E342: The Rise of Venture Secondaries

What if the real edge in venture isn’t picking the hottest companies, but structuring your portfolio, pacing capital, and building relationships in a way most investors never do? In this episode, I sit down with Jamie Melzer, Founder and Managing Partner of Altra Venture Partners, to break down how she built a firm focused on late-stage venture and secondaries at the height of market dislocation. We discuss why rising interest rates in 2022 created a rare entry point, how buying private tech companies at 40 to 80 percent discounts reshaped the opportunity set, and why transaction risk often matters more than company risk in secondary markets. Jamie explains her concentrated, power-law-driven portfolio strategy, how she sources deals in an opaque and relationship-driven ecosystem, and why access, not awareness, is the true barrier in private markets.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00David Weisburd?

  So you built Ultra on the heels of the private markets and the illiquity in 2022. Tell me about how you built your firm.

• 0:07Speaker 01

  Ultra Venture Partners invest in the next generation of category-defining technology companies in the private markets. And we largely do so by providing liquidity to early stakeholders through something called secondary transactions. What preceded the opportunity in 2022 was 13 years of close to zero interest rates, followed by interest rates rising from near zero to 5% plus very quickly in, starting in March of 2022. And while 5% is still low from like a historical standpoint, relative to what was priced in across asset classes at the time, this was hugely disruptive. And so you saw public equities start to correct very quickly, especially the high-growth public tech stocks that had been pricing in, you know, close to 0% discount rates and crazy valuations because of that.

• 0:51Speaker 01

  The Nasdaq was down like 33% that year at the low. The S and P was down 25%. Credit markets, which are directly linked to interest rates, adjusted very quickly. Late-stage venture, where we sit, is a very illiquid, illiquid and inefficient asset class and really needs a prolonged period of fear and pain for valuations to capitulate. And so for most of 2022, valuations were still very high. There weren't really new rounds getting done. Most of the companies had raised and did not need to raise new capital. We actually didn't see the bottom in venture until mid-2023, when it was off about 50% from the 2021 highs. But over the period of 2022, I was kind of looking at this market and saw a really interesting

• 1:35Speaker 01

  opportunity emerging, where you had some of the best private tech companies in the world still in the private markets. They didn't need to raise new capital. So how do you take advantage of a market cycle and invest in some of these incredible companies at sometimes hugely discounted or, you know, attractive valuations? There was a lot of fear. A lot of the buyers had come out of this market. There weren't that many to begin with. And so we came in and were buying some really incredible companies at like 40% to 80% discounts from where they were trading previously.

• 2:00David Weisburd?

  In March 2022, interest rates went from zero to five over a short period of time. Everything just plummeted down in valuation. We're basically looking for the baby in the bathwater in that there were some good assets that were dragged down with the bad assets.

• 2:14Speaker 01

  To be fair, valuations, I think, did need to reset across the board. But we went from a period where valuations were pretty lofty, multiples were very high. Obviously, there were very low discount rates kind of being implied in those valuations to great companies that were still growing a lot, were generating free cash flow, growing 50% year over year. And all of a sudden, valuations looked very reasonable, like very attractive relative to historical norms, relative to public markets. So there were just a lot of opportunities to kind of add to those types of companies.

• 2:41David Weisburd?

  And did you raise in 2022 or were you already in the middle of fundraisers?

• 2:44Speaker 01

  So I actually ended up spinning out and launching what is now Ultra Venture Partners at the beginning of 2023. We made our first investment, I think, in June of that year. And the market bottomed in July of 2023. So the timing was good.

• 2:56David Weisburd?

  Oftentimes, there's corrections in markets and there's so many buying opportunities. But paradoxically, there's no supply of capital for new funds. How did you actually raise in such a market?

• 3:04Speaker 01

  That's a good question. So if you remember, early 2023, it was kind of a delayed impact, but that's when the banks were flying up, right? Like SVB went up, or Credit Suisse was acquired. I mean, there were a lot of pretty big failures in the banking system. So there was a lot of fear in the market in early 2023. I started my career in like a bank failure environment or shortly below or shortly before in the global financial crisis. And so to me, this was actually a really exciting opportunity. But when we went out to raise from our investors, who are largely high net worth individuals and family offices, it was really hard. Like, I think we raised $6 million in the entire year for 2023. It has gotten much easier since then, but at the time where we were seeing the biggest opportunity was definitely the most challenging to raise new capital.

• 3:43David Weisburd?

