When IVP recently announced the closing of its 18th fund, I called Eric Liau, the growth-stage firm's longtime general partner, and asked him a few questions. First, squeezing out $1.6 billion in capital commitments from investors at this point will seem much more difficult than attracting commitments during the frothy 2021 period, when IVP announced a $1.8 billion business plan.
I also wondered about IVP's successor. IVP includes his Figma and Robinhood, whose founders and early investors still cast a large shadow over the company, both figuratively and literally. Fortune magazine recently noted that photos of the company's founder Reid Dennis remain scattered “all over IVP's San Francisco office.” Meanwhile, photos of former general partners and current “advisory partners” Todd Chaffee, Norm Fogelson, and Sandy Miller appear among the company's general partners on the company's website. There is less room for the current generation, at least visually. .
Last but not least, I wanted to talk to Liaw about Klarna, the portfolio company that made headlines last month when behind-the-scenes disagreements over who should sit on the board leaked into the public domain. I was there. Below is a portion of the chat, edited for length and clarity. You can listen to the longer conversation as a podcast here.
Congratulations on your new fund. Now you can spend two months with peace of mind! Was this funding process more or less difficult given the market situation?
It was truly a turbulent period overall. If you really rewind the clock, in 2018, when we raised his 16th, that was a “normal” environment. In 2021, which was not a normal environment, I grew it a little larger. One thing I wish we didn't do was raise an excessive amount of capital for our strategy and deploy it very quickly. This is what others in our industry have done.So [we’ve been] It's pretty consistent.
Did you receive money from Saudi Arabia? In doing so, it became more accepted and more widespread.Please, I'm curious [Public Investment Fund] New or existing LP.
We don't typically comment on our LP base, but we don't have any capital from that region.
Speaking of the area, you've been in the Bay Area for a number of years. He earned two degrees from Stanford University. You are in London now. When and why did you take such action?
We moved about 8 months ago. Actually, I've lived in the Bay Area since he came to Stanford as an undergrad when he was 18 years old. That was more years ago than I'd like to admit at this point. But for us, expanding into Europe was an organic extension of the strategy we have been pursuing. We made our first investment in Europe in 2006 in Helsinki, Finland, in a company called MySQL, which was later acquired by Sun. [Microsystems] It was $1 billion when it wasn't normal. In 2013, we invested in Supercell, also based in Finland. In 2014, we became an investor in Klarna.and [at this point]Currently, our European portfolio consists of approximately 20 companies. This is approximately 20% of our active portfolio and spans 10 countries. I felt that keeping my feet on the ground was the right choice.
There was a lot of drama around Khurana. What did you think of The Information's coverage? [former Sequoia investor] Michael Moritz vs. [Matt Miller]a Sequoia partner who most recently served as president of the company, has since been replaced by another Sequoia partner, Andrew Reed.
We are a small investor in Klarna. We are not active in discussions at board meetings. We are excited about their accomplishments. In many ways, they experienced the worst of both worlds. They file publicly. They are the subject of much scrutiny.Everyone can see their number, but they don't have the currency [i.e. that a publicly traded company enjoys].I think [CEO and co-founder] sebastian [Siemiatkowski] is becoming more open about the fact that it will become a public entity at some point in the not-too-distant future, and we're looking forward to that. If the reports are accurate, I don't think a motive can be substantiated. I don't know exactly what happened. I'm really glad he can forget about them and focus on business.
You and I talked about different countries and their respective strengths. We talked about consumer startups. This reminds me of the French social network BeReal. BeReal is reportedly currently seeking Series C funding or could sell. Has IVP had a negative impact on the company?
We've looked into them in the past and talked to them, but we're not investors right now, so we don't really know what their current strategy is. I think social things are difficult. The prize money is huge, but the road to get there is quite difficult. Every few years, I think a company can gain a foothold even with the strength of Facebook-slash-Meta. Snap continues to have strong pull. We invested in Snap very early on. Discord has carved out its own space in the market. It's clear that TikTok has done some pretty transformative things around the world. The prize is big, but getting there is hard. That's part of the fund's agenda, investing in consumer apps, and that's what we've been doing. [figuring out] Which of these rocket ships will have enough fuel to break through the atmosphere and which will return to Earth?
Regarding your new fund, that Fortune article pointed out that it was not named after the company, as evidence that it was created to outlive founder Reed Dennis. But the company also noted that Dennis' photo is ubiquitous, and that IVP's site features other people who are past partners and current advisors to the company very prominently. IVP talks about creating space for younger partners. I doubt if that's actually happening.
Without a doubt, it's happening. We have a strong culture and tradition of providing career people with opportunities to advance within the organization to the highest levels of general partnership. I'm lucky to be an example of that. So do many of my partners. This is not just a path for companies, but a real opportunity for people.
We have no managing partner or CEO. We believe that when people come into the company, serve the company and our LP, and also reach different points in their lives and careers, they can take a step back and move on to something else, and by definition have more room. younger people, who are reaching the prime of their careers, are responsible for helping move the system forward.
May I ask you something? Do these advisors still receive carry?
Feel free to ask, but I don't want to get into economics or that dimension.Therefore, I will quietly decline your request. [that question]. However, we highly value their input, advice and contributions to the company over the years.
There's clearly been a valuation reset in all the companies that don't seem to be large language modeling companies, which is a lot of companies. Doing so would give us easier access to top companies, but I think it would be to the detriment of some of our existing portfolio companies. How is the company getting through this situation?
When it comes to companies raising capital, I think the most promising companies will always have options and there will always be competition for those rounds, so those rounds and their associated valuations will always feel expensive. I don't think anyone has ever achieved great results in a venture and felt, “Wow, I got a good deal from that deal.'' You always feel a little uncomfortable. But a belief in what the company can become offsets that discomfort. That's part of the fun of this job.