E186: Where’s the Alpha Opportunity in VC in 2025? w/Abe Finkelstein

What’s the playbook for building a resilient, multi-billion‑dollar venture firm that weathers every market cycle? In this episode, Abe Finkelstein, Co‑Managing Partner at Vintage Investment Partners, shares how they underwrite managers, navigate funds‑of‑funds and secondaries, and spot next‑gen innovation—all while maintaining LP confidence across turbulent times.

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

• 0:00David Weisburd?

  So is European venture dead?

• 0:04Speaker 01

  You're the first person that ever asked me that. Look, I don't think so. As a firm, we don't think so. You know, I think, I think you saw it recently. We actually added a partner in London.

• 0:19Speaker 01

  Our first partner outside of Israel. So we're actually long European venture. We've been investing in Europe for about 15 years now. I've done extremely well. I don't just look backwards. I am looking forwards, but I definitely think the, the best years for Europe are ahead of itself. In terms of venture capital, we can touch on that, but it might be a little bit of a contrary intake, but we're big believers in the opportunity there in venture capital.

• 0:47David Weisburd?

  And one of the reasons I wanted to ask you is because you're not stuck on a specific strategy. You're in Europe, you're in Israel, you're in US. So you don't have to be investing in Europe. Why take the time to open up an office in London today and why lean into Europe?

• 1:03Speaker 01

  It's a great question. I actually see some parallels with what we saw in Israel over the past decade and a half, even 20 years.

• 1:14Speaker 01

  So some of that is around the simple, you know, going to the basics of the basics, like the demographics and, you know, saying what's the future going to look like for people, you know, in Israel. You know, kind of being an entrepreneur, I always told people is almost like a, a job, like any, you know, the way I would have thought of being a doctor or a lawyer or an investor back in the day. So I, I think when I look at Europe, and that's because there weren't, you know, there's not a ton of different alternatives. To begin with, kind of going back, when I kind of feel that way with Europe as well. I think if you're, you know, a younger person in Europe, you may decide to pick up stakes and leave, but I think one of the ways to get wealthy there is probably more likely to go the path of being an entrepreneur. So I think that's a, that's a good thing that we're going to see more and more entrepreneurs coming to market.

• 1:59Speaker 01

  Again, just looking at a younger population and the opportunities that are afforded them. And then. The second thing is I look back at Israel, if I go back 20 years, 15 years. You know, the foreign investors started coming over to Israel, the way they started going over to Europe, probably about five or six years ago, some even before that. And it ultimately just raises the bar for the entrepreneurs. You know, the foreign funds don't, you know, they're not satisfied with 100 million, 500 million, even a billion dollar exit these days. So when they're putting money into your company, you better be aiming much, much higher. So I think that's, that's a fantastic thing that happened in Israel, and that's something that we see going on more and more in Europe.

• 2:42Speaker 01

  And then finally, I think kind of, you know, success, we got success in the sense that we've seen, you know, Spotify, and then, you know, we have Revolut, which now they're talking about being valued at, I don't know whether it's 40, 50, 60 billion dollars. I mean, these are very, very large numbers. And then Klarna and a whole bunch of other ones that can be expected to be public offering. So I think that entrepreneurs are seeing out of Europe that it's possible to build very, very large companies and that next generation of whether it's Lovable or N8N or what have you, like, again, these are the next ones that we think can become bigger and bigger. So I always say when an entrepreneur, your, your, your neighbor sees how well you're

• 3:25Speaker 01

  doing, they say, wait a second, you know, that idiot can do it, then I can do it even more so. So I think that that kind of flywheel ecosystem is developing in Europe. It's not without its challenges. It isn't going to be a walk in the park, but I do think we're feeling that. And the last thing I would say is that we're seeing these larger companies, and we saw that in Israel as well, you know, spin off the next generation of entrepreneurs. They were, they were part of a company that got built to a very, very large scale. And again, they say, wait a second, I see this as possible. You know, when you see something happen, you realize it's possible. I'm going to go out and start my own company now. So, you know, that, that's why we're excited about it.

• 4:03David Weisburd?

