of VC is Broken, Who is To Blame, How The Best Funds Will Use Data Intelligently Moving Forward & Whether We Are In A Consumer Bubble Or Not?
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
The Twenty Minute VC
4.4 • 637 Ratings
🗓️ 2 November 2018
⏱️ 35 minutes
🧾️ Download transcript
Summary
Ryan Caldbeck is the Founder & CEO @ CircleUp, the startup creating a transparent and efficient market to drive innovation for consumer brands. To date, Ryan has raised over $50m with CircleUp from some friends and prior guests of the show including USV, Collaborative Fund and Canaan Partners just to name a few. Prior to CircleUp, Ryan spent nearly 7 years investing in consumer products with the likes of TSG Consumer Partners and Encore Consumer Capital. As a result of Ryan's success with CircleUp he has been recognised as a "Titan of Retail" by Bloomberg and "40 Under 40" by the San Francisco Business Times.
In Today’s Episode You Will Learn:
1.) How Ryan made his way into the world of consumer investing and what the realisation moment was for him that the market needed a solution, CircleUp?
2.) Why does Ryan believe that venture capital has a fundamental problem? What is it about the economics of funds that Ryan has a problem with? Who is to blame for this situation; the LPs who fund it or the AUM hungry VCs? Why does Ryan believe the majority of micro VCs are micro as that is all they could raise? Is that really fair or true?
3.) Why does Ryan fundamentally believe the LP ecosystem and mechanism for backing funds is inherently broken? What is so wrong with current LP incentives? What does Ryan believe can be done to encourage more risk-taking and innovation from within the LP class?
4.) Recognising the antiquated nature of much of VC, what does Ryan believe the future of VC looks like? How will we see the use of data impact both sourcing and investment decision-making? Where does Ryan believe it has the most potential? Where is data so sparse that it will be challenging? How does Ryan believe the best managers of the future will use data?
5.) Consumer brands and DNVBs are riding high today, does Ryan believe we are in a consumer bubble? What does Ryan believe is so wrong about how the majority of the current crop of VCs analyse consumer businesses? How should they be analysed? Why does Ryan believe consumer exits will be smaller? Is it fair to say consumer is more capital intensive and largely sells for 1.6-1.8 EBITDA?
Items Mentioned In Today’s Show:
Ryan’s Fave Book: The Hard Thing About Hard Things
As always you can follow Harry, The Twenty Minute VC and Ryan on Twitter here!
Likewise, you can follow Harry on Instagram here for mojito madness and all things 20VC.
Transcript
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| 0:00.0 | You are listening to The 20 Minute VC and Founders Friday with me, Harry Stebbings, at H. |
| 0:04.3 | Debings, 1996 with two Bs on Instagram. |
| 0:07.1 | But why am I so excited for our episode today? |
| 0:09.3 | Well, you know how you can be notified when a certain individual tweets on Twitter? |
| 0:13.2 | Well, I have that enabled for only two people. |
| 0:15.5 | My partner, Fred Destat, at F Destin, and then our guest today. |
| 0:19.0 | I think one of the best there is on Twitter, and you |
| 0:21.3 | guessed it, I'm thrilled to welcome back on the show, Ryan Koolbeck, founder and CEO at CircleUp. |
| 0:26.0 | The startup creating a transparent and efficient market to drive innovation for consumer brands. |
| 0:31.0 | To date, Ryan has raised over $50 million in funding with Circle Up from some friends and prior |
| 0:35.7 | guests of the show, including USV, collaborative fund and Canaan partners, just to name a few. And prior to Circle Up from some friends and prior guests of the show, including USV, |
| 0:37.9 | collaborative fund and Canaan partners, just to name a few. |
| 0:40.8 | And prior to Circle Up, Ryan spent nearly seven years investing in consumer products with the |
| 0:45.1 | likes of TSG Consumer Partners, OnC Consumer Capital, and as a result of Ryan's incredible success |
| 0:50.7 | with Circle Up, he's been recognised as a titan of retail, what a title, by |
| 0:54.4 | Bloomberg, and 40 under 40 by the San Francisco Business Times. But before we dive into the very |
| 0:59.7 | special episode we have with Ryan, and I want to spend a minute to talk about Brex, the first |
| 1:04.0 | corporate card for startups. Brax founders Enrique M. Pedro built a payments business in Brazil, |
| 1:09.1 | but found themselves rejected for a corporate |
| 1:11.1 | card when they were in Y Combinator. They decided to build Brex with instant online sign-up, |
| 1:16.0 | no founder liability required, and limits 10 to 20 times higher than standard cards. Pretty |
| 1:20.9 | incredible, I know, and you can sign up for Brex today and get fees waived by entering the |
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