20VC: Why VC Returns Will Get Worse, Why LP Incentive Structures are so Broken, What is the Answer to Liquidity with No M&A or IPOs, When to Sell vs Hold Your Winners & Turning $5M into $250M with The Trade Desk | Roger Ehrenberg, Eberg Capital

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

🗓️ 19 February 2024

⏱️ 71 minutes

🔗️ Recording | iTunes | RSS

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Summary

Roger Ehrenberg is a legend of the venture industry as the Founder of IA Ventures, among the most successful seed-stage venture firms of this generation, having seeded companies including Datadog (NASDAQ: DDOG), Digital Ocean (NYSE: DOCN), The Trade Desk (NASDAQ: TTD) and Wise (LSE: WISE.L). Today Roger is the Founder and Managing Partner of Eberg Capital, a pioneer in bridging the gap among sports franchises, sports betting, media and entertainment. Roger’s current sports investments include stakes in the Miami Marlins, Real Salt Lake, Alpine Racing, Betr, Commonwealth, Kero Sports, Simplebet, SlamBall, Smarkets and WagerWire.

In Today's Episode with Roger Ehrenberg We Discuss:

1. The Commoditisation of Venture and Worsening Returns:

Why does Roger disagree with Doug Leone that "we have moved from a boutique high margin business to a commoditised low margin industry"?
Why does Roger believe we will see consistently worsening returns in venture?
Is this influx of LP capital cyclical or is it here to stay?

2. The New LPs and The Broken Existing LP World:

Why does Roger think the existing incentive structure for LPs is totally broken?
Who are the most important new LPs entering the venture market?
How do sovereigns and pension funds entering venture change the industry?
Which players have capitalised on this new LP class best?

3. Where Does the Liquidity Come From:

With the closed IPO window and lack of M&A, where will liquidity come from in the next 24 months?
Would a Trump administration open M&A markets? Does Roger agree M&A markets are shut down?
When does Roger believe IPO markets will open again? Will Databricks and Stripe go out in 2024?
If Roger were to run a continuity fund strategy, how would he structure it? What would he do?

4. When to Sell and When to Hold:

How does Roger advise managers on when to sell vs when to hold?
How important is it for a new firm to have a company go public in the first five years?
What are Roger's biggest lessons from selling The Trade Desk at a $2.5BN valuation?
How does Roger think about managers thinking they should manage the public book of their portfolio for their LPs? What are the pros and cons?

5. Relationship to Money:

Do rich investors make better investors? How does investing when you have a lot of cash already change your mindset around investing and exiting?
How does Roger analyse his relationship to money today?
What have been the single biggest needle movers in his wealth journey? How did it feel when he made a $6M bonus?

6. The Secrets to Parenthood and Marriage:

What does it mean to be a great father for Roger?
How does Roger think about bringing his children up with the same level of hunger and ambition, despite being brought up with such wealth?
What are Roger's two biggest lessons on the secret to a great marriage?

Transcript

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0:00.0	There's going to be a compression of returns. You're going to have more of the Andrescans and the insights and these platforms. They're not really venture firms. Very early artisanal VC is not scale. And it never will be. I'm not in pure tech anymore. But if I was, I would literally be spending almost no time in pure AI. Take risk. Don't play it safe. Have a deeply helped thesis and just put it out there. Don't be a sheet. Don't follow the playbook.
0:28.4	This is 20VC with me, Harry Stebbings. Now, I remember reading Roger Ehrenberg's writing 10, 12 years ago. It inspired me and so much of the way that I think. To me, he's one
0:39.1	of the true greats of this business, and I'm so, so thrilled to call him a friend today. With that,
0:44.1	Roger is most recognized as the founder of IA Ventures, one of the most successful seed stage
0:48.7	venture firms of this generation, having ceded data dog, digital oceanOcean, The Trade Desk and Wise.
0:54.5	Today, Roger is the founder and managing partner of Eberg Capital, a pioneer in bridging
0:59.0	the gap, among sports franchises, sports betting, media and entertainment, and his current
1:04.0	sports portfolio includes the likes of Miami Marlins, Alpine Racing, and many more.
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	...

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