  You need to help you as a fundraiser and help people disfranchise, starting in the most difficult possible market.

• 3:48Speaker 01

  It builds resilience. I think, you know, going out and starting your new fund from scratch and kind of a new and nascent market as a first time fund manager, I think, takes a little bit of resilience to begin with. But like, I just saw such an enormous, almost once in a career, once in a lifetime type opportunity emerging here that I had to do it and I just stuck with it.

• 4:10David Weisburd?

  I think of it as a barbell strategy. Really bad markets are great for resilience and really good markets are good because it teaches you that it works. It's like I pitched, I followed up and they invested. You know, needless to say, it's 2021, it's the easiest market of all time. There's something there of like seeing success over and over. That's really helpful as well. When you look at the secondary market, specifically in the venture asset class, why are so many people just buying portfolios? Why won't anyone underwrite a single company?

• 4:33Speaker 01

  It's interesting that you say that. I actually feel like I see more people focused on the single company, single asset type acquisitions in the market where we're playing, which is very late-stage venture. The portfolio acquisitions are a little bit more of like a private equity strategy where you can come in, provide liquidity to an LP. It's a very illiquid market. You have to underwrite the entire portfolio, the GP, you know, the exit profile of all of these companies. You usually come in and buy these at a discount. You can mark it up right away, or most people do mark it up right away, you know, and then you have to manage all of those out. So I think it's just a very different piece of the market, and there's a lot of big players and private equity-like players that are doing that. That's not where we're playing. We are heavily concentrated and have the goal of building positions in the best private tech companies in the world. We have a fund that does this. We also do it on an individual basis through some of our co-investment opportunities, but are really

• 5:18Speaker 01

  targeting like building that concentrated portfolio of the companies that will kind of create the most value and generate those power law dynamics.

• 5:25David Weisburd?

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• 7:11David Weisburd?

  Double click on that. Tell me about your strategy today.

• 7:13Speaker 01

  The underlying goal is to continue to build positions in the companies that we think will create the most value in the late-stage private markets. And we're very flexible. So I say it's opportunistic in terms of how we do this. So it's not, this is not traditional venture capital. Like where we're playing late-stage venture and secondaries are really their own asset class and their own set of players that are emerging. And we invest kind of across a broad variety of transactions. So we can come in as a minority investor in primary rounds. We can help fill pro-rata for early-stage funds in later-stage rounds. We do a lot of secondary transactions. So we can do direct secondaries where we come in and provide liquidity to early investors. So early funds, it could be angel investors. It could be executives or early employees of the company. We come into company-led tenders and we can team up with other funds

• 7:58Speaker 01

  and do like large transactions. We're like, maybe we can't do a $300 million transaction, but we can team up with one or two other large funds to do like a large secondary block in the market. So we're very flexible. We're very collaborative. We've also done like equity swaps with company executives where they actually become an LP in our funds.

• 8:13David Weisburd?

  And return for shares?

• 8:15Speaker 01

  Yes. So they would like swap in shares of the company and then they get...

• 8:18David Weisburd?

  Is that some tax-efficient structure? Why would someone do that?

• 8:22Speaker 01

  It can be. It depends how you structure it. It becomes a little bit more complicated. Like when we've done it, we've basically paid cash for the tax component and just let them like crystallize it at that point in time. And then they swap in the rest of the equity and then they get exposure to a diversified portfolio of like another...

• 8:35David Weisburd?

  It's like these exchange traded funds in the public markets, but you've taken it to the private markets.

• 8:39Speaker 01

  And it's very unique to our strategy. I don't know if we created it. When I mention it, people are often surprised. Like, I don't think that it is widely done in the market.

• 8:47David Weisburd?

  The corollary in the public market. So if you have $100 million in Robin Hood, let's say you were on the founding team and you don't want to be exposed $100 million to Robin Hood. In the public markets, they have these vehicles called exchange traded funds. You could put in your $100 million in kind and you get a portfolio of S and P 500. The reason people do that is you don't have to pay taxes on it. You get diversified and then you could defer your taxes while minimizing your concentration. So that's been around for a while, but private markets, it's the first time I'm hearing about it.

• 9:14Speaker 01

  I don't think it really exists outside of like a secondary transaction, right? So like this is kind of growing in prevalence. And I do think if we expand that like piece of our kind of program, there are ways to layer in like more tax efficient ways to do it.

• 9:24David Weisburd?

