Ben Black, co-founder and managing director of Akkadian Ventures, shares insights into the venture capital secondary market. He highlights the distinct approach Akkadian Ventures takes, focusing on businesses with proven customer economics and strong technology moats. Ben elaborates on their strategy of gradually increasing positions and leveraging discounts from secondary investments. He also discusses the evolution and growing importance of secondary markets as startups stay private longer and new liquidity models develop. Ben also talks about Raise Global, a platform he founded to support emerging venture managers.
Ben Black, co-founder and managing director of Akkadian Ventures, shares insights into the venture capital secondary market. He highlights the distinct approach Akkadian Ventures takes, focusing on businesses with proven customer economics and strong technology moats. Ben elaborates on their strategy of gradually increasing positions and leveraging discounts from secondary investments. He also discusses the evolution and growing importance of secondary markets as startups stay private longer and new liquidity models develop. Ben also talks about Raise Global, a platform he founded to support emerging venture managers.
In this episode, you’ll learn:
[1:39] Silicon Valley thrives on meritocracy, where anyone with ambition, talent, and hard work can quickly connect and succeed regardless of their background.
[4:41] To succeed, emerging managers must proactively create their own opportunities, rather than waiting for them to be given.
[6:46] What is the venture capital secondary market? How is it developing, and what impact does it have on the broader VC ecosystem? What does the future hold for secondary investments?
[12:27] Key strategies for investing in the secondaries market
[22:00] The evolution and impact of Raise since its inception.
The non-profit organizations that Ben is passionate about: Mind The Gap
About Ben Black
Ben Black is a co-founder and managing director at Akkadian Ventures. He has extensive venture capital experience, having previously worked as an investor at Maveron, Rosewood Capital, New Cycle Capital. As an entrepreneur, Black served as vice president of corporate development at Harris Interactive, driving its transformation into a leading internet-based market research firm and leading to a successful IPO. He also co-founded Raise Global to facilitate connections between emerging fund managers and capital partners, enhancing investment opportunities in the venture space.
About Akkadian Ventures
Akkadian Ventures is a Silicon Valley-based direct secondary investment firm that offers liquidity to early employees and investors of venture-backed businesses. For more than a decade, Akkadian has pioneered secondary and opportunistic investments in growth-stage technology companies.
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If you want to have business relationships that are really powerful, be with people when they're starting their business. If you help them start their business, if you help push them along, if you're a little wind in their sails in their first year, they will remember that forever and they will think kindly of you forever.
I can't go be important to Mr. Megafund person. They don't need me. But I can be important to an emerging manager.
[00:00:30] Gopi Rangan: You are listening to The Sure Shot Entrepreneur - a podcast for founders with ambitious ideas. Venture capital investors and other early believers tell you relatable, insightful, and authentic stories to help you realize your vision. Welcome to The Sure Shot Entrepreneur. I'm your host, Gopi Rangan. I'm here with Ben Black. Ben Black is the co-founder and managing director at Akkadian Ventures.
He also started Raise. Raise Global is an event that supports emerging managers and brings limited partners and emerging managers together. We're going to talk more about that. We'll also talk about Akkadian Ventures, the venture capital firm based in Silicon Valley, investing in startups and secondaries.
Why does he do that? Why is it exciting? We're going to talk about that as well. Ben, welcome to The Sure Shot Entrepreneur.
[00:01:30] Ben Black: Thanks for having me. It's great to be here.
[00:01:32] Gopi Rangan: Let's start with you. You grew up in Rochester, New York, and now you live in San Francisco. How did that transition happen? How did you start as a lawyer and now you're in the investing world?
[00:01:45] Ben Black: Well, I grew up in Rochester, New York and one of the things about growing up in Rochester, New York is if you're ambitious, you want to leave. I mean, it's a perfectly nice place to grow up; nothing bad about Rochester. But I graduated from law school in 1997 and then clerked for a year and I was looking around the country about where I wanted to go live. I actually had accepted a job in Washington DC and I came to San Francisco on vacation and I had exactly one friend. Her name was Donna Sikulski. At the time she was working in Netscape's PR department. We went out and we had a beer.
