1 00:00:00,020 --> 00:00:02,580 Josh: Right now, if you want to invest in the hottest companies in the world, 2 00:00:02,840 --> 00:00:05,600 Josh: SpaceX, OpenAI, and Anthropic, you really can't. 3 00:00:05,700 --> 00:00:08,440 Josh: It's normally an activity reserved for the ultra-wealthy who are accredited 4 00:00:08,440 --> 00:00:10,040 Josh: and involves a lot of jumping through hoops. 5 00:00:10,140 --> 00:00:13,720 Josh: Well, this week, there's a fund that enables you to invest in all three and more. 6 00:00:13,860 --> 00:00:17,000 Josh: And it seems like a pretty awesome deal, but the internet has some skeptics 7 00:00:17,000 --> 00:00:18,120 Josh: and questions about how it works. 8 00:00:18,300 --> 00:00:21,840 Ejaaz: Well, the good news is we have the GP of the fund here, Ankur Nagpal, 9 00:00:21,980 --> 00:00:24,100 Ejaaz: on the show to answer all these questions. Ankur, what's up, dude? 10 00:00:24,360 --> 00:00:28,140 Ankur: What's up? Excited for this. It's been a really, really fun week and yeah, 11 00:00:28,280 --> 00:00:29,200 Ankur: looking forward to digging in. 12 00:00:29,200 --> 00:00:33,400 Ejaaz: Okay, so the headline I keep seeing everywhere is with this investment vehicle, 13 00:00:33,560 --> 00:00:37,900 Ejaaz: now the average show can invest 500 bucks in their favorite company before they go public. 14 00:00:38,000 --> 00:00:40,600 Ejaaz: So if you have 500 bucks, you can invest in Anthropic and OpenAI. 15 00:00:40,780 --> 00:00:44,280 Ejaaz: But I want to take a few steps back because I think people are missing the wider 16 00:00:44,280 --> 00:00:47,000 Ejaaz: story as to why this makes sense now and why you're doing it. 17 00:00:47,080 --> 00:00:47,800 Ejaaz: So that's my first question. 18 00:00:47,900 --> 00:00:51,620 Ejaaz: Why does USVC exist at all? And why is now the right time for this? 19 00:00:51,740 --> 00:00:57,540 Ankur: So if you look at where most of the money is being made in private technology 20 00:00:57,540 --> 00:01:02,120 Ankur: companies now, Now, it's been happening before these companies go public. 21 00:01:02,940 --> 00:01:07,580 Ankur: Businesses are taking so long to get out there. And the result of that is the 22 00:01:07,580 --> 00:01:10,320 Ankur: average person misses out on that wealth creation. 23 00:01:10,740 --> 00:01:16,740 Ankur: So the goal with USVC is to build a vehicle for people to invest in the future 24 00:01:16,740 --> 00:01:17,940 Ankur: of American technology. 25 00:01:18,220 --> 00:01:21,880 Ankur: Now, it's easy to look at, you know, OpenAI, Anthropic, and all of that. 26 00:01:22,020 --> 00:01:23,540 Ankur: Those are the names we have today. 27 00:01:23,740 --> 00:01:27,580 Ankur: But a big part of this fund is investing in the companies of the future. 28 00:01:27,580 --> 00:01:31,320 Ankur: So it's not just late stage private tech of which, you know, 29 00:01:31,420 --> 00:01:35,140 Ankur: there are other products as well, but it's also backing the smaller companies 30 00:01:35,140 --> 00:01:39,360 Ankur: starting today that will be relevant three, five, seven years from now. 31 00:01:39,900 --> 00:01:43,800 Ejaaz: Okay. And how does USVC specifically solve this problem? Can you like walk us 32 00:01:43,800 --> 00:01:45,920 Ejaaz: through like if I'm someone that's investing 500 bucks today, 33 00:01:46,140 --> 00:01:47,780 Ejaaz: what is exactly happening with my money? 34 00:01:48,120 --> 00:01:52,440 Ankur: Yeah. So historically, the way investing in private startups work, 35 00:01:52,480 --> 00:01:53,480 Ankur: and this is kind of bizarre. 36 00:01:54,150 --> 00:01:58,470 Ankur: In the U.S., historically, you have to be something called an accredited investor, 37 00:01:58,670 --> 00:02:04,010 Ankur: which means you need to have a net worth of millions of dollars in order to invest in a startup. 38 00:02:05,210 --> 00:02:09,110 Ankur: And there's different opinions on why it exists, but it's a bit ridiculous when 39 00:02:09,110 --> 00:02:12,950 Ankur: you think about, you know, you can invest in any sort of derivative crypto product 40 00:02:12,950 --> 00:02:14,770 Ankur: without that. I can go gamble. 