  Secondaries are famous for having lower information rights. How do you deal with that? And is there ever a case where you're able to underwrite an opportunity with low or no information?

• 9:35Speaker 01

  Ooh, good question. The secondary markets and late stage venture as a whole are very opaque. It is hard to get access to information. I have a very institutional background and we try and bring a more institutional level of diligence to what we do. So if we can't get access to enough information to underwrite what we're buying and project out, you know, exit value and like likely financial forecast and things like that, then we just don't do it until we can get access to more information. So there are companies that we haven't invested in that I would have loved to invest in. And we just didn't get the opportunity along the way to get access to enough information to really underwrite what we were buying and our kind of long-term views on the company. With that said, the amount of information we get varies on the type of transaction, who we're working with, whether it's directly with the company, whether it's coming into a tender that the company's running and there's a data room.

• 10:20Speaker 01

  So like it varies dramatically. Once we get access to information, we can underwrite it. I'll say like that view, unless something changes materially in the market, can kind of hold for some period of time, whether it's six months or something. And so maybe we can then do transactions where we don't have additional information because we've already done this diligence and formed this view. The biggest issue for like a lot of smaller investors in this market. Is that they literally don't know what they're buying. Like you see like, you know, share prices on marketplaces. I don't even know how they calculate what evaluation is, you know, associated with that.

• 10:48David Weisburd?

  They don't even fully calculate it.

• 10:49Speaker 01

  They don't have the share count. And actually, I see sellers coming into me frequently who quote a share price and evaluation that's completely wrong. And, and, you know, we often have access to more information than the sellers that we're buying from. Like, it's a, it's a very asymmetric market in terms of like, who has information and who doesn't.

• 11:08David Weisburd?

  Speaking of the market, venture secondary, specifically, single stock venture secondaries. Who are the investors there? Are they the same investors as typical venture capital LPs?

• 11:19Speaker 01

  Primary investments and private companies fall under a venture exemption with the SEC. So when I started Ultra, only 2% of venture capital companies were registered as an RIA with the SEC. Today, it's closer to 9 or 10%. So it has grown dramatically over the last three or four years. And you're seeing a lot of like, the later stage players register. I think a big driver of this is secondary opportunities. So secondaries are not venture exempt. So we'll have to register other funds that are playing in the space in any meaningful way. We'll have to register. But what that means is that the rest of the venture capital industry, who knows these companies the best, who have been investing in them all along the way, are not the natural buyers or players in this space. And so you're actually seeing capital come in from different parts of the market to kind of create this late-stage

• 12:00Speaker 01

  and secondary ecosystem. So the big venture capital companies are now kind of becoming these big cross-asset RIAs. You're seeing a lot of like, public crossover funds come into the market, like really large institutions, Franklin, Tiro, Fidelity, Newberg, like really big names are starting to play here. Co2, Tiger have always kind of been in the space. Family offices, sovereign wealth funds, and even like, the major strategics. So like, we're seeing Amazon and Microsoft and Nvidia are now all massive late-stage venture investors. And so it's a different set of players than traditional venture, but I think the opportunity in late-stage venture and secondaries is so interesting that there is a lot of capital coming.

• 12:36David Weisburd?

  Are the limited partners different than in the traditional venture capital limited partners in these venture capital examples?

• 12:41Speaker 01

  It's a different asset class in terms of risk, in terms of duration, in terms of potential returns. I mean, there's definitely some crossover in the LP base. You know, people that are naturally interested in early-stage tech, I think inherently understand what we're going for in later-stage tech. We also have a lot of public market investors, and here's why. The way that I think about it, like for my own portfolio, like if you go back to the mid 2000s, the best venture-backed private technology companies would go public after five to six years on average at sub $500 million valuations. And so Amazon, Apple, Netflix, Google, they had to go public to access growth capital. So venture capital, or venture capital as an industry was still a pretty niche industry that really funded the creation of companies. Once they hit scaling mode, they had to go

• 13:26Speaker 01

  public to access enough capital to grow, which means that investors, both retail and institutional investors, got to participate in all of that upside. So like, if you bought Amazon at the IPO, it's sub $500 million. It's now a $2.3 trillion company. That's like 4,000 X plus of return. Like, I can't quote you that in my head. Today, those companies are staying private for 10, 15-plus years and are worth hundreds of billions. We've now seen a trillion-dollar-plus company created in the private markets. And so so much of that value creation is happening in the private markets behind closed doors. And so the way we think about it from a portfolio construction standpoint is that investors need to shift some capital from public markets into late-stage private just to recapture

• 14:10Speaker 01

  the same type of innovation and growth profile, compounding upside that they used to be able to get in the public markets. So Ultra exists because some of the best private tech companies in the world are staying private for longer, and so much of that value creation is happening behind closed doors.