She's the only person I knew here. And she's like, "Ben, why would you want to go be a lawyer in Washington, DC? You're going to end up living your life, working for the government and like probably settle in Bethesda." She said, "everything's going to happen in San Francisco. The internet's going to change everything. You got to come here." And I thought about it. I go back and I thank that 27 year old boy who is, you know, impulsive and unreasonable. And I turned down my $150,000 job, which I thought was the more money I'd ever imagined in my entire life and I came out to San Francisco to find a job out here. And it was, you know, 1998. It was a good time to come.
So that was a very good move on my part.
[00:02:58] Gopi Rangan: Now, if you're ambitious, Silicon Valley is the best place to be.
[00:03:01] Ben Black: It is the best place to be. I love Silicon Valley, you know, for all the people who complain about the Bay area, I always say there is no place in the world like it, where nobody cares who your daddy is.
Nobody cares if you can come from anywhere and if you're talented and you're ambitious and you're hardworking, and you know people, and you're smart, this town will just embrace you. And that's been my experience. I've been really lucky. I mean, within three years of being here, I went from knowing nobody to, you know, presenting to Warren Hellman and Meg Whitman at my first VC job. Like it was a crazy run. I was like, this is nuts. So I'm very thankful for San Francisco and I'm never leaving. I'm a lifer.
[00:03:38] Gopi Rangan: Although some things have changed, the spirit of Silicon Valley is that “come here, settle in, and if you really want to get in touch with anyone, you can make your way and find that connection, be in front of that person in a matter of weeks, if not months.” That is typically not possible unless you had strong connections or you came from certain families, and that's not true in Silicon Valley, and it is still true today, although Silicon Valley has become way bigger, and there are a lot more people. It's harder to get to people, but it's yeah,
[00:04:09] Ben Black: I'm 55 years old, like, you know, there's a tendency for us all to go back in 2008 when we had the great financial crisis. The big firms like excel at NEA were the monster firms and they were still like basically three or 4 percent partnerships who really made the decisions.
And it was very much a cottage industry, you know, for 2000 to 2010, everyone wanted to talk about hedge funds and everyone to talk about big private equity firms and venture capital is just a boring asset class. And now it is absolutely so massive, and these institutions like the, you know, the megafunds are so huge compared to everything else.
That's been a really fundamental change.
[00:04:50] Gopi Rangan: You were at a few other firms like New Cycle Capital and some others, and eventually you decided to start your own firm, Akadian Ventures, about 15 years ago. What was the genesis? What was your thought process at that time?
[00:05:02] Ben Black: So I had done sort of seven years in venture.
I was at Rosewood Capital, and then I was working for Howard Schultz's firm, Maveron, up in Seattle. And Howard actually said something to me that really stuck with me. He said, " whenever you're in your career, you really want to ask yourself, are you putting yourself in a position to win?"
It got pretty clear in the venture business that if you wanted to put yourself in a position to win, you kind of couldn't wait around and expect somebody to hand you the golden key and give you partnership level carry. That was just something you had to go take for yourself.
So I had a meeting that was crazy. It's like the most Silicon Valley story ever to make a long story short. I'd done this one deal. That was a very interesting deal. While I was at Maveron. Actually, Maveron didn't invest in it, but I put it together on the side cause Maveron didn't want to do it.
Andy Rappaport, who's one of the original guys from August Capitol. He heard about this deal and basically like asked to meet me. He's been long retired now, but he's a legendary VC and and he basically like had dinner with me. I told him all about this deal and he said, " I love this.
This is such a great deal, such an interesting deal." And he actually wrote me a check to get my own firm started. And that was New Cycle Capital. And that was a seed fund. You know, it's like doing double bottom line investing in 2007. We like very early on the whole mission related impact investing. 2007 we want to raise $26 million. Me and Josh Becker, who's now a state senator from Menlo Park, and we raised $26 million, which is by the way, like, that's like a first micro fund. Like that's, that's a thing. Like we raised $26 million. Our largest investor was a public company called Mini May.
