samir kaji

CEO of Allocate ( Host of the Venture Unlocked podcast, My opinions are mine, and not related to Allocate.

[samir kaji @Samirkaji]

I talk to thousands of LPs every year. Here's what I'm seeing right now when it comes to how they're approaching VC.

1) Late-stage co-investments have never been hotter. The top 5-7 names have effectively *unlimited* demand. And that supply/demand imbalance has created three real issues:

First, the question of *true* access. Many of the SPVs floating around for these companies are not sanctioned by these companies. Buyer beware. These companies are tight on their cap tables, and access can be gated beyond just capacity.

The fee creep is getting egregious. Someone shared with me recently that for a top AI lab, a group was charging 15% upfront, 20% carry, and 30% over a 2X. At those economics, you can take what would be a generational company but a bad investment. Fees are the silent killer of returns in late-stage co-invest, and this risk is now being focused on the logo, but ignoring the fee effects.

Additionally, for those who aren't getting access to the top companies must go a tier (or two) below. Very dangerous in a high-intensity / valuation market for AI. As I've mentioned, there will be a lot of expensive mistakes made as we figure out what winners will look like in the future.

2) Capital is flowing to large, established brands. This is the clearest trend right now. LPs are concentrating on the top multi-stage and Series A firms. The logic is straightforward: these are easier to underwrite, and given how extreme the power law has become, investors want exposure to the trophy assets soon after investing. If you're a top 10-20 brand, you're oversubscribed, sometimes in multiples. If you're not, the fundraising environment is a different world.

3) Emerging and emerged managers are in the toughest spot, with a notable exception. Spinouts from top firms and operators with strong brands are moving fast and generally very oversubscribed.

For everyone else, the bar has never been higher. I think this is actually where the opportunity is for LPs If they have the time/expertise to do so.

The issue isn't that LPs don't know this. Most do. The problem is twofold: the time and difficulty of sourcing and diligencing emerging managers is real, and the hangover from 2019-2021 is still very present. A lot of people tried VC during that era who probably shouldn't have, and the failure rate on those Fund 1s has made the entire segment harder to navigate. Matching supply and demand here has become nearly impossible. Supply (Managers) far exceeds demand due to the issues noted.

[samir kaji @Samirkaji]

Stories like this are what founders talk to each other about all the time. Every single round, we've had some variation of a bad experience with an investor.

1) Seed round: One investor said, "We don't think ex-bankers can be entrepreneurs".

2) Series A: Large firm meeting; they send their most junior person, who spends 80% of the time talking about themselves and other companies, and at the end, with 5 minutes left, says, So, what do you do again?

3) Series B: Asked for 4 meetings, 6 different asks for additional models (which we had to custom build), and then just went silent. No pass note, no acknowledgement.

Founders don't forget those experiences.

[samir kaji @Samirkaji]

The gap between great VCs, good VCs, and mediocre VCs has never been greater. It's not obvious in numbers yet, but the 2022-2025 vintages likely will have the biggest dispersion of returns we have ever seen in the asset class.

[samir kaji @Samirkaji]

@abdrahmanbid Use it for fuel ;)

[samir kaji @Samirkaji]

Stories like this are what founders talk to each other about all the time. Every single round, we've had some variation of a bad experience with an investor.

1) Seed round: One investor said, "We don't think ex-bankers can be entrepreneurs".

2) Series A: Large firm meeting; they send their most junior person, who spends 80% of the time talking about themselves and other companies, and at the end, with 5 minutes left, says, So, what do you do again?

3) Series B: Asked for 4 meetings, 6 different asks for additional models (which we had to custom build), and then just went silent. No pass note, no acknowledgement.

Founders don't forget those experiences.

[Matthew Prince 🌥 @eastdakota]

Two of our worst VC stories:

1. A Sequoia partner passed on Cloudflare because he didn’t think a woman could lead a security infrastructure company. Seriously. 🙄

2. I got introduced to @pmarca. Meeting got scheduled for a Monday, which should have been a clue. I thought it was just a casual meeting. He thought it was a pitch and brought the whole @a16z partnership team. Hilarity ensued. 🤪 At one point one of them said: “You don’t seem very prepared.” Which was true because I wasn’t. I framed the rejection letter they sent.

[samir kaji @Samirkaji]

@JayKapoorNYC Don’t think this is a good take (as written). The narrative should be original but Claude design is a huge time saver to allow founders for other higher value stuff. If it’s slop it’s one thing but it’s helped us immensely

[samir kaji @Samirkaji]

@monty10x This is a terribly constructeed list. Dated and some of the companies listed (ContextLogic for Yuri, as his top company lol).

[Turner Novak 🍌🧢 @TurnerNovak]

New @ThePeelPod live from Allocate's Beyond Summit

I asked 15 investors to give me their spiciest take.

Thanks to @numeral, @FlexSuperApp, and @Amplitude_HQ for sponsoring this episode!

