E307: Why Size Is the Enemy of Venture Returns w/Glenn Solomon
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How does a $650M fund compete with giants like Sequoia and Andreessen?
You compete against the Sequoias and Andreessens of the world with a $650 million fund. How do you differentiate? For your listeners who may not be familiar with Notable Capital, we're the US-focused team that previously built GGD Capital. We split from our Asia colleagues in late 2023 due to geopolitics, and we formally rebranded as Notable Capital in March of 2024. There's a chart I saw recently, an SVB chart, that I thought helped crystallize for me how we're competing and differentiating with the giants. There's actually 350 billion that went into venture rounds in 2025. An incredible number, astounding number, but 250 billion of that 350 went into rounds that were over 100 million in size with the majority of that 250 going into rounds that were over a half trillion in size.
These are mega rounds, and they're really what we used to consider IPOs. Companies are staying private longer. They're accessing the private market pre-IPO capital in size.
What strategies does Notable Capital use to differentiate in venture investing?
So if you're a large platform fund and you can deploy enormous checks into late stage high growth companies, that's very interesting. The other $100 billion of that $350 billion is invested in rounds sized under $100 million. And notable, we're really focused on investing in seed, Series A, Series B. So really the bottom half, let's say, of the $100 million type round size and below. These are early stage companies. We're investing early average valuations. probably plus minus 80 to 150 in valuation. So much different complexion than these mega rounds. And it's the only thing we do. We certainly compete in these early stage rounds with larger funds for early stage investments, but our win rate in these types of rounds is very, very high.
And I really think that's because of our focus.
Why is early-stage investing crucial for venture capital success?
Right now is a very hot M&A market as well as an IPO market. Does that change how you go about investing?
We really try to stay disciplined and ensure that we invest over two and a half to three year period in each fund. That gives us some time diversification, which we found invaluable in our prior funds. I mentioned earlier, we're an early stage oriented investor. The average deal we're doing as notable capital is a series A. The average ownership we're getting is double digit. These companies have many years typically until they exit. So while 2026 may turn out to be a very active and attractive year for exits, and we'll take advantage of that with our existing portfolio, the companies that we're investing in now, if they're successful, are going to exit many years from now. We try to obviously use what we can and inform our investing from what we see on the field at every stage at all times.
But we are early stage venture investors and it takes five to 10 years, sometimes even longer than 10 years to help grow really, really successful businesses
Your fund one was $650 million. So not quite a large multistage fund, not quite a small fund. In what ways is that an advantage to you? In what ways is it a disadvantage?
I hear from a lot of LPs that they want to invest either in the platforms, brand name firms where they can deploy a lot of capital. or very focused, smaller funds. And I think that makes sense. I would put us in the category of smaller focused funds. I think it's rational to assume, and this is our expectation, that investing in notable you should expect us to deliver better returns than platform funds.
What makes Notable Capital's approach to founder support unique?
We're investing earlier. That's not to say that the platform funds can't do well, but we're seeing, as I mentioned earlier, great performance from our 650 million that we're investing. We're over 2X MOIC after two years. Our gross IRRs are nearing 200% right now. I don't expect us to be able to maintain that level of performance over time, but I do think that it's a harbinger of, a signal of a great portfolio that we're building. And I expect us to be able to continue to do that fund after fund.
So you don't have quite the coffers of the large funds, but you do have a sizable budget. Where do you choose to concentrate that budget?
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Chapters
8 chapters
1
How does a $650M fund compete with giants like Sequoia and Andreessen?
0:00–0:53
2
What strategies does Notable Capital use to differentiate in venture investing?
0:53–1:35
3
Why is early-stage investing crucial for venture capital success?
1:35–3:31
4
What makes Notable Capital's approach to founder support unique?
3:31–5:10
5
How is the venture capital landscape changing with mega-rounds?
5:10–8:31
6
What is the significance of the 'software apocalypse' in today's market?
8:31–11:50
7
How does AGI impact the future of venture capital investing?
11:50–15:54
8
What are the emerging opportunities in AI and labor markets?
15:54–29:09
Speakers
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