So we, raised $26m and then $15m of it was like, we had a lot of problems collecting, let's just say that. And it was a mess. Josh decided he wanted to go run for office. So then I was stuck running a 10 million micro fund myself with seven investments that we had made.
But thank goodness. One of them was a company called Opower that we ended up doing 70 X on and doubled the whole fund. But I was like, oh my gosh. By 2010 I was just like managing myself through this mess. And I discovered secondaries and I was like, "oh man, this is a very interesting business" and a lot of ways was, I thought, more interesting than a small seed fund was. So that's why I started Akkadian. Uh, it was basically like to give myself a job after my mess of a seed fund, New Cycle Capital . So that's how we got going. In 2010, we did our first secondary, and now we've done close to 800 of them.
[00:07:15] Gopi Rangan: The secondaries is a very wide market. Can you describe what is secondaries and what part of the secondaries world you operate in?
[00:07:23] Ben Black: So, when I started in 2010, like the idea of getting early liquidity at companies just didn't exist. We started doing a small scale back then, basically just buying out early shareholders and sort of high growth technology companies at the growth stage.
So you have the secondary market, just to sort of level up a little bit. The largest part of the market by far is LP secondaries, which are people who have been in VC funds and large institutions come out and they basically buy very mature VC assets that are still liquid. And that's firms like Lexington can do this to the tune of billions of dollars.
Then you have, what we do is just direct secondaries, which is providing liquidity to companies and to shareholders or private companies. And the way I look at it is like, you know, it's a very niche way to play growth. Our average revenue in our portfolio is something like 60 or 70 million companies we're buying out.
Sometimes we're doing the whole company liquidity programs. Sometimes we're buying out founders. Sometimes it's a transaction. Sometimes it's option exercise loans. And it's really a way to build a position over time in your best companies, rather than like going into the primary, where you're just investing in a series B, series C, series D, and then that's a one off transaction.
You wait around till you can sort of buy more. Secondaries are just, there's a lot of complexity to them. You know, we do lots of little tiny deals. You have to be really set up from the get go to be good at doing them. But at the end of day for our investors, we're targeting a portfolio of growth companies. And a lot of times we enter even on a primary. We really want to build up our positions and have a heavily concentrated portfolio. So our current fund, $300m fund, we have 15 material positions in it, but we use secondary to like very much focus our capital on our best two or three companies.
So it's a large percentage of the portfolio. And, you know, it's just a different way to play growth. It's got some real advantages. It's got some disadvantages, but I wouldn't invest any other way.
[00:09:04] Gopi Rangan: The secondaries is playing a very important role in this ecosystem. There used to be a time when startups went from founding to IPO in five, six, seven years, and at the time, Series A used to be the first round of funding.
That's why it was called Series A. Now there's seed round, there's pre seed round, and angel round, and accelerators. And Series A has become the fourth or fifth round of funding. And on the other end, companies stay private longer and longer and longer. They would go IPO when they had a line of sight to get to a hundred million dollars in revenue.
But now these companies stay private even with billions of dollars in revenue. It takes a long time for a startup to go from founding to IPO or even other types of liquidity events. That's like 10, 12 plus years.
[00:09:50] Ben Black: Yeah, even more.
[00:09:51] Gopi Rangan: Therefore, secondaries has become such an important piece of the ecosystem.
It really brings liquidity to the market, to founders, early investors, early employees, and others. Being illiquid for decade plus is very difficult for any investor. How do you see this playing out in the future? What's the future for secondaries?
[00:10:12] Ben Black: So the thing that is really fascinating that people aren't talking about right now is yes, we know that every time there's a new cycle, the bar to get public gets bigger and bigger.
So now people have been saying you need $500 million of revenue to go public. We have four companies in our portfolio that have more than $500m of revenue and they're still private. And I cannot believe it's still private. One I've been in for like 12 years. I'm ready to hit the sell button myself on that one the first chance I get. But let me tell you why it's going to be even worse. What people are not talking about is there've been four recent transactions that I think are real harbinger for how much longer it's going to take for companies to go public because the mega funds are now basically eating the public markets.