• 14:24David Weisburd?

  Small, traditional, public growth companies are now late-stage private companies. It's same, same risk-return kind of dynamics.

• 14:30Speaker 01

  The companies we invest in look like mid- and large-cap public companies from a size, stage, and risk standpoint. They're just really inaccessible to most investors.

• 14:40David Weisburd?

  Just to demonstrate that this concept, both SpaceX and Anthropic going public, both my portfolio companies, full disclosure, are trying to get into the S and P 500 ahead of being listed. Sorry, they're trying to get into into the NASDAQ index ahead of being listed, which obviously categorically means you're one of the largest companies. So they're trying to get into the largest pool of large growth companies at the time of listing, just to show you how crazy it is.

• 15:03Speaker 01

  Which I think makes perfect sense, right? Like, given the scale that they're at, it doesn't really make sense for there to be this kind of arbitrary delay, just because that was baked in historically.

• 15:12David Weisburd?

  What about DPI? How do you underwrite DPI in secondaries versus a traditional venture fund? How do you think about that?

• 15:18Speaker 01

  A traditional venture fund is a 10-year fund. The average life of a traditional venture fund is actually 14-plus years. So like, the 10 years is kind of made up, right? It's like out the window. Our first fund is a five-year fund with three potential year extensions, just depending on the market and so forth, and it's fairly concentrated, like intentionally. We're two years into our fund one. We've already started returning capital to our investors through exits and IPOs and secondary liquidity. So it's a much shorter duration. Liquidity is higher. It's not liquid. It's still an illiquid asset class, but it is more liquid than early-stage venture, right? And the duration is certainly shorter. I think most of the companies in our portfolio are likely or have the potential to go public in the next two to five years.

• 16:01David Weisburd?

  When I think about getting access to venture, the analogy I just used on other podcasts is exposure therapy. So if Family Office wants to get into venture, how do they decrease their risk? I think one of the necessary components is you don't want to start in emerging managers to begin. And that's even for the benefit of emerging managers, because if you invest and then you wait until year 10 to get your money back, you're not going to keep on investing in asset class. There's a couple of alternatives out. There's late stage, there's secondary funds with minimized J curves. You can invest later stage as well. So it's a really critical success factors, because as retail comes into venture capital, if they start going into the very early stage, it's not going to be good for the industry.

• 16:36Speaker 01

  That's right. I think if you are new to it, you get kind of burnt out waiting for those returns that really come eight to 14 years out.

• 16:47David Weisburd?

  People talk a lot about, well, we educate our clients, but I don't know if you could educate someone on a 10-year PPI. It's something that must be experienced. My very first investment in 2008 in a startup took me seven years to get back my money. Obviously, I was 22 years old, so I was more impatient, but it didn't feel like seven years. It felt like 70 years.

• 17:02Speaker 01

  Seven years is a pretty good outcome, too.

• 17:04David Weisburd?

  Yeah.

• 17:05Speaker 01

  A lot of my early angel investments were, gosh, about nine years ago now. I mean, we're just starting to see a few exits, so.

• 17:12David Weisburd?

  It's easier said than done. And of course, once you get the money, you're like, oh, I love this. Like, that wasn't hard at all. Let me do it again.

• 17:17Speaker 01

  Well, and along the way, so many of them fail that you like, you just feel like you've.

• 17:20David Weisburd?

  It's a lot of negative reinforcement before you even get the money. You've emphasized your concentrated portfolio a couple of times. Talk to me about your portfolio construction and what the principles behind it.

• 17:31Speaker 01

  What we've seen is that power law dynamics hold true throughout the equity market. So from early-stage venture capital, it's 1% to 2% of early-stage companies create the vast majority of returns for early-stage funds. In the public markets, it's the MAG7 has generated a vast proportion of the returns, both across the S&P and the NASDAQ, over the last five or 10 years. The same has held true in late-stage private markets, where the top 10 and really the top seven companies have generated an enormous amount of the growth and value over the last five years. And so we are intentionally very concentrated. 10% of our portfolio is in our top 10 positions, and we have maybe 25 investments in total.

