Securing the deal – How not to look like a douchebag when meeting management teams
May 2024: Arrive armed with extensive research and present a comprehensive data pack that shows you understand not just the company, but also the industry landscape. This demonstrates serious intent and respect for the potential partnership. Come with graphs and slides... We make it abundantly clear that we put 100s of hours into the research and are invested... money is fungible, commitment is not [...].
Underwriting a potential venture investment in Levels Health
May 2024: Levels represents an interesting early-stage investment opportunity. The company is looking to raise $5-10M in a friends and family Series A extension round via an SPV. Previous funding for the company includes an Andreessen Horowitz-led $12M seed round in November 2020, a $38M Series A in April 2022 ($300M post-money valuation), and a $7M Series A extension round in January 2023 [...].
Merchant banking, the perfect canonical business
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April 2024: My idea of the perfect business is getting paid a tremendous amount of money for your words. Just your advice. The old-school merchant banks and M&A boutiques like Lazard and Allen & Co. are pretty close to the perfect business. Someone has decided that your wisdom is so worthy that they are going to give you millions (sometimes hundreds of millions) of dollars for it. They require no capital, they are hugely cash flow accretive, and you can generally build equity by investing in the deals that you are advising [...].
What private equity gets wrong​
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March 2024: The more I get into institutional capital markets, the more I realize it’s one big career-risk, principal-agent problem from bottom to top across LPs and GPs. The problem for my industry is that traditional private equity terms create terrible incentives for buying and operating a company. A private equity firm is being completely rational when it continues to pay higher prices, does increasingly less due diligence, raises larger-and-larger funds, buys bigger companies, makes short term decisions, and bills the heck out of investors and portfolio companies every time they lift a finger [...].