Cendana's Michael Kim on VC Portfolio Construction, How Seed Funds Compete vs Multistage

Описание: Michael Kim is the Founder of Cendana Capital, a fund of funds that makes anchor investments in very early stage VC funds.

We talk characteristics of the best investors, how Cendana does diligence on fund managers, portfolio construction best practices, Michael’s “60x rule”, and why high ownership to fund size is the main driver of returns.

We also get in to how VCs are using AI, the competition between Seed and multi-stage investors, why US endowments are under siege, and how secondaries are driving most early stage venture returns today.

Michael also opens up about the early days of starting Cendana, taking 18 months to raise Cendana Fund 1, the day he almost died, and ranking in the top 2% globally in Call of Duty.

Shoutout to Roger Ehrenberg, Kevin Hartz, Semil Shah, Jeff Claviar, Beezer Clarkson, Jack Altman, Jeff Morris Jr, Sheel Mohnot, Nichole Wischoff, Ted Alling, and Rick Zullo for their help putting this together.

Thanks to Bolt for supporting this episode. Help them break a world record for the largest hackathon (up to $1m in prizes): https://bit.ly/ThePeelBoltHackathon

Timestamps:
4:24 The day Michael almost died
5:10 Call of Duty & video games
9:34 Hiring @ Cendana
10:31 How Cendana uses structured and unstructured data
16:51 How VCs are using AI
19:55 Why secondaries are driving most early stage venture returns
22:01 Deciding when to sell secondaries
24:28 Best performing venture funds ever
27:26 The best VCs have amazing access to the best founders
33:42 Why Cendana backs Solo GPs
35:57 How to invest over time and hype cycles
41:35 Why multi-stage firms are investing earlier
44:45 Cendana’s current thesis: High ownership % to fund size
45:51 Why Cendana started backing non-lead VCs
48:41 How Cendana does diligence on fund managers
52:22 VC NPS Scores and Ron Conway’s Silver Bullet
53:49 Good vs bad new VC firm strategies
56:36 Determining defensibility of a strategy
57:57 “Messy middle” software buyout fund
1:03:25 Portfolio construction best practice
1:08:11 Michael’s 60x Rule
1:14:28 How Seed funds compete with multi-stage funds
1:20:05 Should you collect logos writing small checks?
1:21:07 Becoming an LP for the city of SF
1:24:42 Taking 18+ months to raise Cendana Fund 1 in the GFC
1:26:48 Warehousing the first Cendana Fund 1 investments
1:29:56 How to do a first close
1:34:29 Why it’s hard to kill a VC firm
1:37:00 What happens to ZIRP tourist fund managers
1:40:22 How to raise a Fund 2 or 3 today
1:42:07 “US endowments are under siege”
1:44:55 What the best GP LP relationships look like
1:46:41 What Fund of Funds get wrong
1:50:43 The three most interesting trends in venture today

Referenced
Check out Cendana https://www.cendanacapital.com/
Deep Checks https://www.deepchecks.vc/
Prior episode with Eric at Bolt    • Zero to $20m ARR in Two Months: Bolt’s 7-Y...  

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