• 18:15Speaker 01

  And so it's intentionally very concentrated in the companies that we think will continue to create that power law dynamic and create the most value. And we'll start to build positions in companies that we think could move into that over time, but don't want to dilute our exposure much outside of that group.

• 18:32David Weisburd?

  The best public investors tell me the same thing. I was honestly surprised to hear that, that they think about it as power laws. They think about it as a buy-and-hold strategy. So they're thinking about it like venture investors. Maybe not 14-year timeline, but what asset would I want to own for five to seven years? And you invest in, kind of, the trading up and down is noise, but they're looking at it very much like private investors.

• 18:51Speaker 01

  It's compounding, right? Like, the power of compounding. Buy the best companies in the world and hold them long-term and let them grow. I think what we're doing is just allowing people to get exposure to those companies. Three to five years before they go public and really take advantage of that compounding.

• 19:06David Weisburd?

  You've built this amazing ecosystem around you and you're great at partnering with outside other funds, other people. Talk to me about your strategy and how you built your deal sourcing network and your relationships.

• 19:18Speaker 01

  It's still quite inefficient despite the types of companies like in the space. The actual market is still very nascent, right? Like it was really created over the last like 15 years and most of the value has been over the last five years. So players are just coming into the space, but it's still a very relationship driven and very inefficient market. There is no marketplace, right? And so so much of my job, once we identify the companies that we want to invest in, it's really just figuring out how and how to continue doing that over time.

• 19:47David Weisburd?

  And so you pick the asset first and the structure second.

• 19:49Speaker 01

  My view is that the best companies are not hiding. It's just hard to invest in them. So every once in a while, kind of an up and coming company will come through and we'll do diligence on it. Usually don't invest right away, but like.

• 20:02David Weisburd?

  We actually do this exercise. We look at series B and series C companies led by the very top investors and over 90% probably, close to 95% of them were led by top series A companies. This whole meme of these companies coming out of left field and somebody in their basement like comes out of stealth and raises a hundred million dollars from Sequoia. It's not a common thing.

• 20:20Speaker 01

  Oh, interesting. I don't think I, thank you for sharing that. That's interesting.

• 20:22David Weisburd?

  Yeah, I was surprised as well because I guess if you think about it in retrospect, it's like the exception proving the rule. The fact that this is such a big story when a company comes out of nowhere is the proof that usually you have these leading indicators.

• 20:34Speaker 01

  Yeah.

• 20:34David Weisburd?

  Sometimes it's not the multi-stage funds, it's the top seed investors, but it's these known parties through known social networks, bringing it from the seed to the series A to the series B to series C. Between seed and series A, there are people that emerge from nowhere or, you know, there may be an Australian company or Israeli company that wasn't within Silicon Valley, but within A and B, it's actually quite predictive who your series A investors.

• 20:54Speaker 01

  Very interesting. A big part of my job to figure out how to invest in these companies, right? So is the company approving direct transfers on the cap table? Are investors roffering at certain prices? So like, are we, you know, going to put in an offer and then an existing investor just comes and takes it from us, right?

• 21:08David Weisburd?

  Do you have breakup fees or anything like that around those?

• 21:10Speaker 01

  No, it's not, not common. Certainly not at our transaction size. Maybe that exists at like, you know, billion dollar deals, but.

• 21:16David Weisburd?

  So first you figure out if you do all the diligence, will it actually clear?

• 21:19Speaker 01

  I think there's actually far more transition risk in this piece of the market than there is company risk. So a lot of our diligence is focused on how to invest in the companies and then how to get the transactions closed. So. Who do we know on the cap table that we could potentially like give them a call and say, do you have any LPs in your fund that maybe wants some liquidity because where you invest in Europe 50x?

• 21:40David Weisburd?

  And this is a fund tender.

• 21:41Speaker 01

  There's like a lot of different things, right? So like, let's say we have like a handful of friends from funds that are on the SpaceX cap table. Maybe they have some LPs in one of their early funds that would like some liquidity. So like you give them a call. Maybe there's an upcoming tender. Maybe we can participate directly. Maybe one of those funds will get a large allocation and we can become an LP in the fund that takes down that allocation. Maybe there's an opportunity for someone who's very close to the management team to sell a hundred million dollar block and it's more likely that that will get approved than some random ex-employee. So I would say there's like good sellers and less good sellers depending on your relationship with the company and ability to approve.

• 22:17David Weisburd?

  There's a funny dynamic too where the company might hate one of its early employees and either they want to block them or they want to part ways forever. There's this kind of almost almost binary.