You have Figma did a $900 million secondary. Ripling did a $580 million secondary. Sequoia just did a secondary to its own LPs to the tune of $600 million. And there's Wiz did like $400m or $500m secondary is part of their last round. Why in the world do you need to go public? If you can access that kind of second, that scale of secondary liquidity? And those are the best companies around.
And so from the perspective of the mega funds. You get to charge fees on that money. What a beautiful thing to be able to plunk $200m or 300m into whiz or rippling! Literally like Marc Andreessen said that software is eating the world, but like Marc Andreessen is eating the IPO market.
You know what I mean? Like, it's like, wow. I mean, I looked at those four deals. I'm like, come to the state private forever. They're not going to go public anymore. Why would you go deal with the hassle of like short sellers and activist investors and quarterly earnings if you can sit there and have that level of capital put in your companies? For secondary, it's like, we're great.
I will tell you, given what we're seeing, like we've now moved up our sort of when we start buying, like we really can't start buying companies at $10 or 20 million in revenue anymore. Like we've done the past, like we now have to start buying it like a hundred or else the time is just so long and you know, that's kind of a bummer because I like getting involved in companies earlier, but our best company or portfolio has went from $10 million of ARR to $120 million of ARR, but it took them three and a half years.
And so now they got another, so that's going to be like a seven year old, eight year old, like minimum. People invest in secondary firms because they are not like venture firms. We get discounts, markups, and shorter time duration. I always say like, the LPs in secondary firm, it's their choice to get exposure venture in this risk-adjusted, lower risk way with faster times liquidity.
We're never going to give you a 5x fund. This is never going to happen, but we can grind out two and a half and threes. That's kind of what you're trying to achieve there. It's a very different business and it's kind of like venture from people who hate venture.
[00:12:56] Gopi Rangan: Very interesting times indeed. And the next 10 years is likely to be even more interesting as a lot of these things evolve and the market turns to a direction where secondaries becomes more and more important. But let's talk more specifically about Akkadian Ventures. What kind of companies do you invest in?
What do you look for? What happens when you start looking at the company in the first few meetings?
[00:13:17] Ben Black: We tend to invest in businesses that we can understand, but you have recurring revenue software companies. So my partner, Mike Dinsdale was the CFO of DocuSign, DoorDash and Gusto.
And Mike is just like a hyper growth CFO. And so we basically look for companies that look like those companies. And, you know, I got to know Mike because he was a CFO of DocuSign. And for like two and a half, three years, I was like the only secondary buyer there. It was a great run and we became really good friends.
And that's how he joined me midway through fund five. And then we raised fund six together. We're going to look at companies in a very similar way to any sort of series B, series C kind of investors; whether it's like scale or IVP or, you know, we're underwriting the same thing. Like we're looking for things we can get 3X - 5X in three to five years where I can understand very proven customer economics, repeatable customer economics, strong gross margins, high switching costs, strong technology moat.
The funny thing is like, especially with secondaries, you'd be amazed at how similar the underwriting is from firm to firm, because it's the years and years that we've all like been beating away at the same drum and we'll look at the world in the same way. The difference between a secondary firm and a primary firm is that the company usually has no dog in the fight on these transactions, like the company, they may want to see the problem solved, whatever problem it is that we're coming in to solve, you got a senior executive who's got an issue and you want to see that issue taken care of or, Whatever it is, you know, we're not expecting the management teams are going to like to spend hours with us and we're not going to get super detailed because like we're gonna get the basic information financials, cap table, and all that stuff.
And then you got to be really creative about how you're going to do your own due diligence. For example, we don't ever ask the company for customer references. We just go find their customers themselves. Like it's just not that hard, like, especially if they've ever had a user conference. Like we just start digging up whoever spoke about it.