41 00:02:14,950 --> 00:02:19,150 Ankur: I can go bet on Polymarket on how long Donald Trump will shake his hand for. 42 00:02:19,150 --> 00:02:24,510 Ankur: But investing in Enthropic or OpenAI is illegal for the average person. 43 00:02:25,250 --> 00:02:32,730 Ankur: So the goal with US VC and, you know, we're SEC approved to do this is to offer a registered fund. 44 00:02:33,110 --> 00:02:37,510 Ankur: Again, you know, people should understand that this is investing in venture capital. 45 00:02:37,690 --> 00:02:40,490 Ankur: It is still a speculative asset class. We always say with VC, 46 00:02:41,230 --> 00:02:44,450 Ankur: only invest what you can afford to lose. It is an illiquid investment. 47 00:02:44,730 --> 00:02:48,090 Ankur: Like, do not think of it comparable to investing in the stock market. 48 00:02:48,090 --> 00:02:51,590 Ankur: However, if you're someone that otherwise has a balanced portfolio, 49 00:02:51,910 --> 00:02:57,450 Ankur: it could make sense to allocate, you know, 3%, 5%, 7%, something like that to 50 00:02:57,450 --> 00:03:01,970 Ankur: this basket of high growth technology companies and effectively own a piece of the future. 51 00:03:02,790 --> 00:03:07,710 Josh: Awesome. So I'm investing in this. I see a price on the page that says the NAV is $19.95. 52 00:03:08,110 --> 00:03:11,110 Josh: And I have a little bit of PTSD, right? There was a company that launched, 53 00:03:11,310 --> 00:03:15,090 Josh: or an ETF that launched a few weeks ago that went up like 10x in one day and 54 00:03:15,090 --> 00:03:15,890 Josh: then it crashed back down. 55 00:03:16,050 --> 00:03:19,450 Josh: But I understand that that's because the NAV was actually much lower than the 56 00:03:19,450 --> 00:03:20,370 Josh: company was trading for. 57 00:03:20,610 --> 00:03:24,550 Josh: I believe USVC is handling this a bit differently. So when I see the price $19.95 58 00:03:24,550 --> 00:03:27,510 Josh: on the screen, what is that getting me and how do you handle the pricing? 59 00:03:27,630 --> 00:03:28,910 Josh: Is it subject to that fluctuation? 60 00:03:29,410 --> 00:03:32,370 Josh: How would you explain NAV to a person who doesn't really understand? 61 00:03:32,370 --> 00:03:36,790 Ankur: That's a really good question, because ultimately, US VC is a fundamentally 62 00:03:36,790 --> 00:03:39,070 Ankur: different product from all the ETFs. 63 00:03:39,190 --> 00:03:42,430 Ankur: I believe there is, you know, Fundrise has an ETF called, can't remember the 64 00:03:42,430 --> 00:03:44,610 Ankur: ticker, Robinoot has an ETF as well. 65 00:03:44,810 --> 00:03:50,750 Ankur: And while these are trying to give the average investor access to private companies, 66 00:03:50,910 --> 00:03:52,250 Ankur: they're fundamentally different products. 67 00:03:52,370 --> 00:03:57,390 Ankur: And the reason for that is, their price is sort of divorced from the underlying 68 00:03:57,390 --> 00:04:00,610 Ankur: value of assets. So even right now, the Fundrise ticker VCX, 69 00:04:00,690 --> 00:04:06,810 Ankur: for instance, it's trading at roughly four times the price of the underlying companies. 70 00:04:07,210 --> 00:04:12,350 Ankur: And if you're an early investor, that's great. You're opting the money and it can work really well. 71 00:04:12,450 --> 00:04:17,330 Ankur: But in down markets, this can also sort of trade not in lockstep with the underlying companies. 72 00:04:17,730 --> 00:04:22,010 Ankur: So you could, as an example, buy this ETF, the companies could do well, 73 00:04:22,110 --> 00:04:25,650 Ankur: but you could still lose money because the pricing is sort of divorced from 74 00:04:25,650 --> 00:04:29,750 Ankur: the underlying value. Now, USVC is a different structure. 75 00:04:29,990 --> 00:04:35,270 Ankur: It is not an ETF, so it is not easily tradable. However, the price is determined 76 00:04:35,270 --> 00:04:37,430 Ankur: by the price of the underlying companies. 77 00:04:37,630 --> 00:04:43,210 Ankur: So the NAV that you see only changes if and when one of the underlying companies 78 00:04:43,210 --> 00:04:44,630 Ankur: has an updated valuation. 