• 22:26Speaker 01

  Totally, totally. So that's all part of our diligence process of like.

• 22:29David Weisburd?

  Depends on how much therapy, I guess.

• 22:31Speaker 01

  Is this pre-approved? Does the company, you know, have beef with you? Can we actually get this through? We're going to spend time on it.

• 22:38David Weisburd?

  What percentage of the time are you getting filled in your allocation on the first deal versus building up your position?

• 22:44Speaker 01

  Because we launched in 2023 and have been kind of continuously raising capital over that period of time. We've just continued building positions in the best companies.

• 22:54Speaker 01

  And I think we'll continue to do that going forward, even within our like next fund strategy. Like we will start with positions like I don't think will ever be one and done on the best companies.

• 23:04David Weisburd?

  I love the Stanley Drunken Miller strategy of invest, investigate. You invest, you get a little exposure, you learn more, and then you decide whether to invest more. It's politically incorrect to talk about it as a strategy in finance, but I think it's some of the best investors do put a toe hold, get some exposure, learn a lot. And if their conviction grows, can can write larger and larger checks. Are you ever trying to learn through your investment?

• 23:27Speaker 01

  Absolutely.

• 23:29Speaker 01

  And some of it is, okay, maybe learning more about the company, but also just, you know, seeing how the company grows, how the market evolves. And like, I think over time, as the company de-risks and you get more conviction in like your early thesis, or maybe the thesis changed, but you have even more conviction, you just continue layering on and building those positions.

• 23:47David Weisburd?

  What percentage of the time do you identify a company and you're not able to access it in any way?

• 23:52Speaker 01

  That's happened a few times. More often is that we get access, but we pass on like 95% of what we see because of some of the risks that we talked about on the transaction side. It could be counterparty risk, it could be closing risk, it could be rover risk, um, structural risk. Like, there's a lot, this is like still kind of like the wild, wild west. So like, you see a lot of weird stuff out there. And so it has to check a lot of boxes on like the, the legal side for us to be able to move forward with it. And so more often, we get access, but either we don't have enough information to make a decision, or there's just a risk that we can't get comfortable with. And so we, our default is to pass on it.

• 24:37Speaker 01

  Like, if I'm going to lose sleep over some risk that we took, it's like an automatic pass for us, even if we like the company and want to invest in it.

• 24:45David Weisburd?

  One of the trendiest thing going on in finance right now is continuation vehicles. They just passed $100 billion. Michael Woolhouse from TBG that raised a $1.9 billion fund to do this in the buyout space. Just recently, I had really my first serious conversation on this with Scott Os from Harbor Vest. They're trying, starting to do these continuation vehicles. Continuation vehicles is a fund might be in their 12th year. They have one asset, they might have SpaceX, that's 100 million. They don't want to have to liquidate it through the secondary market, so they do this GP-led continuation vehicle. Do you see that entering venture? And if so, why?

• 25:16Speaker 01

  Potentially. We haven't seen it in a big way yet, but as more of these companies in a portfolio start to look like public companies, but the funds that invested in them early on are now 15 years old. Like, at some point, I think this comes in. Like, we're seeing a lot of crossover between like private equity, you know, public markets, late-stage venture, secondaries. Like, the lines are kind of blurring about what this asset class looks like. And so I do think we'll start to see more of those, especially among the larger shops. I'm not sure that a lot of like the early-stage venture funds are.

• 25:48Speaker 01

  We'll see how it translates. I think you have to have like a decent sized AUM to even just like have the legal wherewithal to pull off a continuation vehicle. But yes, I do think we'll probably see more of those just to give time for those companies to stay private compound, but also provide DPI liquidity to earlier investors.

• 26:01David Weisburd?

  I think there has to be a couple of things that are present for these deals to happen. One is they have to be a certain critical mass. So in private equity, the buyout, the original investment might be 100 million, now it's 2 billion. So there's an entire ecosystem that'll help you. There's bankers that'll go and find that $2 billion for the GP. There's LPs that will do significant diligence. And in the venture space, I think this will happen ironically in these, you talked about these private companies, these private MAC7. In the Anthropics and OpenAI's, if it's a big enough position and if it's something that either a banker or the GP themselves could go out and raise $100 million for like an OpenAI Anthropic. I think this is going to happen. The reason for that is multifold. One is the GPs don't want to sell their best assets. It's not in anyone's interest. The LPs want liquidity.

• 26:45David Weisburd?

