Unpopular Ventures: Annual Update 2024

In August, the view of the high coast bridge in the north Sweden. Inspired by the Golden Gate Bridge, the overall length is 70 meters shorter, a modern and elegant style (close view). Although many new things have begun with science fiction, the world is vast, symbolically reminiscent that it is worthwhile to raise technology from zero to 1*and to raise N from*1 to N. (William Gibson)

Welcome to update LP2024. Welcome to the annual update of LP2024. As in case, we are paying attention to the "the best company that is noticeable" in the unpopular business. We invest in outstanding founders who are in a sense, in a sense, but highly likely business.

We operate the "Scouting Program" to find outstanding business opportunities around the world. This program shares a significant part of our interests with those who have identified, evaluated, and invest in investment continuously. If you would like to introduce an investment opportunity, see the scout program guidelines.

It is a slightly longer update than the quarterly update. In addition to the latest information and miscellaneous information in portfolios, thanks to the community, explanations of the portfolio tracking method, the current investment list, and links to past content.

Thank you for your unchanged partnership!

Peter Livingston and Tivo Reiheld

1. GRATITUDE

We have a lot to thank, so let's start with gratitude. thank you:

The founders of our portfolio. I would like to thank all 436 wonderful founders and Portfolio CEO, who allowed us to invest and worked hard to make their dreams reality. Great founders have endless investment options. I am grateful that we chose us and put us on just a small part of your journey.

Our LPS. Thank you for about 5. 000 LPS syndicate and 100 + LPS rolling fund syndicate that inspire us with your capital. You can choose from dozens of asset classes, thousands of VC farms, and hundreds of syndicate and funds on Angellist. Thank you for choosing Angellist and dating again.

As you know, we share Metafers with LPS, Portfolio founder, and friends, as you know. Thanks to the contributor's big family who accomplished what we could not do for the past 12 months:

AATIF AWAN, Amadeo Pellicce, CHRIS MURPHY, Cindy Bakh, Dave Fontenot, Dec Kelly, Eva Zhang, Flight VC, GIAN SCOZARO ACK Chapman, Jeff Cahn, Jeff Heitzman, Jeffrey, Jeson Patel, Jonathan HirSch, Jordan ISIP, Ken Morimoto, Patrick McDougal Sterea, Raymond Rouf, ROMAN ROZENGURT, SEAN STRONG, SUNIL PAI, TAPA GHOSH, My Leep, Volodymyr Medin, Walton Ward, Zhenya Oganian.

There are some anonymous contributors who do not want to clarify their identity. Also, some of the contributors listed here have not been transferred if there is a conflict of interest.

Angellist team that causes magic behind the scenes. In particular, I thank Fitz Wright, Colton Smith and Jack Plankk. They are one of the Angelist managers who have worked together the most in the past year and are wonderful.

2. PORTFOLIO

Summary: The $ 71 million capital, which has invested in the past five years and five years, has grown to a portfolio value of $ 183 million. This has decreased from the previous quarter ($ 69 million / $ 184 million), but the $ 61 million investment has increased from a year ago, which has grown to a portfolio value of $ 160 million. 。 In other words, a portfolio value of $ 20 million and $ 23 million in the past 12 months has been added.~This means that the evaluation value of $ 13 million has increased annually.

Of course, this number contains many movements under the water. Some positions have risen, while others have dropped. I want you to increase the assessment more. This number shows~The annual growth rate is 8 %, while the total of the lon g-term IRR currently reported by Angellist is 8 %.

However, we recognize that the emerging companies / VC markets are still bearing, and we are grateful for this difficult time.

As I've mentioned in other updates, one of the strange things you'll notice during this down market startup period is that we get very little "credit" for our investments doing well. In good times, companies that made little progress quickly raised money at high prices and were quickly able to register as an increase in the value of our portfolio. But now, in these down times, we have several companies that are doing very well and making incredible progress, and we intuitively know that they are worth more than their current paper value. But because there are no rounds happening, there are no new/high stock prices to point to. As a result, our portfolio is dormant and, at least on the surface numbers, appears to be barely moving year-over-year.

Yes, there are companies that are not doing well and will close. But there are also companies that would normally take a big hit down the portfolio, and those take a lot of time.