  The reason I asked you whether European VC was dead was not necessarily to be controversial. It's the fact that most people, at least the consensus view, is that the future of VC, in at least the next decade, will be driven by AI. And in Europe, you seem to have this weird dichotomy where you have this regulatory landscape that's making it very difficult for AI companies to succeed, but also you have Paris, which is the hotbed of AI.

• 4:29David Weisburd?

  How do you weigh these two factors? And how are they both affecting the European ecosystem?

• 4:34Speaker 01

  That's a great question. And by the way, I think most people are skeptical about Europe and venture capital. And I'm not saying that like I'm not also concerned. I have my concerns and we'll see how it plays out.

• 4:48Speaker 01

  But I tend to think in general, and again, there's no doubt that regulatory and government, and again, we saw that in Israel, we see that in the US can be a big boon for investment in general, investment technology, investment in venture capital.

• 5:03Speaker 01

  And maybe Europe's not there around that. And I think they do need to do a bunch of things, whether it's around like tax incentives, whether it's bringing over more of the large corporates to open up R and D centers and things like that. By the way, like tax incentives make all the difference in the world in a lot of cases, whether it's for startups or for corporates. And so that can be a huge thing. And I know Europe is having challenges with that, and particularly the UK as well. And it seems like in the UK, given some of what they're doing, the tax side is actually driving people out as opposed to having people come in. But I'll put that on the side. I think venture and entrepreneurship, it tends to live in a bit of a bubble. You know, we thought regulation was going to kill Uber and Airbnb.

• 5:47Speaker 01

  And you know, these are some of the largest companies in the world. And I think that the talent will just ultimately get beyond it. So Paris, for example, amazing engineering schools, whether it's companies like Mistral or even Hugging Face has Nexus there and Levin Labs. Like we're seeing those companies come out regardless of regulation. Now, some of them may start there and then move their operations to the US. And we see that with the Israeli companies as well. But ultimately, I think the opportunity is that those companies start in Europe and you can get many of the European VCs or the US VCs that are over there, get there first and give them the seed capital. So I just see that kind of stuff just operating. It's its own organism.

• 6:30Speaker 01

  It's kind of like here in Israel that we've had a conflict going on. Well, we've had a conflict going on for 75 years or maybe 3,000 years. But we've had a conflict at least since October 7th. You know, you could, everything, you know, venture capital investment is living in this bubble that's just doing amazingly well. And I think in Europe, that's going to be the same thing with entrepreneurs want to get something done. They want to build something. They're just not gonna, you know, listen to the regulation and what's going on. Clearly, that can dampen the opportunities. So I do think that needs to be addressed. But I just think we're going to continue to see amazing successes because there's just going to be more experienced entrepreneurs.

• 7:12Speaker 01

  We've seen big companies getting built and we'll want to build one even bigger the next time around. I mean, even though I look at, you know, you know, there's Spotify I mentioned, but look at Stripe, who founded Stripe, you know, it was two Irish guys that had access to the capital to do that. You know, they happened, you know, they weren't from San Francisco, you know, they weren't from New York, they weren't from Tel Aviv. So I think it's possible anywhere.

• 7:37David Weisburd?

  Taking a step back, tell me about Vintage's strategy and how does Vintage invest in both funds as well as startups?

• 7:46Speaker 01

  So we actually have three separate strategies. We have fund of funds, where we invest in venture capital funds, you know, when they come back to raise their new funds. And within the fund of funds, we have a number of different strategies I can touch on. We have secondary funds, which is actually where we started back in 2003. This was kind of the contrarian nature of Vintage and Nowenfeld, who started the firm who saw everybody exiting technology and venture after the dot com bubble burst and exiting Israel as well. And he said, no, I'm the opposite. I'm long technology. And I think that's one of the reasons why he hired me as employee number one, because he saw I was also long technology. So we have secondary