79 00:04:44,850 --> 00:04:47,090 Ankur: So it's a slower sort of moving NAV. 80 00:04:47,600 --> 00:04:52,080 Ankur: Now, in turn, you may wonder, okay, this is well and good, but if it's not tradable, 81 00:04:52,200 --> 00:04:53,620 Ankur: how do I actually get my money out? 82 00:04:54,120 --> 00:05:00,060 Ankur: And the way this works is quarterly, the goal of this fund, and we caveat it 83 00:05:00,060 --> 00:05:04,560 Ankur: with like, look, we aim to do this just because according to your perspective, it's not guaranteed. 84 00:05:04,560 --> 00:05:09,960 Ankur: But if we are to do our job well, we have to meet a quarterly redemption of 85 00:05:09,960 --> 00:05:13,140 Ankur: up to 5% of the fund at the actual NAV. 86 00:05:13,420 --> 00:05:18,820 Ankur: Now, that doesn't mean each investor is limited to 5%. it means 5% of the entire 87 00:05:18,820 --> 00:05:22,980 Ankur: fund will be made available for redemptions every single quarter. 88 00:05:23,140 --> 00:05:27,060 Ankur: So as an example, if we have 100 million in assets, we'll do 5 million every 89 00:05:27,060 --> 00:05:29,780 Ankur: quarter that'll be available to investors on a pro rata basis. 90 00:05:29,940 --> 00:05:34,760 Ejaaz: On the point of redemption, I understand that the shares obviously aren't listed, right? 91 00:05:34,880 --> 00:05:37,440 Ejaaz: So redemptions are quarterly, like you mentioned, but there's a cap. 92 00:05:37,560 --> 00:05:40,200 Ejaaz: I think it's like 5% of NAV at the board's discretion. 93 00:05:40,400 --> 00:05:43,780 Ejaaz: So a two-part question that I have for you is, in a real panic, 94 00:05:44,120 --> 00:05:48,180 Ejaaz: like what actually happens to someone who wants to get out of this vehicle, right? 95 00:05:48,440 --> 00:05:54,500 Ejaaz: Has the board already pre-committed to offering the tender every different quarter or can they skip? 96 00:05:54,680 --> 00:05:56,960 Ejaaz: Like what are people liable for? Who's liable for here? 97 00:05:57,100 --> 00:06:00,700 Ankur: So ultimately we or the board reserves the right to skip. 98 00:06:01,000 --> 00:06:04,160 Ankur: However, it is in our best interest. Our interests are aligned. 99 00:06:04,180 --> 00:06:09,380 Ankur: If we are a fund that is skipping tender offers, it becomes a less attractive 100 00:06:09,380 --> 00:06:12,700 Ankur: investment product and it ultimately hurts us quite a bit. 101 00:06:13,000 --> 00:06:16,600 Ankur: However, it's still important to anyone listening. Like, again, 102 00:06:16,760 --> 00:06:18,800 Ankur: this is venture. It's a different asset class. 103 00:06:18,960 --> 00:06:21,540 Ankur: Like, think about a venture fund. It is a highly illiquid investment. 104 00:06:22,480 --> 00:06:25,920 Ankur: This does have tender offers, which is typical, which is better than a venture 105 00:06:25,920 --> 00:06:27,960 Ankur: fund. In a venture fund, your money is locked up for 10 years. 106 00:06:28,100 --> 00:06:29,080 Ankur: You have nothing you can do about it. 107 00:06:29,530 --> 00:06:34,110 Ankur: However, like, you know, we're kind of repeating, this is an illiquid product. 108 00:06:34,330 --> 00:06:37,970 Ankur: Think about it like, you know, like similar to how you think about a venture fund. 109 00:06:38,130 --> 00:06:41,150 Josh: So there is a lot more stability than something that we saw with BCX. 110 00:06:41,470 --> 00:06:44,410 Ankur: Absolutely. Yeah. The upside is, look, like you're actually owning something 111 00:06:44,410 --> 00:06:47,910 Ankur: close to the underlying asset, which the ETFs, I think, are really fun. 112 00:06:48,050 --> 00:06:52,390 Ankur: I mean, I, you know, dabble in it myself, but I think of it almost like a speculative 113 00:06:52,390 --> 00:06:57,470 Ankur: ticker to kind of trade the sentiment on these names more so than anything else. 114 00:06:57,870 --> 00:07:00,530 Josh: So you mentioned owning the underlying asset. I guess I'm curious, 115 00:07:00,710 --> 00:07:02,710 Josh: how close are we to that underlying asset? 116 00:07:02,890 --> 00:07:05,610 Josh: And the question there is, I understand some of these are SPVs. 117 00:07:05,670 --> 00:07:06,730 Josh: They're not directly on the cap table. 118 00:07:07,130 --> 00:07:10,430 Josh: SPVs generally come with fees, which has been a big thing that I've seen people 119 00:07:10,430 --> 00:07:13,550 Josh: on the internet talking about is the fee structure, what you're paying for as 120 00:07:13,550 --> 00:07:14,970 Josh: a premium in order to access this. 121 00:07:15,070 --> 00:07:17,770 Josh: Could you speak to the fee structure a little bit here? Yeah, absolutely. 