We're looking at anyone they've ever interviewed, any customer that's ever been mentioned in a press release. And we're going to call those people. And then we'll be like, do you know other people? And then you'll be amazed. And it's great when you don't get the customers from the company. The other thing that we do differently, which I think is just my own bias is I try not to meet the CEO, like to really get to know him until like I'm basically done with all my other due diligence because CEOs especially the good ones at the growth stage, those are the winners, right? Like you got built a hundred million dollar revenue business, like you are smooth.
You are a reality distortion field as you know. I remember it was Trip Hawkings. I can't remember who that was about. Now the guy from the games company, reality distortion field, like you want to have your opinion. Before that CEO gets in your eyes and like, just can just spin a beautiful future. I always have this thing with my investment team.
I think it's kind of funny. We had to change our investment format because I found out when you had a really good CEO, your investment team working on due diligence, they would literally like sit there and talk about like all the things that were going to happen and how exciting they were, but they would forget like what actually happened.
So I had to change our memos to be like, you can only put here what has happened. And then in a separate part, you have to see what the CEO says is going to happen. We only look at what's actually happened. We discount anything that's supposed to happen. Yeah. So.
[00:16:21] Gopi Rangan: Your world is a very, very different world compared to most other investors.
I feel like venture is already a different world compared to the rest of the world. But even within venture, we have to make decisions with imperfect information, incomplete information. When you make decisions, you don't even have little bit of that information that other people get, the primary investors get.
And what you say is you actually don't want to meet the CEO until you have formed an independent opinion yourself because it's so easy to fall for the stories they would tell. They're charismatic CEOs, founders, and you will get biased and very easily buy into the story. It's a tough world. Isn't it a risky world when you make such investments with like a little information and perhaps even avoiding founders?
[00:17:08] Ben Black: No, I would say that I'm being kind of like provocative to have fun, but it's, you know, like I'm always happy to meet CEOs and wherever I do like, like to know a lot about the company before I meet them. And I liked, if it's going to be a quick, no, I don't want to waste their time.
I try not to take hour long conversations with CEOs when there's information available that would make this a pass. And I mean, and so, cause I think that's just respectful. So that's part of the reason they're saying about, we get a lot of information. We do not get the same level of information as primary investors, but we do get very detailed.
A lot of times we do get the data room from the last round. Data can typically be old and we don't make investments unless we get enough information. I do think that the information that you get in the secondary market is you have to be more creative about how you get it. I still think we make good decisions and, you know, our loss rates are no worse than anybody else's.
And we have the same sort of similar model. So, so, you know, I don't want to make it sound like we're not great because we are, but you have to work harder at it. And I think as a primary investor, you always have to be careful about the fact that you're going to be given a show.
I think one of the best things about being a secondary investor where you actually have big information advantage is that almost always we're able to get the financial projections from the last round. And typically we're investing on average a year to 18 months after the last round. And just knowing was a company ballpark hitting their numbers is an incredible advantage, and so for all the disadvantages, there are advantages like that, that are just like, that is a really serious advantage that you do get because so much of our investing happens between rounds.
[00:18:38] Gopi Rangan: And you often get a discount on the price from the last round. That's another advantage.
[00:18:43] Ben Black: Yeah. And, like, I've given you all our secrets here. Like, you know, a lot of times we invest. I'm not sure if this stats is still current because I haven't looked at it a long time, but like back years ago when I did the math, we were investing on average 12 months after the last round and getting about a 20 to 25 percent discount on average, but the companies had grown 75 percent in the year.
So I pitched in those funds, you know, it was basically like if the series C guys are paying 12 times revenue, we're paying six or five, right? So that's a big advantage. That's why we're in business, to take advantage of that.
[00:19:18] Gopi Rangan: This is very enticing. You're sharing your secrets on how you make these decisions. How many investments do you make on an average year? And how long does it take to make those investments?
[00:19:29] Ben Black: So it's very important differentiate company positions versus like transactions.