For example, we have a company where our entire position is valued at:~We raised $10M from our last round of stock, and since then the company has made breakthroughs revenue-wise and is also extremely profitable. They want to stay hidden because they are profitable, and they know the funding market is tough. It's not worth the time to raise money, and it's not necessary. Based on market comparisons, we estimate that if they do a new round, they will be worth 3-6x more than their last round, which would add another $20-50M in value to our portfolio just from this company. The company is currently considering an internal auction later this year, where the proceeds will be used to buy out shareholders. If that happens, the stock price will eventually update, we will be able to mark our investment, and the portfolio will take a big step up. But for now, that value creation is hidden.

Hopefully, in the next 2-3 years, the market will warm up and we will finally start to see the hidden value creation "grabs" in our portfolio.

Disclaimers

As we do every year, we wanted to give you a few disclaimers about how we do these updates:

1. Our updates are positive. We are speaking to a large audience (5. 000 LPs) and it is not appropriate to share negative information about a company publicly. Moreover, VC is a game where only extremely positive outcomes have a significant impact on portfolio performance. So let's focus on those.
2. There may be an error here. All the internal portfolio monitoring is done by Peter, and the team and some big LPs check it on spreadsheets. It is very possible that we are doing something wrong. If you notice an error, please let us know. We try to be as accurate as possible.
3. Startup valuation is difficult and complex. Different people do it differently. We explain our methodology in the appendix. You may disagree with this. You are welcome to do your own analysis and draw your own conclusions using the raw data (link below).
4. The only thing that really matters is cash payouts. But in startup investments these take a long time to materialize. The purpose of this analysis is to evaluate what is going on in the short term and to see if we are on the right track. You can't take these numbers to the bank.

PORTFOLIO DATA

So, look at how the portfolio is performing.

Here are the aggregated numbers for all investments over UV's lifetime:

UV Syndicate numbers only:

UV Rolling Fund annual numbers only:

Investment Activity Statistics

We used $655K of uninvested capital in Q2 and raised another $1. 4M in Q3.

If you are a lead LP in Unpopular Ventures, have invested at least $250K to date, and are willing to sign an NDA, we'd be happy to share your full portfolio data with you. Submit your request via this form.

Otherwise, you can access our unverified data here: Link

Top Companies

The following are some of the top performing companies by vintage so far. There are many more companies that are doing great, but we chose to highlight these companies to highlight at least a few top performers.

The bar for this list will rise over time. For example, for 2019, it's becoming clear which companies will truly drive portfolio returns. These old top investments are marked up at least 20x net and have the fundamentals (earnings, unit economics, moats, etc.) to support their paper value.

On the other hand, the recent vintage is not so clear, so we have chosen companies in promising orbitals. In 2019 and 2020, there are no companies that are better than companies named in 2022 and 2023, and are not valuable for us.

2019:

• Stealt h-This is a very good investment company that is going to fly under the radar. We were their first investor, gained 6 % of the valuation and the company. The company is currently growing rapidly, riding a tw o-digit sales, and is the only reliable player in a huge area. In fact, due to too much profitability, we plan to buy shareholders who are preparing for the public purchase in the second half of this year using unpaid profits. We are very expanding in this company, so we are not going to sell it at this time. As of 2019, the company believes that not only will we become the most successful company, but ultimately UV may be the most successful investment so far.
• YASSIR is a super app for Frenc h-speaking Africa. We were the first investor (and one of the largest investors) with a $ 15 million cap in 2019, and then in 2020 with $ 35 million caps. there were. The latest round has received $ 600 million, and very positive news that we cannot freely disclose will be announced soon. According to LinkedIn, the company's employees have grown rapidly, and have recently exceeded 1. 350 team members. This is the first investment that Tivo Reihyd brought to the UV.

2020: < Span> On the other hand, the recent vintage is not so clear, so we have chosen companies in promising orbitals. In 2019 and 2020, there are no companies that are better than companies named in 2022 and 2023, and are not valuable for us.

• 2019:
• Stealt h-This is a very good investment company that is going to fly under the radar. We were their first investor, gained 6 % of the valuation and the company. The company is currently growing rapidly, riding a tw o-digit sales, and is the only reliable player in a huge area. In fact, due to too much profitability, we plan to buy shareholders who are preparing for the public purchase in the second half of this year using unpaid profits. We are very expanding in this company, so we are not going to sell it at this time. As of 2019, the company believes that not only will we become the most successful company, but ultimately UV may be the most successful investment so far.
• YASSIR is a super app for Frenc h-speaking Africa. We were the first investor (and one of the largest investors) with a $ 15 million cap in 2019, and then in 2020 with $ 35 million caps. there were. The latest round has received $ 600 million, and very positive news that we cannot freely disclose will be announced soon. According to LinkedIn, the company's employees have grown rapidly, and have recently exceeded 1. 350 team members. This is the first investment that Tivo Reihyd brought to the UV.