Timestamps
1:22 Seed investing is dead (@thistrippjones)
5:56 Seed is not dead (@BRosenblatt4)
13:19 Most consensus era of VC ever (@naywilliams)
18:02 Taking the Power Law Pill (@pratyushbuddiga)
29:15 The 2nd-time founder premium is dead (@mattybcohen)
32:46 AI will crush intelligence labor
42:25 New deep tech investors will lose their shirts (@sunilnagaraj)
46:39 ChatGPT for robotics is still 15 years away (@josungjoon)
52:07 The app layer ARR reckoning
58:30 The AI bubble will pop in Q2/Q3 (@amiasmg)
1:08:22 Most individuals invest in VC wrong (@jonoberheide)
1:15:25 Allocators have become too allocator-y (@federdan)
1:20:55 LP’s should value information, not just returns
1:24:09 Upcoming litigation of Russian doll SPVs (@ashercdkey)
1:30:13 Why retail needs private market access (@SPintoPeyronel)

[samir kaji @Samirkaji]

@jrichlive @DanBochman It’s a lazy, engagement bait tweet.

[samir kaji @Samirkaji]

True that a lot of AI companies are way overvalued. This happens every time a new super cycle emerges.

But two things are usually true - euphoria creates expensive mistakes, but using the past as proxy is linear thinking which had proven not to be a great way to evaluate iconic companies.

Winners are always bigger every super cycle. A small pct of companies (like anthropic) redefine ceilings. There will be at least a handful of 10T market companies by 2030. We will see a lot of bumpiness in the interim.

Btw I hate these posts which never account for growth rates, adoption, and exponential curves (this is coming from someone that worked the front lines during the dot com bubble so I am s skeptic at heart still)

[Dan Bochman @DanBochman]

Anthropic is being valued near $1T on a $47B annual revenue run-rate.

For context, here is what other software, internet, and platform companies looked like when they first crossed $1T in market value:

Apple crossed $1T in 2018 with about $229B in annual revenue. Its active installed base had already passed 1.3B devices, giving it one of the largest consumer distribution layers in the world.

Amazon crossed $1T in 2018 with about $178B in annual revenue. It was approaching roughly half of U.S. e-commerce, while AWS had become a major cloud infrastructure business.

Microsoft crossed $1T in 2019 with about $110B in annual revenue. Its commercial cloud business had already reached more than $23B in annual revenue across Azure, Office 365, and other enterprise cloud products.

Alphabet crossed $1T in 2020 with about $162B in annual revenue. Google still controlled roughly 90% of global search, one of the highest-intent advertising markets online.

Meta crossed $1T in 2021 with about $86B in annual revenue. Its family of apps reached more than 3.3B people monthly, creating one of the largest attention and advertising networks ever built.

*Run-rate revenue is not the same as audited annual revenue.

**AI companies have different cost structures than classic software and internet businesses.

[aileenlee @aileenlee]

At the #allocatebeyondsummit watching @Samirkaji in convo with @mamoonha. Giant kudos to Mamoon, @ilyaf & team @kleinerperkins for how they have stewarded the mantle of a a legendary instution so successfully. Generational transition is not easy, and Mamoon has led with brilliance and humility. Big big respect and appreciation 🙏

[samir kaji @Samirkaji]

I lost my mother in 2010 to pulmonary fibrosis and miss her every day. Today is a special.

Moms are so special and never take them for granted. Happy Mother's Day, everyone!

[samir kaji @Samirkaji]

There may be 1T+ of demand for Anthropic for this (potential) round. Seeing so much broker activity claiming to have access (I've gotten at least 30 emails this week). Buyer beware. Companies like this are very tight on their cap table, as they should be, and many of these groups are very risky to try to get access.

But I have never seen a private company stop the entire world the way Anthropic does when there are reports of a potential round.

[samir kaji @Samirkaji]

@NWischoff @TXZhuo Fika is awesome but only…..hmmm,

[samir kaji @Samirkaji]

There may be 1T+ of demand for Anthropic for this (potential) round. Seeing so much broker activity claiming to have access (I've gotten at least 30 emails this week). Buyer beware. Companies like this are very tight on their cap table, as they should be, and many of these groups are very risky to try to get access.

But I have never seen a private company stop the entire world the way Anthropic does when there are reports of a potential round.

[samir kaji @Samirkaji]

@KiteVC @zlwaterfield @Zoom @AnthropicAI It’s not even close.