122 00:07:17,950 --> 00:07:22,330 Ankur: So our strategy is multifold. One of the tenets of our strategy is when it comes 123 00:07:22,330 --> 00:07:26,310 Ankur: to early stage investing, like pre-seed and seed, it's very hard for us to keep 124 00:07:26,310 --> 00:07:28,190 Ankur: track of what are the most promising companies. 125 00:07:28,430 --> 00:07:33,590 Ankur: So there, our goal is to find the most promising GPs that run these specialized 126 00:07:33,590 --> 00:07:36,590 Ankur: pre-seed and seed funds and be their source of capital. 127 00:07:37,090 --> 00:07:40,510 Ankur: The benefit of doing this is when they want to write a follow-on check, 128 00:07:40,610 --> 00:07:45,690 Ankur: like a series A or a series B check, we can be their source of capital. In terms of how we're 129 00:07:47,520 --> 00:07:52,640 Ankur: This is a very small seed portfolio. We'll hopefully be announcing a lot of new investments soon. 130 00:07:53,120 --> 00:07:57,340 Ankur: The early investments are largely through a single underlying fund. 131 00:07:57,740 --> 00:08:02,000 Ankur: However, moving forward, a lot of investments that are planned are direct on the cap table. 132 00:08:02,320 --> 00:08:05,060 Ankur: And this is important because if it's direct on the cap table, 133 00:08:05,200 --> 00:08:07,040 Ankur: it means there's no management fee. 134 00:08:07,180 --> 00:08:10,080 Ankur: But also because this type of registered fund doesn't charge carry, 135 00:08:10,200 --> 00:08:14,520 Ankur: there's no carry as well, which makes it very, very competitive from a pricing 136 00:08:14,520 --> 00:08:16,740 Ankur: and fee perspective for any of those direct investments. 137 00:08:17,460 --> 00:08:20,900 Ejaaz: Wow, that's great if you're getting the direct investment on the table. 138 00:08:21,100 --> 00:08:25,580 Ejaaz: But just to kind of step back for a second and kind of walk through maybe an 139 00:08:25,580 --> 00:08:28,920 Ejaaz: example, like I know a lot of the companies that you're investing in right now aren't public. 140 00:08:29,100 --> 00:08:32,160 Ejaaz: They're meant to, they're very highly valued. They've been valued maximally 141 00:08:32,160 --> 00:08:34,440 Ejaaz: over the last couple of months, especially in the AI world. 142 00:08:34,580 --> 00:08:38,700 Ejaaz: If we stepped back, say, a year ago, right, when OpenAI was worth a couple hundred 143 00:08:38,700 --> 00:08:43,580 Ejaaz: billion dollars or even a hundred billion dollars, let's say this vehicle existed back then. 144 00:08:43,740 --> 00:08:46,520 Ejaaz: Can you walk us through an example of if I'd invested a thousand dollars in 145 00:08:46,520 --> 00:08:48,520 Ejaaz: here, how much would I be up right now? 146 00:08:48,660 --> 00:08:52,160 Ejaaz: How much could I have taken out? Are you able to give us a kind of walkthrough? 147 00:08:52,440 --> 00:08:55,520 Ankur: Yeah, let me, we can try and work through this live, right? 148 00:08:55,660 --> 00:08:59,140 Ankur: So again, this fund took us a while to set up and we sort of don't control the 149 00:08:59,140 --> 00:09:00,900 Ankur: market conditions and they are what they are. 150 00:09:01,160 --> 00:09:05,980 Ankur: But theoretically, every time there's a markup, what happens is you look at 151 00:09:05,980 --> 00:09:10,940 Ankur: what that company size is a percentage of NAV and that markup is reflected in NAV. 152 00:09:11,040 --> 00:09:15,400 Ankur: And so that goes up and you could theoretically start redeeming quarterly based 153 00:09:15,400 --> 00:09:18,900 Ankur: on that sort of inflated NAV value. 154 00:09:19,420 --> 00:09:25,400 Ankur: Even now, part of our strategy is we believe there are opportunities to come 155 00:09:25,400 --> 00:09:28,760 Ankur: in and buy out certain positions at discounts. 156 00:09:28,880 --> 00:09:31,420 Ankur: These could be secondaries in funds, secondaries in companies. 157 00:09:31,720 --> 00:09:35,160 Ankur: And the benefit there is as a company raises a new brand of financing, 158 00:09:35,340 --> 00:09:38,740 Ankur: that's a little, that's a markup to NAV, which theoretically could benefit people. 