2020: On the other hand, the recent vintage is not so clear, so we have chosen companies in promising tracks. In 2019 and 2020, there are no companies that are better than companies named in 2022 and 2023, and are not valuable for us.

• 2019:
• Stealt h-This is a very good investment company that is going to fly under the radar. We were their first investor, gained 6 % of the valuation and the company. The company is currently growing rapidly, riding a tw o-digit sales, and is the only reliable player in a huge area. In fact, due to too much profitability, we plan to buy shareholders who are preparing for the public purchase in the second half of this year using unpaid profits. We are very expanding in this company, so we are not going to sell it at this time. As of 2019, the company believes that not only will we become the most successful company, but ultimately UV may be the most successful investment so far.
• YASSIR is a super app for Frenc h-speaking Africa. We were the first investor (and one of the largest investors) with a $ 15 million cap in 2019, and then in 2020 with $ 35 million caps. there were. The latest round has received $ 600 million, and very positive news that we cannot freely disclose will be announced soon. According to LinkedIn, the company's employees have grown rapidly, and have recently exceeded 1. 350 team members. This is the first investment that Tivo Reihyd brought to the UV.
• 2020:
• Gebes is a global business bank that offers a complete financial stack to a rapid growth company that develops business in multiple countries. We were their first investors (other than YC), the largest investors of $ 10 million and $ 13 million in the first two rounds. Most recently, the C series of $ 180 million has been raised, and $ 21 million from Tencent, A16Z, and CRV. According to a recent public article, the company has achieved a positive contribution margin last year on all business lines and is currently growing in 2024. Given that many of the customers of the company are emerging companies, I think this was a wise action. As a result of its caution, the company reduced funding and expanded its runway.
• 99Minutos is a Latin American e-commerce delivery company. We are one of the largest investors in their seed rounds of $ 35 million, and recently raised the $ 82 million C series from Oak HC/FT and Kaszek. According to LinkedIn, the current team members are 915 and are growing. H/T Ed Roman and Anish Acerea for Collaboration on this.

Prodigy digitized car purchase processes, saving customers, and improving trust and satisfaction. This was a quick withdrawal (acquisition by UPSTART), which was able to return LPS five times in 12 months. H/T to Thibault.

2021:

• India's speedy food delivery company Zepto has emerged as a winner of Giga this year. We have invested in their presoads with a $ 13 million pos t-money and recently raised two unicorn rounds. Our funds could only invest $ 25 million (this round was intense in competition and a syndicate assignment was imposed). As a result, this investment is already three times worth the quotary fund (the first quarter of '21), and if the valuation doubled, it would reach the whole of Rolling Fund in 2021. See. Not bad for just three years. In the ten years we are planning to make this investment, we can see Zepto growing into one of the most valuable companies in India, and eventually creates a fairly large return to our LPS funds. H/T to Thibault.~Vaultree is a completely functional data encryption solution that solves permanent data encryption. We are promoting their pr e-spoa rounds and is going very well. They recently announced a product that encrypts the weight of the AI ​​model. H/T to Thibault.
• Community Phone offers simple and reliable telephone services for business. We have invested in them many times, but they are very good with significant revenue growth. H/T: Rohit Taneja.
• Flint is a global healthcare human resource recruitment platform. We invest in their seeds, and after the follo w-o n-rounds led by the to p-class VCs, their traction continues to grow steadily. Vcs. H/T: Safee Shah.
• STEPFUL supports no n-college graduates to train and find an entr y-level healthcare job. They are very good and have rapidly increased their retention since we invested in their rounds. H/t: thibault.
• Albedo produces optical and infrared global observation satellites. The image is higher than any satellite on the market. We have invested in the Bill Gates' energy business. Albedo plans to launch the first satellite into space next year. H/T THIBAULT AND TOMMY LEEP FOR COLLABORATING ON THIS.
• 2022:
• It will still be too early to know what investment has a great influence. But there are some worthless things:

Farcana is a game company that creates hig h-quality thir d-person shooting games in Unreal Engine 5 for PCs, and also includes encryption rewards. They opened tokens earlier this year, and the completely diminished market capitalization of $ 1 billion.