[samir kaji @Samirkaji]

Fundamental Truths in VC today (as I see them)

1/ The barbell between large and small firms is as wide as it's ever been. These are genuinely two distinct asset classes now, and LPs should treat them that way.
2/There is no portfolio construction model, whether concentrated or diversified, that rescues a bad portfolio. Construction can extend the right tail and reduce left tail risk, but GPs still have to be in great companies. What the right model looks like depends entirely on where you operate (seed vs. early vs. growth) and what your strengths are (sourcing, access, expertise).
3/Some SPV operators raising capital into the top 5 consensus growth stage names will make more in fees over the next five years than most smaller seed GPs will make in fees/ carry. I ran into someone who has deployed ~$1B at 5% one-time fees and 15% carry -- In the last 12 months.
4/ The valuation gap between AI and non-AI companies is widening fast, and it's most visible at Series C, when category winners start to emerge, and large capital concentrates quickly.
5/From 2022 to 2024, growth VC was ignored. That was a mistake. Prices had come way down, and AI was in its early innings. Now the LP pendulum has swung entirely to growth, but concentrated into consensus names. Given how much these companies can raise, it's not unusual to see a large fund with only 5 to 8 positions.
6/The mid to large end of VC is increasingly taking cues from PE: secondaries, multi-product platforms including PE and credit, and heavy reliance on the wealth channel. The lines are officially blurred.
7/There is a lot of gamesmanship in ARR reporting. Founders are trained to show growth to maintain expectations and valuations. This is getting dangerous and will not end well for many of these companies.
8/No one actually knows how the next few years play out with AI. The honest truth: foundation model companies still need to find a path to sustainable margin, application layer companies are watching moats erode faster than they can build them, and the infrastructure buildout assumes demand that is still largely theoretical. The people who sound most certain are usually the most invested in a particular outcome being true.
9/Investing at $50M to $100M pre-money at seed only works mathematically if you assume you're getting into companies that exit at $10B or more. That's not impossible, but it's not easier just because everything feels hot. We saw exactly this loop play out in 2021. LPs should be asking harder questions about whether the seed funds they're backing are optimized for outcomes (3x or higher).

[samir kaji @Samirkaji]

@scott___ttocs 5-7 firms

[samir kaji @Samirkaji]

Fundamental Truths in VC today (as I see them)

1/ The barbell between large and small firms is as wide as it's ever been. These are genuinely two distinct asset classes now, and LPs should treat them that way.
2/There is no portfolio construction model, whether concentrated or diversified, that rescues a bad portfolio. Construction can extend the right tail and reduce left tail risk, but GPs still have to be in great companies. What the right model looks like depends entirely on where you operate (seed vs. early vs. growth) and what your strengths are (sourcing, access, expertise).
3/Some SPV operators raising capital into the top 5 consensus growth stage names will make more in fees over the next five years than most smaller seed GPs will make in fees/ carry. I ran into someone who has deployed ~$1B at 5% one-time fees and 15% carry -- In the last 12 months.
4/ The valuation gap between AI and non-AI companies is widening fast, and it's most visible at Series C, when category winners start to emerge, and large capital concentrates quickly.
5/From 2022 to 2024, growth VC was ignored. That was a mistake. Prices had come way down, and AI was in its early innings. Now the LP pendulum has swung entirely to growth, but concentrated into consensus names. Given how much these companies can raise, it's not unusual to see a large fund with only 5 to 8 positions.
6/The mid to large end of VC is increasingly taking cues from PE: secondaries, multi-product platforms including PE and credit, and heavy reliance on the wealth channel. The lines are officially blurred.
7/There is a lot of gamesmanship in ARR reporting. Founders are trained to show growth to maintain expectations and valuations. This is getting dangerous and will not end well for many of these companies.
8/No one actually knows how the next few years play out with AI. The honest truth: foundation model companies still need to find a path to sustainable margin, application layer companies are watching moats erode faster than they can build them, and the infrastructure buildout assumes demand that is still largely theoretical. The people who sound most certain are usually the most invested in a particular outcome being true.
9/Investing at $50M to $100M pre-money at seed only works mathematically if you assume you're getting into companies that exit at $10B or more. That's not impossible, but it's not easier just because everything feels hot. We saw exactly this loop play out in 2021. LPs should be asking harder questions about whether the seed funds they're backing are optimized for outcomes (3x or higher).

[samir kaji @Samirkaji]

@mattob @pitdesi @CaplightData Very little. Anthropic has bids but not a lot of sellers. None last time I looked.

[samir kaji @Samirkaji]

Truth about venture today

We are in peak AI fomo.

Growth trajectory drowns out legit durability concerns of most AI companies

Family offices playing direct / co invest instead of funds, almost at any cost for top companies. Anthropic is the hottest asset of all time and fees are getting unethical.

Vcs know the market is nutty but incentives matter; quick markups, easier raises, and get the right one and the inevitable failures don’t matter (or they do but it takes awhile).
One anthropic and you are minted for 10+ years. Even lesser companies can king make someone. This is where irrational becomes rational.

Companies growing 2-3x per year largely ignored if a 10x year isn’t clearly coming next. Benchmarks are completely distorted on what’s fundable.\

This is like the internet on steroids. Tech shift is real and it’s inevitable but investing behavior is similar to past cycle - too much, too fast.

Winners will be 10-100x bigger but most investors will incinerate tons of capital hoping for the golden goose.