For example, the classic case that I talk about is we have invested in a company called placer. ai. It's a large position for us. We first invested in the series B where we actually entered into a partnership with an emerging manager through Raise, and we did $12 million in series B and then we watched it for two years and we watched it hit his numbers and just do very, very, very well.
And it's tremendously good company and one that we're very excited about. Then when we sort of got conviction that we wanted to make it a full position, we spent the next really six months aggressively buying it everywhere we could and ended up having a very material position in that company and one of the largest shareholders.
So $12 million is pretty aggressive for us. Typically like we have like $5m or $6m to start out and then we'll watch for a fair amount of time, two years maybe. And then when we see a company that's really hitting it's growth trajectory, then we sort of go deep and we concentrate in that name.
So it's very, very different, you know, it's very different than being a primary investor. Sometimes we put about 20 percent of our capital goes into primaries. Primaries are usually how we like to get started with companies because, you know, you're top of the stack. You have full access to information. You're within 10. A lot of times we even end up getting informally controlled the roofer because the company just wants to have a secondary partner and those are our best relationships. The company just like, "Hey, I want to have a secondary partner that's going to provide liquidity to my stakeholders over time, fast, transparent." They don't want to deal with. You know, the brokerages and the brokers and having strangers bid on their shares. And we're just there like Intel on the inside to make, to make all that stuff go away. So we monitor 22 different brokerages and if shares pop up in one of our companies that we're buyer and like, we'll just go take the shares down and keep consolidating the common share class for the company.
[00:21:19] Gopi Rangan: So unlike a primary investor, primary investors typically take their largest position in their initial investment and then they follow on to hold on to their ownership, but you do the opposite. You start small and your investment is over a long period of time and you continue to build your position, buy more and more shares.
It's a very different way to approach this.
[00:21:41] Ben Black: I'm definitely, we do not work like most firms. We are like, I sort of like this to sort of VC hackers. We're playing, playing the system. So. Yeah,
[00:21:49] Gopi Rangan: you're truly a hacker here in the VC world, .
[00:21:52] Ben Black: Well, you know, like you said from the beginning, secondary liquidity was backwater. It was something that companies fought it until Facebook let their employees start to sell.
And then over the years, given how long it takes companies to go public, you just need regular partners on liquidity. And we're never going to be a huge fund that does $200 million secondaries, but for that stage of the company, when they're sort of $ 20 million to $100 million or $20 million to $120 million in revenue, you need a good institutional counterparty to take care of people's life problems.
My favorite relationships are like literally when CEO would be like, "Hey, Ben, my director of marketing, she needs to put her kids to college. Can you take care of it?" And I can buy some shares in the college tuition is taken care of, like, those are the best.
I mean, I think at DocuSign we did like 65 transactions and Mike was CFO at the time and I did that with him as my partner at the company and Mike was like, this is so great that I want to go do that for other companies. And that's why I joined Akkadian. So it's a different business. It's a service business. People laugh when they look at like some companies and how big we've gotten. And they're like, "man, if I had known there's, you know, $50 million that was available at this company, you know, I would exercise my right of first refusal. If it's some, you know, primary guy in the cap table."
And I'm like, "are you willing to transact in $25, 000 chunks?" Because we are, you know, so it's a different, it's a different business.
[00:23:10] Gopi Rangan: I could spend a lot more time on this and learn more about Akkadian, but we have to talk about Raise. During the day, you're at Akkadian, and in the evenings, you change your cloak to do something completely different.
And it's another side of the ecosystem with emerging managers. Tell us about Raise. How did it get started? What was the thought process? And where is it today? Well,
[00:23:32] Ben Black: it goes back to the very beginning of our conversation where I talked about the fact that I had started New Cycle Capital, which is a seed fund, and I got it up to institutional capital, not huge, but I got there.