159 00:09:39,380 --> 00:09:42,640 Ankur: Working backwards, it's tough to model out exactly what this is because 160 00:09:43,180 --> 00:09:47,620 Ankur: There's a huge sensitivity on position size and fund size, right? 161 00:09:47,740 --> 00:09:54,080 Ankur: Because as an example, if we own a SpaceX position that is 20% of our fund, 162 00:09:54,360 --> 00:09:57,720 Ankur: but then our fund grows, our position effectively gets diluted unless we're 163 00:09:57,720 --> 00:09:59,360 Ankur: kind of buying more to keep up with it. 164 00:09:59,740 --> 00:10:02,640 Ankur: And that sort of makes some of this math a little bit more complicated. 165 00:10:03,280 --> 00:10:07,040 Ejaaz: One thing that kind of stood out to me when I was digging into this and I tweeted 166 00:10:07,040 --> 00:10:09,320 Ejaaz: about this, you responded to me because you were like, some of these management 167 00:10:09,320 --> 00:10:13,780 Ejaaz: fee estimations are wrong, is this is happening on AngelList. 168 00:10:14,180 --> 00:10:18,160 Ejaaz: Now, AngelList is a widely successful platform, but why is it particularly suited 169 00:10:18,160 --> 00:10:19,640 Ejaaz: for this particular product? 170 00:10:19,840 --> 00:10:23,220 Ankur: For people who don't know about this, AngelList has been around for 15 years. 171 00:10:23,400 --> 00:10:26,500 Ankur: They're sort of, you know, at this point, they've had multiple sort of generations 172 00:10:26,500 --> 00:10:28,760 Ankur: of leaders and employees come. And, you know, it's been around. 173 00:10:28,880 --> 00:10:30,020 Ankur: It's been a fixture since... 174 00:10:30,740 --> 00:10:34,580 Ankur: I've now built and sold two companies and they are how I raised money for my 175 00:10:34,580 --> 00:10:38,040 Ankur: first company over 10 years ago. So they've been around for a very, very long time. 176 00:10:38,320 --> 00:10:43,580 Ankur: But the benefit of the AngelList platform is they are where the majority of 177 00:10:43,580 --> 00:10:45,020 Ankur: early stage investing happens. 178 00:10:45,220 --> 00:10:49,160 Ankur: They are the fund manager of choice for a lot of early stage investors. 179 00:10:49,300 --> 00:10:52,560 Ankur: They are the SPV tool for most companies. 180 00:10:52,560 --> 00:10:57,240 Ankur: And as a result, their platform has really good exposure to all of these early 181 00:10:57,240 --> 00:11:01,460 Ankur: stage assets, which is a very good vantage point for us if we're like, 182 00:11:01,520 --> 00:11:04,880 Ankur: hey, you know, we want to go acquire a stake in Anthropic. 183 00:11:05,080 --> 00:11:07,460 Ankur: Let's see, you know, there's a lot of Anthropic investors on AngelList. 184 00:11:07,560 --> 00:11:08,500 Ankur: We know who to reach out to. 185 00:11:08,760 --> 00:11:16,300 Ankur: So that makes it a very attractive sort of very logical institution to start a product like this. 186 00:11:16,580 --> 00:11:21,640 Ejaaz: So when I think about I saw someone explain this on X, there was a lot of activity yesterday. 187 00:11:22,200 --> 00:11:27,700 Ejaaz: So if you understand, right, the walkthrough, I put in 500 bucks and the way 188 00:11:27,700 --> 00:11:33,020 Ejaaz: I outlined it in my explanation yesterday over here was there's a 3% management 189 00:11:33,020 --> 00:11:35,900 Ejaaz: fee in total aggregated, not 1%. 190 00:11:35,900 --> 00:11:39,100 Ejaaz: It's a double layer vehicle. So you go at USVC at the top, you're paying them 191 00:11:39,100 --> 00:11:40,380 Ejaaz: a management fee. There's no carry. 192 00:11:40,560 --> 00:11:45,520 Ejaaz: So there's no necessary incentive for you guys to maybe like work on the or 193 00:11:45,520 --> 00:11:47,020 Ejaaz: like hold particular positions. 194 00:11:47,020 --> 00:11:50,300 Ejaaz: But then at the bottom, right, the layers that you guys are investing in where 195 00:11:50,300 --> 00:11:54,180 Ejaaz: these GPs are actually like putting in chunks on the cap table on L1 SPVs, 196 00:11:54,280 --> 00:11:56,440 Ejaaz: they then take a 220, right? 