• 8:28Speaker 01

  funds that buy out investors from their investments, both in venture capital funds and direct holdings in companies. And then we have a growth fund. The growth fund is actually The most recent strategy that we added, that was back in 2011. And the idea of the growth fund was to look back into the portfolios of the fund of funds and the secondary funds and cherry pick what we thought were the best emerging companies, you know, at that growth stage and go in on a direct basis. So if I, I think about everything we're doing, it's kind of covering the venture landscape from the earliest early stages via our fund of funds, typically going into early stage funds. And then the secondary funds is maybe going in a click later to much later, buying out

• 9:13Speaker 01

  LP interests, doing direct secondaries. That growth fund is kind of somewhere, kind of the B rounds up until the last round. And it's a cross venture, so everything is venture capital. And in our fund of funds, we have multiple strategies. So we have a fund of funds specifically focused on Israeli funds. We have a fund of funds for smaller funds in the US and Europe, emerging funds in some cases, and then a fund of funds for larger funds in the US and Europe and a health fund of funds. And they're all super synergistic. You know, we can get to, you know, a deal from multiple different ways and leverage each of the funds. At the center of it, I would say, is our relationship though with the GPs of the funds.

• 9:55David Weisburd?

  You mentioned you have a fund based on small fund of funds or emerging managers. How flexible is that mandate? Are you looking for the funds that have a 50% chance to be a 10x plus? Or are you looking for something to be diversified within itself and predictably deliver a 3x?

• 10:15Speaker 01

  That's a great question. So, um, so that fund specifically, the mandate of it is to invest in funds in the US and Europe, $200 million in sizes and below. And typically the funds that are 200 and below are doing pre-seed and seed.

• 10:31Speaker 01

  We, you know, I would love a 50% chance of getting a, I don't know if it's a 10x or 5x, but that's not great, but, but they're definitely like, it's a mix of two types of funds. It's usually funds that may be on their, you know, fourth, fifth or sixth fund that just, they want to be small, right? So it could be like a Ludlow out of Detroit or a version one. These are funds that they intentionally want to remain, remain small and may remain small forever, or a floodgate, for example. So very, very experienced investors over multiple cycles as well. And then what we also try to do is find the next great versions of those funds. So it could be that it's somebody, we only, we only invest in investors that have some sort of track record. So it could be a first time fund. It could be

• 11:16Speaker 01

  a single GP, it could be a first time team, but we want to see a track record. And the hope is that they can perform really, really well. Some of these funds will grow up in size over time. Like we were in the $100 million fund of Primary Ventures of New York and, you know, we were in the $120 million fund of .9 out of Germany and they've scaled up over time and kind of moved out of that smaller fund of funds, or our fund of us targeting smaller funds. But we're always looking for those new managers and yes, what we, what we see is that the diversification, we don't want to be over diversified, lowers the risk and therefore we can take big bets on these smaller funds. And we've had, you know, these $200 million and below funds, we have a bunch that are, you know, 10x's and above,

• 12:01Speaker 01

  we have a bunch that are 5x's and above, we even have a couple that are 20x's and above. And then we have a few that haven't performed quite as well. What we don't have a lot of, interestingly enough, is those that have actually lost money. So obviously we're not doing, we're not making an investment in a venture capital fund to do a 1x or 1.2x, but it's very interesting to see, you know, if you get an experienced manager, you know, who's made money in the past, has a track record, it's, it's rare that they'll actually lose money for you. It happens, but it's, it's, it's pretty rare. But for sure, that's the vehicle that's a bit more high betas, the way I would put it.

• 12:43David Weisburd?

  And every LP will say they do first time funds, most will not, and most like to track the fund over time. Give me the thesis for why Fund Ones are good investments. Why should somebody invest in a Fund One?