  And the GPs, emerging managers specifically right now, it's very difficult to fundraise. They want to show that DPI mark. When you do a continuation vehicle, it's technically a secondary as it relates to your fund and fund math. So you're able to show full DPI, which is such a huge differentiation now going into the private markets. So I think we're going to see it. I think a lot of GPs would love to do it, but their transaction size is too small to get a lot of help. So they're going to have to kind of beg, borrow and steal and find LPs. Oftentimes for assets that are not SpaceX and Anthropic, it's going to be much more difficult. But I do see this becoming bigger force in the venture market. And I think there's going to be a memetic aspect to it. Once a couple of people do it, LPs will get more comfortable with it. GPs all have other GP friends. They'll kind of start learning about this. So I do see this coming probably as early as 2027.

• 27:25Speaker 01

  I think you're already starting to see it on a single asset basis. They're just not calling it continuation funds. It's happening in like a single asset vehicle where old LPs are selling and maybe there's a pool of them, new LPs are coming in, like we participate in those. They're not.

• 27:39David Weisburd?

  Are these portfolios or single?

• 27:40Speaker 01

  So these are single asset. I think you'll start to see more portfolios across those like multi-billion dollar, you know, funds. But right now it is happening. It's just happening on like an individual basis.

• 27:50David Weisburd?

  And those GPs, how are they finding the new investors for these, what I would still call continuation vehicles?

• 27:56Speaker 01

  A lot are potentially LPs within their existing portfolio.

• 28:01Speaker 01

  And then others in the ecosystem like us, there's family offices. I mean, we haven't talked about it yet, but I would say probably 50% of this quote unquote "market" functions through kind of boutique brokers and investment banks that are trying to match buyers and sellers.

• 28:16David Weisburd?

  The secondary market that you've talked about, the secondary players went from the black market where people were literally selling forward contracts, SEC was gray on it, did not love it, to the scaled market with high Forge, Equities, and then these were acquired by larger players like the Morgan Stanleys and the Charles Schwabs. What's the second order effects of that? Are we going to see more institutionalized secondaries? And where is that market? And is that going to feed into retail?

• 28:41Speaker 01

  A lot of these acquisitions that you mentioned by Schwab and Morgan Stanley were driven by retail demand and trying to figure out a way to service that demand. You also said that we went from black market to scaled. I do not think we're anywhere near scaled on this market. I think we're still kind of just maybe in gray territory, but trying to figure out how to scale.

• 29:00David Weisburd?

  And in many ways, and I think this is the elephant in secondaries, is that they'll never be fully scaled because private companies care who's on their cap table.

• 29:06Speaker 01

  So there's a huge amount of retail demand for access to these companies. And there's a lot of players trying to figure out how to provide that retail, like, see that retail appetite, I guess. I don't think that it's going to change anytime soon because the companies don't really want it, right? They want to control who's on their cap table. They want to control what the pricing is. If they wanted to be fully liquid, they would just go public. And so I think there's just like a structural inconsistency there where like, just because there's a lot of demand does not mean it's going to be common in this marketplace.

• 29:40David Weisburd?

  So another way, the CFO of SpaceX, OpenAI, Anthropic, doesn't want to deal with individual investors texting them when they're going to go public and messaging them and asking for information. They want to deal with a couple trusted counterparties that could make it efficient, and they want to focus on building their business.

• 29:54Speaker 01

  I think that's right. I mean, I think there's a lot of structural reasons why companies are staying private for longer. One, they can raise all the capital they need in the private markets now, at least the best companies, right? Like, we have yet to see the limit on how much one of these companies can raise. OpenAI just raised $110 billion round in the private market.

• 30:11David Weisburd?

  Which is twice as much as SpaceX is reportedly raising in their IPO.

• 30:14Speaker 01

  In their IPO, right? So like, what is the public market anyway, aside from a lot of volatility and maybe headache for some of these companies? They want to control where their investors are. Maybe they don't want to deal with like the roadshows and the day-to-day volatility and the quarterly earnings reports. And like, they just want to grow. Confidentially for the future, like when you're trying to build a rocket to Mars, like what are quarterly earnings related to that? So I think there is a lot of noise and headache about being public. At the same time, I think a lot of these companies will eventually become public companies just because dealing with the liquidity for employees and executives and early investors is a headache, right? It becomes a full-time job in and of itself.

• 30:51David Weisburd?