197 00:11:56,540 --> 00:12:00,640 Ejaaz: So in my mind, that made sense as 3%. But you clarified over here, 198 00:12:00,700 --> 00:12:03,620 Ejaaz: you said our management fee is actually 1% and the total expense ratio right 199 00:12:03,620 --> 00:12:07,800 Ejaaz: now is 2.5%. I think that's really important and people don't understand that. 200 00:12:07,920 --> 00:12:10,380 Ejaaz: Can you, would you mind like explaining how exactly you get to that? 201 00:12:10,520 --> 00:12:15,040 Ankur: Yeah, absolutely. Yeah, that's a, it's a nuance that matters to people closer to this. 202 00:12:15,660 --> 00:12:19,080 Ankur: What investors care about is their expense ratio but that's different from a 203 00:12:19,080 --> 00:12:23,400 Ankur: management fee you know the idea because a 2.5% management fee looks like 2.5% 204 00:12:23,400 --> 00:12:25,640 Ankur: going into our pocket the reality 205 00:12:25,640 --> 00:12:30,320 Ankur: is the expense ratio which is the net percentage investors are paying 206 00:12:30,900 --> 00:12:33,880 Ankur: is 2.5% right now. 207 00:12:34,000 --> 00:12:39,940 Ankur: And the mechanics and the scare to some people is it's really right now 3 point something percent. 208 00:12:40,300 --> 00:12:44,220 Ankur: We subsidize it out of our pocket to make it 2.5%. Now you may wonder, 209 00:12:44,320 --> 00:12:46,040 Ankur: why are we doing it? Why is it so high? 210 00:12:46,340 --> 00:12:49,380 Ankur: The reason is when you start funds like these, they're pretty expensive to start. 211 00:12:49,640 --> 00:12:54,740 Ankur: So all these funds will have very high expense ratios up front because there's fixed costs, right? 212 00:12:54,800 --> 00:12:58,920 Ankur: And when you have like 10 or 20 or 30 million in assets, those fixed costs are really high. 213 00:12:59,540 --> 00:13:02,640 Ankur: However, we think the 2.5% is very competitive because again, 214 00:13:02,860 --> 00:13:05,660 Ankur: you know, if you compare this to a Vanguard fund, you'll be like, 215 00:13:05,800 --> 00:13:08,360 Ankur: this is like why 2.5%, that's crazy. 216 00:13:08,780 --> 00:13:14,220 Ankur: But venture funds typically are 2%. And Drees and some other funds are 2.5%. 217 00:13:14,220 --> 00:13:17,620 Ankur: However, if you're a venture fund of funds, which we partially are, 218 00:13:18,020 --> 00:13:20,620 Ankur: those are typically 3% if you include the underlying. 219 00:13:21,140 --> 00:13:25,640 Ankur: So this 2.5% cap, I think makes us very competitive, especially when you factor 220 00:13:25,640 --> 00:13:31,600 Ankur: in, we don't charge carry. Now, some of our investments are in funds and they 221 00:13:31,600 --> 00:13:33,160 Ankur: underlying have their own carry. 222 00:13:33,680 --> 00:13:36,820 Ankur: However, all the direct investments don't have that and there's no carry on our end. 223 00:13:37,550 --> 00:13:41,070 Ankur: The combination of that, I think, compared to the world of venture products 224 00:13:41,070 --> 00:13:43,050 Ankur: makes this very competitive. 225 00:13:43,710 --> 00:13:46,610 Ankur: And a big part of why even, you know, you're like, okay, why is it even two 226 00:13:46,610 --> 00:13:50,650 Ankur: and a half is when you try and distribute a fund like this to retail, 227 00:13:50,750 --> 00:13:53,530 Ankur: there's just operational fees that really add up. 228 00:13:53,630 --> 00:13:58,190 Ankur: But from a management fee perspective, I mean, you know, we were looking at 1% or 100 bps. 229 00:13:58,350 --> 00:14:01,890 Ankur: And within that, we're, you know, have to do sales and marketing and a lot of other stuff. 230 00:14:02,070 --> 00:14:04,110 Ankur: And right now, we're honestly subsidizing most of it. 231 00:14:04,110 --> 00:14:07,490 Josh: Awesome. Okay, so we understand why this works. The fund structure. 232 00:14:07,670 --> 00:14:10,630 Josh: Now, let's talk about the portfolio of what you actually get when you invest 233 00:14:10,630 --> 00:14:15,450 Josh: in this thing. I see XAI on there, Anthropic, OpenAI being three of the larger ones. 234 00:14:15,650 --> 00:14:20,330 Josh: And particularly when I see the largest holding, I mean, 20 and a quarter percent is XAI. 235 00:14:20,570 --> 00:14:24,330 Josh: Now, as most people know, XAI has been acquired by SpaceX on February 3rd at 236 00:14:24,330 --> 00:14:26,610 Josh: one and a quarter trillion dollar valuation. 237 00:14:26,950 --> 00:14:30,370 Josh: So that position now is functionally pre-IPO SpaceX. 