• 13:00Speaker 01

  We actually had a discussion about it today in one of our investment meetings that sometimes, and we've seen this a lot, where the Fund One isn't good. It could be timing, it could be portfolio management, and then you have to make an assessment, do I go into Fund Two, and Fund Two turns out to be amazing. And we've had that. There's a bunch of well-known groups where their first fund was terrible, and then they went on to do amazingly well. But you're saying, if I say, why invest in that first fund, is because, first of all, like, an access issue. Like, we see something that's amazing, and we really believe in that, like, we want to be there from day one. It'll give us the ability to have ball control, so to speak, to be able to increase our allocation over time. And it also might be, if we're not there from day one, and they do extremely well, we may not be able to

• 13:44Speaker 01

  get into that Fund Two. Now, it's kind of rare that you know how strong a fund is within kind of those first couple of years before they come back and raise that next fund, but that's always a risk. But the main idea is to get there, get in early, get a toehold in the fund, and then again, if they do well, you can scale up over time. And that's the main reason to do it. And again, sometimes, you know, sometimes being in the fund can teach you a lot. So it could be that I say, okay, I'm going to skip Fund One, but then I'm going to come to Fund Two, and then Fund One looks sideways, or maybe it looks great for some reason, but, you know, and that can make me invest or not invest. But it might, having been in the Fund One, and known, and see how it behaves, and how the partners

• 14:29Speaker 01

  behave, and the types of investing they're doing, that could actually change my opinion versus Fund Two. So being on the inside is also worth something as well. I mean, we don't do a lot of Fund Ones. We do do them. But that's why we keep the bar, like, super high on those. There's really got to be, as I said, there's got to be like, one sentence that you can describe the fund in, is why you think it's like, super amazing and differentiated for you to go do it.

• 14:53David Weisburd?

  It's that edge.

• 14:53Speaker 01

  Yeah, it's that edge. We might start with a million dollar check, by the way, and that million dollar check could become a $30 million check over time, right? So.

• 15:02David Weisburd?

  Said another way, if you can't simply explain the edge, then there is no edge.

• 15:06Speaker 01

  Or, you know, I it's not being conveyed to me properly, or I can't interpret that. So again, we've made mistakes and we've missed things because I couldn't discern the edge. But I would say even the ones that I didn't do and I made mistakes on, I saw the edge. I just didn't have the, you know, maybe the guts to go do it for whatever reason. But I saw the hedge and I'm, you know, so that kind of tells me like, if you can see the edge, then there's usually a good, like a real, there's usually a good case that it's going to turn out well.

• 15:36David Weisburd?

  Obviously, Fund One is extremely risky, even from a entity level, whether the team stays together. What are some ways that you could de-risk investing into Fund Ones?

• 15:46Speaker 01

  So first of all, the model that we do it is a way to de-risk it. Again, we're probably investing in that vehicle in about 20 funds, about 10 to 12 of them. I would call core checks and then another, you know, six to eight are sort of these toe in the water ones. So by having that diversification, it tends to de-risk it. So that's the, that's the main thing. I, I think also, and again, I don't want to toot our own horn, but we've seen, you know, what works, what doesn't work, managers, you know, and staying close to these early stage managers.

• 16:17Speaker 01

  You know, giving them guidance, not telling them what to do, obviously. But, but I do think we have contributed over the years to making some of these groups, maybe giving them a better chance to, to be successful. So that's another way de-risking, just because we've seen so much. But at the end of the day, it's you're taking a big risk, right? And but, but I would say the main, the, the main de-risk going in is I, I always like to, and I mentioned it before, is to say that, you know, we're not doing first time investors. We're doing people that have made investments. Maybe they haven't done it in kind of a classic fun sense, but they've made investments. There's feedback from entrepreneurs about them. You can kind of read something into the tea leaves from what they've done before.

• 17:00Speaker 01

  So it doesn't mean that somebody couldn't, you know, come out of some large organization and, you know, start just making investments and do amazingly well. I'm sure it's happened in the past, but I think we de-risk it by avoiding those and focusing much more on the ones that have had some investment experience and at least a decently robust track record.

• 17:23David Weisburd?

  You've repeated this multiple times, the benefit of having the toehold in the fund, but also the information advantage of being an existing investor versus observing it from the outside. What do you see on the inside that you can't see from the outside?