And then I started a completely second firm, a completely different strategy that I also got to institutional capital. So about 2013, people were just asking me all the time out to lunch, like, "how do I start a fund?" my friends, operators and, people I knew, and they're like, "you've done it twice. How do I start a fund?" And so I created the original Raise, I guess the first year it was, but 2015, the first year it was really a community for fund entrepreneurs. So it was basically like, "I'm going to get the legendary fund entrepreneurs like Jeff Clavier and Phil black from True and John Callahan and Kate Mitchell from Scale and I'm going to get them together. And we're going to like have the people who built truly institutional platforms teach the next generation how to do it." And I thought that that was a great idea. I was over at the Golden Gate Club where we still are today, and I had one extra room that I wasn't doing anything with it.
So in the room, I was just like, "well, let me have like 10 of my friends that are in market. Like, why don't I have them pitch the 30 LPs that are there?" And it was a total throwaway, like, well, their main hall, which had like a hundred people, 150 people in it, you know, half of the audience at that time, because it was in time conflict goes and leaves.
And it's like trying to jam into this little tiny room to see the VCs pitch. And I realized that VCs had never seen other VCs pitch and no one had ever pitched in public. But the first time I even brought up to people, people like, I don't know, I don't want to get up and stand up in front of a group of strangers and pitch.
And I was like, then that is the conference. That is what it is. It's just raise, you know, all VCs want to talk about is how to raise money. Then we started, you know, we changed it. The first few years I was the whole committee I picked who went up on stage and I figured that was a very bad job.
Because everyone's just mad at me if they didn't get selected. So that was like killing my whole goal was like, Hey, if you think about it from a business perspective, if you want to have business relationships that are really powerful, be with people when they're starting their business. If you help them start their business, if you help push them along, if you're a little wind in their sails in their first year, they will remember that forever.
And they will think kindly of you forever. I can't go be important to Mr. Mega fun person. Like they don't need me. But I can be important to an emerging manager. And so now we're in our ninth year. This year, we just have the numbers in, over 900 funds applied this year for a hundred spots.
We have 350 institutional LPs there who want to meet this group of a hundred that we select, we have a limited partner selection committee. Now it's a 42 or 43 institutional limited partners who rate all the funds. And we're right now in the middle of that process. And so by, you know, sort of scale, you know, 900 plus completed applications.
We had over a thousand that started the application compared to 500 two years ago. So, it's a very significant portion now the entire emerging market. It's a great example, by the way. We just kind of try to make it a little bit better every year, but after nine years, like it's gotten better and better and better, you know, and for me, it's like a wedding because I just have so many friends that I've seen there, you know, I like walk around seeing all these people I haven't seen forever.
And then I just have the most fun day. And I'm so amazed at all the cool funds that are out there walking away and the future of the industry is bright.
[00:26:51] Gopi Rangan: Now, when I pitched at Raise many years ago, it was the first time I pitched on a stage. LPs were watching, VCs were watching.
I had never done that. I had, of course, pitched my fund to many LPs, but all in private conversations on Zooms and like one on one meetings, but never on stage. And it was the first time I pitched. It felt really different. It felt like a real pitch.
[00:27:12] Ben Black: Yeah, it was. It was. Well, you know, what year was that? Do you remember?
Yeah.
[00:27:16] Gopi Rangan: This is before COVID.
[00:27:18] Ben Black: Now it all takes place in the, like the one main hall. And we jam everyone in there. So it's like 450 people in the audience. And now, by the way, we've also lowered the pitch time. We started out in our first year was 10 minutes per VC. No one wants to hear a VC drone on for 10 minutes.
And we lowered it to five. And then last year, Slush, the conference in Finland, They asked me to do like a mini version of Raise there with the European VCs. And I was like, "yeah, that sounds great." And I'm going to play into Finland in November. No problem. It was actually great. The first time I'd ever gotten a super fun conference, but they decided on their own that they would do three minutes per pitch.
And I saw the three minute version and I'm like, we're doing three minutes this year. So you get up, every word counts. And like, you know, I can remember there had just been some VCs who, who like really, really understood the value of the moment and they were just incredibly prepared compared to other VCs that didn't even practice it.