Currently, 66 million dollars have invested in the Rolling Fund for $ 15 million to $ 20 million in both 2022 and 2023 years. The fluctuations in the value of our contract owners are one of the recent fluctuations in the apparent value of portfolios in 2022 and 2023. The value has fallen than before, but the investment amount in 2022 is still quadrupled, and we continue to believe in the future of the company. One issue here is that the sale of tokens for six months is limited. Now that the price is falling (and probably approaching the fair value), we believe it is best to keep i t-at least so far. H/t: thibault.

• Chowdeck is building "Rappi for Nigeria". We first invested in their seed round during YC and recently followed up based on their great traction and growth. H/T: Thibault
• NSAVE (FKA MASREF) is building "Swiss bank accounts for everyone". We invested in their seed round, followed by top VCs and have made great progress since then.
• Altzcor offers a lending-as-a-service toolkit that allows any business in the Latam region to integrate and develop credit products. We invested in their round, followed by top VCs and have made great progress since then. H/T: Ivan Montoya
• Polymath Robotics is developing autonomous navigation for off-road vehicles. We first invested in their seed round during YC and recently followed up and have made great progress since then. H/T: Thibault
• Flagship enables creators to create their own curated boutiques. We first invested in their seed round, joined their subsequent A-Series led by top VCS and they continue to make great progress. H/T: Nikolaus Volk
• Erithmitic is reconnecting commercial real estate lending by leveraging AI and other technologies. We first invested in their round and recently followed up with a strategic round and they continue to make great progress.

3. MISCELLANEOUS THOUGHTS

2023:

With 2023 even longer than 2022, it's too early to tell which of our investments will be home runs. That said, here are a few:

Hapi is building the Robinhood of Latin America. We invested in their Seed+ round and have seen incredible growth in users and revenue since then. H/T: Tiago del Rio

Felix Pago is facilitating instant money transfers through Whastapp in Latin America. We've seen great progress from our investment.

Yola Fresh is reinventing the fresh food supply chain in North Africa. We did their pre-seed and the company has made great progress since then and recently raised a round. H/T: Idris Ijadunola.

RevV makes software for auto repair shops to disconnect and create detailed calibration reports. Just surpassed $4M in ARR.

Title Pippin creates the first national searchable database for real estate titles. We invested in their Seed+ and the company has grown significantly since then. H/T: Walton Ward and T-Bird Capital.

Stella Sleep has a leading application in treating insomnia. It's already done $3 million in revenue. H/T: Thibault.

(First person changed because Peter wrote it)

Buy

You've probably seen this chart a few times, but I think it's the most telling in thinking about the current market season. So, I'm posting it again:

As we've discussed further, we've been disappointed lately that our portfolio hasn't continued its rapid 30%+ annualized gains. This early part of 2019, 2020 and 2021 has felt great - many of our companies have scored quickly and each multiple of our portfolio has 2-3x in 1-2 years. But markets inevitably go through cycles, and we are currently in a downcycle.

The question from the beginning of the recession has been how bad it would get. There was a good chance that we would see the red line in the chart above. A lot of signals would come out and the portfolio would fall in value for a while. So far, we've seen something closer to the blue line, a line where the portfolio has a slight uptrend. It was down this quarter, but it's down about 8% over the past year. I'm grateful we've been close to the blue line so far, and looking forward to finally getting to the other side of the market downturn. Bull markets are a lot more fun.~What's a bit surprising is that the stock market seems to be doing well. The S& P 500 is up 19% year over year:

But what this chart doesn't tell you is that the majority of the returns are coming from a "great seven."

That is, the "market" returns are concentrated in a handful of large companies, while the smaller companies are all struggling.

It's fun to see how the stock market has been acting recently like a venture capital portfolio, where venture capitalists expect a handful of investments to deliver most of the returns. Most will either get zero or be mediocre, while a handful will go crazy and get 100x or even 1000x returns. But I never expected the distribution of returns for large U. S. companies to be such a power law.

I don't think it will last long. The segment repeats the cycle so that the market repeats the rise and fall cycle. Sometimes large companies are professionals, while small caps are professionals. In a sense, emerging companies are "super small caps" (although there are structural differences), and in this way, it is convinced that the venture capital market shows the same performance as the small cap segment in the public market. go. At one point, the pendulum will be shaken, the giant will stagnate, and the growth will return to everything else. There is no tree in the sky.

IRR

You may notice that this year's life IRR is considerably lower than the annual update a year ago.