238 00:14:30,590 --> 00:14:33,670 Josh: Is that kind of how you think about it internally? and are the people investing 239 00:14:33,670 --> 00:14:38,210 Josh: in that acquisition price or is this a higher markup closer to what it's looking 240 00:14:38,210 --> 00:14:39,570 Josh: like as it IPOs this year? 241 00:14:39,710 --> 00:14:44,610 Ankur: Yeah, so I think the most recent mark on this, and I think we've shared this, 242 00:14:45,690 --> 00:14:50,210 Ankur: was a few weeks ago based on some internal documentation. It's not the IPO price, 243 00:14:50,310 --> 00:14:52,770 Ankur: right? That's speculative. That hasn't happened. We don't know when that is. 244 00:14:53,210 --> 00:14:57,830 Ankur: My general caveat with all of this is like, look, some of this may look super 245 00:14:57,830 --> 00:15:00,730 Ankur: opportunistic. You can get in before certain marks and all of that. 246 00:15:01,340 --> 00:15:04,780 Ankur: I don't encourage that type of thinking in general. I think you should think 247 00:15:04,780 --> 00:15:06,840 Ankur: about this as a long-term investment. 248 00:15:07,140 --> 00:15:11,100 Ankur: Are you long-term bullish on venture as an asset class? If so, great. 249 00:15:11,440 --> 00:15:14,100 Ankur: I think these positions are great. I obviously like these companies. 250 00:15:14,300 --> 00:15:18,940 Ankur: However, this is such a small percentage of what we will and plan to do. 251 00:15:19,420 --> 00:15:22,560 Ankur: And something you'll see soon is we're going to be very public with our investments. 252 00:15:22,700 --> 00:15:26,040 Ankur: Hopefully as soon as next week, we'll announce newer positions. 253 00:15:26,360 --> 00:15:29,640 Ankur: And so people can kind of see the portfolio evolve in real time. 254 00:15:29,640 --> 00:15:33,820 Ankur: But my general guidance is like consider 255 00:15:33,820 --> 00:15:36,700 Ankur: investing in this if you're generally bullish about the asset class 256 00:15:36,700 --> 00:15:39,500 Ankur: you want to own a piece of the most important technology companies in 257 00:15:39,500 --> 00:15:42,380 Ankur: the future you can withstand the 258 00:15:42,380 --> 00:15:45,960 Ankur: lack of liquidity and the fact that it's a speculative asset class and do it 259 00:15:45,960 --> 00:15:50,420 Ankur: for that don't do it because you really like the SpaceX position or the Anthropic 260 00:15:50,420 --> 00:15:54,260 Ankur: position these are great companies we wished we owned more of them but right 261 00:15:54,260 --> 00:15:58,260 Ankur: now we've added a lot in cash these positions have effectively gotten diluted 262 00:15:58,260 --> 00:16:01,380 Ankur: and we think the future is not just these companies, 263 00:16:01,760 --> 00:16:06,020 Ankur: but the companies that everyone will talk about three years from now and five years from now. 264 00:16:06,660 --> 00:16:10,000 Josh: Awesome, so yeah, notably in the portfolio, 56% of the holdings, 265 00:16:10,060 --> 00:16:11,360 Josh: if you purchase today, are cash. 266 00:16:11,600 --> 00:16:15,200 Josh: So you're buying basically this potential upside opportunity for whatever the 267 00:16:15,200 --> 00:16:16,240 Josh: fund decides to invest in. 268 00:16:16,440 --> 00:16:21,020 Josh: How do you consider allocating that and what is the velocity people can expect you to deploy that? 269 00:16:21,080 --> 00:16:24,040 Josh: I found a lot of people were kind of mentioning they don't want to invest in 270 00:16:24,040 --> 00:16:24,880 Josh: something that's half cash. 271 00:16:25,000 --> 00:16:28,060 Josh: So what is the plan to deploy that and kind of how quick? 272 00:16:28,260 --> 00:16:32,580 Ankur: Totally. I mean, our goal is we'd want to ideally hold close to 273 00:16:33,240 --> 00:16:37,300 Ankur: 10 to 20 percent somewhere or maybe even a little bit less in cash and cash 274 00:16:37,300 --> 00:16:39,880 Ankur: equivalents and again the reason we want to do that is we have to quarterly 275 00:16:39,880 --> 00:16:44,280 Ankur: tenders right like if all your dollars are invested in venture that's very illiquid 276 00:16:44,280 --> 00:16:46,440 Ankur: and quarterly tenders become a little bit difficult so 277 00:16:47,040 --> 00:16:51,040 Ankur: ideally we would like to keep some kind of buffer in either cash or public equivalents 278 00:16:51,040 --> 