And like time goes so fast and they don't get through their slides. It makes a huge difference. Last year we had 184 LP commitments that had come out of Raise that we identified. Some people go, "Oh, you know, like, I mean, you have a hundred people there Like there's no way to make a hundred GPs happy at all. And fundraising is kind of miserable anyway. It's like a soul sucking experience." Our goal and like our KPIs, like, can we just create enough authentic positive interactions between GPs and LPs that everyone feels like they got a good deal? And that's our goal. But, but it does result in, all the time, every year, I probably 10 to 12 times a year, get an email of somebody saying, "Hey, Ben, just wanted to let you know, I just got a 10 million commitment from this person I met a Raise three years ago" because that's the way it works and like, "I just wanted to let you know that because I know you'd like to know that" you know, and so, uh, super fun. I'm excited for this year.
[00:29:04] Gopi Rangan: Starting a new fund, raising for that first fund, second fund, third fund is one of the hardest things to do.
There's so much information gap and relationship gap. When I started, I didn't even know who these LPs were. Creating an opportunity for emerging managers to really explore the market. And learn about the LPs and understand how LPs think, that's an incredibly valuable thing that you've offered through Raise.
Thanks a lot for doing that and continuing to grow as you invite 100 GPs to pitch this time, three minutes each. And you already have 900 applications.
[00:29:37] Ben Black: Yeah, so we, we can't get all 100 on the stage. It's either going to be somewhere between 24 and 30.
I'm not sure how many actually get on stage because there's only so much like tension that people can get just like sitting there and listening to these decks. And so like attention deficit is real. Like, you know, when I just watched the room, It's a long day, even as it is. So we have breakout sessions, we have round tables, we have multiple different formats that people can get interactions and get exposure directly to GPs and LPs.
The LPs would shoot me if they made me do a hundred like in one spot. And it also like would be very, very hard to manage, very, very hard to manage. So, you know, in the future, maybe.
[00:30:16] Gopi Rangan: The true art of venture capital is investing in the earliest stages, like you said. If you're an early believer of the earliest stages, you can actually build a relationship with these founders in the same way same goes for LPs and GPs. When that happens, that really creates a flywheel effect for the entire ecosystem. And that's a powerful effect that you are creating from the beginning,
[00:30:38] Ben Black: It's a very interesting time, right? Because you have the mega funds controlling huge amounts of capital.
And then you have a super fragmented seed. You know, how many seed funds are there? A thousand, A thousand plus. So you have basically this very monstrous institutional, like on one side, and then you have this like very boutique types of venture business on the other side.
And there's less and less, it's sort of the tweeners. Like you're either like tiny or you're big and the, you know, it's interesting. And now of course, you know, the view of the big funds is like, I will spread out so many bets around to find the 15 companies that matter that that really perverts things at the seed stage.
But I think that's, you know, I think that, you know, especially things like AI, I think the money's gonna be made in seed stage because growth stage prices are so bonkers that that's where the money goes. Right.
[00:31:23] Gopi Rangan: We're coming towards the end of our conversation, and I want to ask you about your community involvement.
Is there a non profit organization you are passionate about? Which one?
[00:31:31] Ben Black: One organization that I really respect is an organization called Mind the Gap. And Mind the Gap uses the most quantitative promote Democratic politicians around the country. And so, that's an amazing organization. As far as my political giving goes, they get pretty much all of my political giving. They're the most thoughtful allocators of political capital that I know.
[00:31:53] Gopi Rangan: Ben, thanks a lot for spending time with me. Thanks for really sharing secrets, real secrets on how you make decisions. And thanks a lot for what you do for the ecosystem through Raise support for so many emerging managers.
I look forward to sharing our nuggets of wisdom with the world.
[00:32:07] Ben Black: Thanks a lot, man. Appreciate it. Thanks for asking me. It was fun. Great to see you. And congratulations with all this.
[00:32:14] Gopi Rangan: Thank you for listening to The Sure Shot Entrepreneur. I hope you enjoyed listening to real-life stories about early believers supporting ambitious entrepreneurs.
Please subscribe to the podcast and post a review. Your comments will help other entrepreneurs find this podcast. I look forward to catching you at the next episode.