4. PAST CONTENT

In today's Angellist

It was 34 % and 53 % a year ago. From the end of 2021 to early 2022, it exceeded 100 %. It is 1024 times if 100 % IRR is maintained for 10 years (the minimum period of holding a portfolio in a venture investment principle). This occasionally happens in individual companies, but as far as I know, it has never happened in a fund. The best thing I heard was Chris Sacca's LowerCase Capital Fund I, investing in Uber for $ 5 million, and finally achieved a capital profit margin.

Investors often see high IRRs in the short term and think this should be reproducible. Especially in angel / business investment, a few good investments (especially in bullish generations) are made, and the value of portfolio is generally 2-3 times in a short period of time. As a result, "IRR" is about 50 to 100 %. However, of course, it cannot be sold, and inevitably, the pension declines in a few years. Therefore, the value of the portfolio continues to increase, but the IRR decreases.

Even if the IRR is 34 %, it is still unreasonable to expect it to be achieved as a whole over the long term. Certainly, there are things that can be done in individual funds and vintages-especially if there is "Uber". However, 34 % in 10 years is equivalent to 18 or 7 times, a wonderful return. Compare with this chart, which indicates that even thre e-digit funds are rare in venture capital:

Click here for source. For 1500 mature funds (over 10 years) from 1976 to 2014.

5. APPENDIX

I have a question that I often think: Which is better, which is one of the time you get 100 % IRR or 20 % of IRRs for 10 years? Certainly 100 % is good, but in that case, you have to pay taxes and find another investment. 20 % is 6 times and 2 times for 10 years. On the other hand, 100 % for one year, then (at most 10 %), 4, 7 times.

Also, do not forget the QSBS tax incentives for VC/ angel investment. If you invest early and hold at least five years (after the stock conversion), you will have zero taxes up to $ 10 million per year per investment. In particular, the return after tax is unrivaled.

So I like the early stage project. You can get a lot of money if you keep it for 20 to 30 years, or as my intention. It is necessary to be patient, thoroughly managed, distributed, and knows that the market changes periodically. Accept fluidity and volatility, and get a higher lon g-term return in return. One year is performing well, and in some years, portfolios are rapidly evaluated, and in some years. But overall, we are convinced that it will work very well.

Since the content of the past is aged here, you can easily see it:

LP update for every quarter from last year

Annual LP update information since the start of UV:

Is winter coming? (1/2022)-Our post is calling for the start of a bear market faster than anyone else.

Thank you for reading. We also thank you for your support for unpopular business!

• Portfolio tracking method
• As described in the 4th quarter of 22 years of 22, it is now in line with the SEC guidance that if the fund manager presents the numbers in gloss returns, the numbers after all commissions must be presented. The number is presented. This is a bit difficult for us, because Rolling fund investors provide several commission options and need different calculations. 2 and 20 are the default options, but we offer 1 and 30, and even 6-yea r-yea r-old commitments are 0 and 20. This last option is our favorite (we prefer lon g-term fixed capital), but we recognize that two and 20 years are the standard for the market. Most LP prefers a shorter commitment period.
• Standards along the structure of 2 and 20 fees to give the "net" numbers. To do so, start with the amount actually invested in a company. This is "real", regardless of whether or not the management fee is registered. Then, if all LPs are registered with a 2 % percentage of management fees, we will create the funds raised based on the amount we have invested as "fictional" figures. However, some LPs are contracted without administrative expenses, so this fictional "increase" does not indicate the actual procurement amount. This is simply to calculate the amount that subtracts 2 % and 20 % fees. If the commission system is different from 2 and 20, the net number is also different.
• We also distinguish syndicate and fund investment. Before the fourth quarter of 22, we had both together, which is to measure ourselves, that is, to see if we are making good investments, and the vehicles that come out of the capital. I didn't really like it. However, since the fees for these two entertainers are different, they must be separated to give numbers after deduction.
• Safe cap signal

In addition to incorporating fees, diluting, carrying in calculations, what we do is to display safe caps (both up and down) as different points from other companies.

This is to create more accurate reports. For example, there is a company that procured on e-round shares after one round to reduce the evaluation of safe caps. Angellist has such a company in the latest equity round, but has a low reputation. I do so in the rising direction.

Angelist has this approach with several nuances:

It should be in the speech. Do not count if you apply for a ridiculously high cap (or no cap) or a large discount. The discount is zero or the smallest, the cap is worth the company's progress, and if it is a price round, it is counted only when it is close to the valuation.