Capclarity

15 years on both sides of the GP/LP table. Private markets, capital allocation & the institutional investing world — one clear idea at a time

[Capclarity @Capclarity]

@credistick Great chart. Will be interesting to see if the public demand will be sufficient post listing to support liquidity for VCs in Anthropic, Space X etc

[Capclarity @Capclarity]

@MrFamilyOffice This could be a benefit to a lot of potential heirs. 1. they have to make their own way in the world - making it is far more rewarding than spending from the bank of mum and dad 2. they have a great fallback in later life if things dont work out

[Capclarity @Capclarity]

@IlliquidInsight Agree with this take, not sure how they stick it. Surprisingly there seems to be a much stronger desire for assoicates to work to partner in a law firm than associates and VPs to grind toward MD in banking. Maybe there are just fewer lucrative alternatives for the legal folk

[Capclarity @Capclarity]

@thesamparr Fear of inadequacy is wildly underrated as a motivator. Agree re 7 days a week being unsustainable - lions don't hunt every day. Short bursts of intense focus, then recovery.

[Capclarity @Capclarity]

@IlliquidInsight This would be a much better outcome for the individuals but for the banks, mega PE etc they have a very specific profile and set of skills they are looking for. Can see why they follow this structured process

[Capclarity @Capclarity]

@credistick Great piece. I put more blame on the LPs than the VCs. Every time a pension fund re-upped a megafund with zero DPI and a PowerPoint of markups, they funded the next decade of fee extraction. The 2 and 20 model only works as designed when the 20 matters.

[Capclarity @Capclarity]

Excellent list of reading material for those looking to leverage AI. Avoid the anxiety around AI displacement by getting stuck in!

[Nicolas Cole 🚢👻 @Nicolascole77]

Yesterday, I locked myself in my office for 7 hours, inhaling 50+ articles about AI.

I did this to unlock more bandwidth for my team.

But these 7 were too good not to share:

[Capclarity @Capclarity]

@BoringBiz_ Fully agree. Until your net worth is >1m there is much more benefit in investing in yourself and putting financial investments into an ETF. This is arguably a better strategy for many with 8 and 9 figure net worths also!

[Capclarity @Capclarity]

@myfirstmilpod @MohnishPabrai Looking forward to listening @MohnishPabrai is the GOAT!

[Capclarity @Capclarity]

This is one of the more reasonable takes I've seen on this. As a generalisation I tend to seee less focus on financial engineering / cost optimisation at the lower end of the market with more focus on increasing topline growth and driving value. For a large scale business thats been through 2-3 PE owners, its harder to find too many positive examples

[Capclarity @Capclarity]

What an absolute banger! Longer breakdown and key takeaways to follow

[Patrick OShaughnessy @patrick_oshag]

This is my sixth conversation with @GavinSBaker.

As always with Gavin, the conversation covers a lot of ground, but we spend the most time on watts and wafers.

We discuss:
- Why the wafer shortage may prevent an AI bubble
- Data centers in space (reframed)
- Elon's Terafab and the new chip companies challenging Nvidia
- Usage-based pricing
- The disaggregation of GPUs
- DRAM, frontier tokens, and open source

Enjoy!

Timestamps:
0:00 Intro
7:55 Anthropic and OpenAI Valuations
12:58 Watts, Wafers, and Infrastructure
14:39 Orbital Compute and Data Centers in Space
22:49 Avoiding the AI Bubble
28:26 Terafab and the Future of US Manufacturing
32:16 Returns to the Frontier
37:23 Continual Learning
42:03 New Chip Companies
48:52 Extending GPU Lifespans and Private Credit
51:22 The Application Layer
57:32 The Token Path and Open-Source Dynamics
1:01:37 Cybersecurity
1:05:46 Diversity Breakdown
1:11:59 Assessing the Big Tech Players in AI
1:19:02 Geopolitics, Personal Safety, and the AI Horizon

[Capclarity @Capclarity]

@HarryStebbings The risk reward now skews heavily to joining a well funded private company 2-3 year out from IPO at even mid levels vs being say employee no 5-10 at a startup.

[Capclarity @Capclarity]

@JulianKlymochko Has anyone consistently made money from shorting over the last decade? It seems tortous with negative asymmetery

[Capclarity @Capclarity]

@pavelprata @SpaceX Incredible - in absolute $ terms the largest venture outome of all time? the post from Damodaran on how to value SpaceX is well worth a read
https://t.co/AgP1FfLjnO

[Capclarity @Capclarity]

Nailed it. The shift from asset-picking to asset gathering has fundamentally altered late stage risk profiles. When a GP’s primary metric becomes deployment velocity to justify a mega-fund size, "venture" becomes a misnomer.

The Gornall/Strebulaev data on common stock overvaluation (56%) is telling. Founders and employees bear the brunt of this structural inflation while structured terms insulate the top of the stack. True venture requires capital scarcity to breed discipline.

[Capclarity @Capclarity]

Good news, with caveats.
The EU picking EQT for the €5bn Scaleup Europe Fund is the right kind of signal. A serious manager, a real LP coalition (Novo, Allianz, Santander, APG, Wallenberg, CriteriaCaixa), Commission anchor capital. After a decade of conference talk about the scaleup gap, this is what institutional Europe stepping up actually looks like.
It's also not the fix.
Capital was never really the binding constraint at Series B+. The exit picture hasn't moved. European winners still drift to a US listing or get bought by a US strategic before they get there. Scaling across the single market is still 27 different rulebooks. European pension and insurance pools still aren't flowing into growth equity at anything close to US ratios.
A €5bn fund isn't a panacea but does put real institutional money behind a problem that's been talked to death and underfunded. That's worth something.
Longer piece coming on what EQT actually has to deliver and which structural pieces have to move alongside for this to matter.

[Seb Johnson @SebJohnsonUK]

EQT has just been chosen to manage the €5bn European Scaleup Fund.

All I can say is THANK GOD the European Commission finally made its mind up.

The decision has been dragging on (in very european fashion) for months.

It's now been decided that @tedpersson and Victor Englesson will co-lead the fund.

@eqt has €269 billion in total assets under management, and has invested in companies like Lovable, Parloa, Nothing, and the The Exploration Company.

The Fund will invest across the EU and other countries in European technology scaleups, across digital systems, industrial systems and life sciences, from Series B onwards.

EQT and Atomico were the final two firms in the running to manage the fund.

I would love to hear what VCs think about it - either publicly or privately!

[Capclarity @Capclarity]

@gregisenberg Powerful list

[Capclarity @Capclarity]

This. The IRR-to-DPI rotation will be the most painful repricing in VC since 2002.
Secondaries already tell the story. Average VC NAVs trade in the 60-70c range. Top decile at par. That spread is the leading indicator. Most LPs aren't in the funds holding the top 25-30 names. They're sitting on mid-tier books, rich paper marks, no realisations.
NAV facilities and continuation vehicles are the cope. Don't generate DPI, just defer the conversation. Re-up season is going to be brutal.

[Capclarity @Capclarity]

@JulianKlymochko Agreed on the fundamentals - the lurking risk here is the refi. Until sentiment changes late-stage software refis fight that headwind regardless of how clean the fundamentals look.

[Capclarity @Capclarity]

@sourceryy @vladtenev I like the sentiment of giving retail more access but would need right structure around it. The majority of these companies will fail and while there will be great successes for some this wil be more than offset by losses from punting on individual AI plays