  The positive and negative reinforcement of being a public company is so destructive to long-term shareholder value. A funny way to explain this is if you're a private investor, you have these quarterly updates and you're talking to the board and then you're a public investor. Now, after every quarter, somebody comes in and if you miss your mark by a little bit, they just throw like ice water in your face. First time, you're gonna be like, this guy's an asshole, why is he doing that? And then after three, four times, you're gonna be essentially learn helplessness and you're gonna be like, oh, okay, I need to focus everything on hitting my marks. Let's sandbag the numbers. Let's not invest into this R and D that in five years could 10x the company. There's so many downstream consequences of being a public company.

• 31:26Speaker 01

  Yeah.

• 31:27David Weisburd?

  And private CEOs, to their credit, have been able to prepare for these and have been aware of it, but it's also one of those things that's very difficult to internalize until you're a public CEO.

• 31:35Speaker 01

  Yeah, that's right.

• 31:38David Weisburd?

  Jamie, you mentioned you started your career in the global financial crisis. If you could go back to when you first started your career, what is one piece of advice you'd give a younger Jamie that would have either accelerated your career or helped you avoid cost of mistakes?

• 31:50Speaker 01

  Gosh, I wish I could go back even like a little bit before that and learn how to become comfortable with failing faster, if that makes sense? So I don't know about you, I'm like first child, type A perfectionist. I didn't like not being good at things when I was younger and I think I carried that into my career. I think as I've gotten older, I've embraced trying new things, being bad at things as like a learning experience.

• 32:19David Weisburd?

  It's so hard.

• 32:19Speaker 01

  Even failing, right? Like, nobody likes it, but like viewing it as actually incredible feedback so that you can pivot and do something else quickly as opposed to like, no one wants to fail slow, right? Just like leaning in, trying harder things, failing faster and really embracing that as a part of the learning journey. It's one piece of one chapter in a success story. It is not at all the end of the road, so.

• 32:40David Weisburd?

  I'll tell you two anecdotes which are actually the exact opposite of each other. One is at our firm, me and my partner Curtis, we've created this culture of you have to celebrate shitty first versions. And every first version is bad.

• 32:52Speaker 01

  Yeah.

• 32:52David Weisburd?

  Nobody, Van Gogh's first painting was not good. Everybody's first version is bad. It's by definition shitty, so you must celebrate it. So we have this culture when somebody does something and it's really bad, including me and Curtis, everybody, we celebrate it.

• 33:02Speaker 01

  I love it.

• 33:03David Weisburd?

  And you have to have like this policy because default is like, that's just shit. That's just bad. And then two, the exact opposite, just to show you how much of a perfectionist I am. I was, I've never really learned how to ski. And I was sitting with actually my great uncle and my wife. And I was telling him, well, I need to find a ski simulator in New York and I need like four, like four days of full ski simulator so I could be like on second. And they're like, you could just get an instructor on the first day. I'm like, yeah, touche. I'm like, that's how, that's how reluctant.

• 33:28Speaker 01

  Just go to like Thunder Ridge for an afternoon and like just put on some skis and try it.

• 33:31David Weisburd?

  Well, that's how reluctant and I used to be more perfectionistic. I like to think I've evolved, but that's how ingrained it is in adults, like not to be bad at anything. Like we create these elaborate systems. I've been like planning this ski simulator for like probably three years, just so you know.

• 33:45Speaker 01

  And you haven't done it for three years.

• 33:46David Weisburd?

  And I still haven't done it.

• 33:47Speaker 01

  You started three years ago, like you'd probably be a decent.

• 33:48David Weisburd?

  Well, if I just booked the ski trip, I would do it on first day. It's even worse than that, but it's something about the human mind and the lack of plasticity. As we get older, our egos become so fragile that it is very difficult to start.

• 34:00Speaker 01

  I feel like my, I have less of an ego than I did when I was younger. Like I don't care what people think anymore, like trying to speak out of them.

• 34:06David Weisburd?

  It's like somewhere like in your early 30s, you like the most you got to skull, the most on a hat and then you start to care less and less.

• 34:12Speaker 01

  Yeah. If you can, if you can pull that forward a little bit, I think life will be happier.

• 34:17David Weisburd?

  Well, Jamie, thanks so much for jumping on and sharing everything and looking forward to doing this again soon.

• 34:21Speaker 01

  Thank you for having me. This was great.

• 34:23David Weisburd?

  Thanks. If you found this conversation valuable, please click follow How I Invest so that you don't miss the next episode with the world's top investors.