00:16:55,780 Ankur: where we can go make our tenders however we intend to be deploying these dollars 279 00:16:55,780 --> 00:17:00,280 Ankur: quite aggressively and aggressive doesn't mean we're going to index all of late 280 00:17:00,280 --> 00:17:05,720 Ankur: stage private tech but you know we're going to be backing a lot of early stage fund managers, 281 00:17:06,120 --> 00:17:07,980 Ankur: a lot of companies directly on the cap table, 282 00:17:08,400 --> 00:17:11,500 Ankur: buy out some kind of fund positions as well. 283 00:17:12,340 --> 00:17:15,100 Ankur: There's a lot I can't talk about because these are deals in progress. 284 00:17:15,420 --> 00:17:21,160 Ankur: But again, we've been very active on the social so far and we will continue 285 00:17:21,160 --> 00:17:23,040 Ankur: to be when we announce each new position. 286 00:17:23,260 --> 00:17:25,900 Ankur: And what's cool is for a lot of these companies, they're pretty small. 287 00:17:25,900 --> 00:17:29,300 Ankur: So they will also announce it to their community and it could be a great way 288 00:17:29,300 --> 00:17:31,640 Ankur: to activate their community to own a small piece of the business. 289 00:17:31,840 --> 00:17:36,220 Ejaaz: A very important nuance that you've described several times on the show so far 290 00:17:36,220 --> 00:17:39,740 Ejaaz: is this isn't trading like a public stock, right? The VCE game, 291 00:17:39,740 --> 00:17:41,480 Ejaaz: venture game is very, very different. 292 00:17:41,800 --> 00:17:44,200 Ejaaz: It is more asymmetric. Deals are 293 00:17:44,200 --> 00:17:48,500 Ejaaz: kind of like aggregated and dealt with within a very few set of actors. 294 00:17:48,740 --> 00:17:52,880 Ejaaz: And these rounds of valuations can mark up pretty massively. 295 00:17:52,880 --> 00:17:54,700 Ejaaz: So it takes time and it's a long haul thing. 296 00:17:54,760 --> 00:17:57,560 Ejaaz: I get that. You mentioned like, it's the long game, right? 297 00:17:57,780 --> 00:18:00,380 Ejaaz: Three to five years is what you said. In three to five years, 298 00:18:00,420 --> 00:18:04,140 Ejaaz: or maybe even a decade, what's the best outcome for USVC? 299 00:18:05,190 --> 00:18:10,910 Ankur: So the best outcome for us is if you look at the data, venture capital as an 300 00:18:10,910 --> 00:18:17,310 Ankur: asset class has the potential to outperform public markets while also being 301 00:18:17,310 --> 00:18:18,990 Ankur: somewhat uncorrelated. 302 00:18:19,450 --> 00:18:23,950 Ankur: So if we can sort of index that, right, like I can't commit to an IRR, I can't commit to that. 303 00:18:24,110 --> 00:18:29,730 Ankur: But if we can effectively outperform while not being fully correlated, 304 00:18:30,090 --> 00:18:33,170 Ankur: that's sort of, that's why endowments invest in venture, right? 305 00:18:33,170 --> 00:18:36,070 Ankur: Like it's two things. It's the alpha and the lack of beta. 306 00:18:36,250 --> 00:18:39,410 Ankur: And that's sort of the goal here as well. 307 00:18:40,130 --> 00:18:43,570 Josh: Awesome. Well, thank you. Sadly, we are out of time. I wish we had more time 308 00:18:43,570 --> 00:18:46,230 Josh: to chat about this, but I very much appreciate you coming on the show to join 309 00:18:46,230 --> 00:18:50,550 Josh: us to kind of explain the perceptions around it, to give some clarity to this fund. 310 00:18:50,910 --> 00:18:54,010 Josh: Any final thoughts for anyone on kind of the steps they should take if they're 311 00:18:54,010 --> 00:18:55,610 Josh: interested in participating or just learning more? 312 00:18:55,790 --> 00:19:00,370 Ankur: Yeah, look, I mean, usvc.com is our website. At this point, you know, we've been, 313 00:19:01,230 --> 00:19:05,890 Ankur: the response has been phenomenal and it's honestly blown every expectation so 314 00:19:05,890 --> 00:19:09,870 Ankur: it's gone from like oh you should invest in usvc to all the reasons people should 315 00:19:09,870 --> 00:19:14,030 Ankur: you know be careful and think about liquidity and you know what they can afford 316 00:19:14,030 --> 00:19:18,210 Ankur: to invest and stuff but no check it out at usvc.com and thanks for having me guys 317 00:19:18,210 --> 00:19:21,450 Josh: Awesome we really appreciate the time thank you so much thanks.