• 17:38Speaker 01

  You see, you see how people make decisions, you see whether they're careful with them, you see whether, you know, how deeply they go on things, they see, you can see, again, how they interact with you, what information they're willing to share with you or not, you know, how transparent they are. Again, these, these things are real partnerships. Again, we're not running these funds, but you're involved with these people for, you know, we, I say 10 years, it's probably more like 20 years in many cases. And ultimately, like you want to be involved with people that you can trust, that you have fun working with and interacting with. And again, being on the inside, you could, you can feel that. And also being on the inside, you know, it's more the, you know, it's the job of the GP

• 18:20Speaker 01

  at the end of the day, the fund manager. But you can also see some interesting things like bubbling up in the companies, right? You can see a little bit more detail than opposed to saying, okay, three years from now, start telling me about, you know, what happened. You can kind of see that, that time series of how things are progressing. I must just say, and again, we, I think we have okay judgment on entrepreneurs as well, but we get to interact with the entrepreneurs that they've invested over the years, listen to them, hear what they're saying, and that type of stuff as opposed to, again, just at one point in time when you're due diligence of a fund, to have to make a decision, I'm in or out based on everybody being prepped to say wonderful things about the fund. So being on the inside can just make a tremendous, tremendous difference.

• 19:03David Weisburd?

  It's also what you're not seeing, which is you're not just seeing a backwards applied narrative to why you did X, Y, and Z. You're seeing in real time before the decision is made. And that's just a whole different way to view a fund versus through, through a narrative that the GP has weaved.

• 19:19Speaker 01

  A hundred percent, a hundred percent. And again, like I said, this isn't, you know, at the end of the It's working with people in a insanely dynamic market and like so that's the thing like you really you want to be in the trenches with them and that's that's really critical. Again, we've we've invested in fund twos as well, but in many cases, it's been people that, you know, we've we've been tracking for, you know, that first fund and even before. Like, there was one fund in our portfolio where we didn't do the first fund because we didn't like the strategy related to the timing of the market, but we loved the person.

• 20:01Speaker 01

  And also, there was some team dynamics as well, two partners, when they came back for the the second fund, the strategy had shifted a little bit, the market had shifted a little bit, and they came back as a solo GP and we're like, great, you know, I'll back that person and it all it all worked out. And we'd kind of been following it relatively closely along the way, also because the fund manager, you know, very graciously was in touch with us, giving us updates as well, which is also, that's great, you know, like, I appreciate that also, even though, again, we had passed on the first fund.

• 20:35David Weisburd?

  And you mentioned that oftentimes, the fund one is okay and the fund two is great. What would make a fund two suddenly pick up and be a good fund where it wasn't as a fund one?

• 20:46Speaker 01

  Great example, I, you know, it's it literally was one of the first fund to fund commitments we did, we did back in our first fund to fund. So the situation was the first fund, to be fair, this was the first fund was raised in 99, 2000, which was like, or maybe 2000, right, that's the one of the worst vintage years ever. So ultimately, I think the fund did a 1X, so I don't know if that was top quartile, or so they they didn't lose money, which I'll give them credit for. But what was really interesting, when we were analyzing the first fund, we saw that out of the whatever, you know, 100 Great exits over whatever period of time, you know, they were in, you know, they had picked four out of the 20 portfolio companies that they invested in. I was like, wow, you know,

• 21:27Speaker 01

  these guys seem to know what they're doing about picking. But we analyzed the portfolio, we saw they entered with very low percentages relative to their fund size and a lot of their following capital was used to help, let's say, the more challenged companies survive versus putting more capital into their great companies. Now, when we talked to them about Fund Two, we sat down with them and we were going to pitch them that that's what we saw in the first fund, like, okay, so why we wouldn't do the second fund. And they literally came to us and said, look, you know, we see where we made our mistakes. We want to change it. We think we picked good companies. Where we went wrong was around portfolio management and construction. And that's what we plan to do differently this next time around. Now, it could have been, they would have

• 22:12Speaker 01

  screwed it up, but it turned out that that second fund ended up being, I think it was something like a Forex net fund. So again, I think it was that it was picking up on some of the, you know, what they were doing well and where they weren't being able to exploit that and take advantage of that. So again, it doesn't always work that way, but I do think, and also, by the way, I think it also says a lot about managers when they see, you know, what they did wrong and they want to correct that. You know, a little, something that isn't necessary public information, but, and I blame myself as being here in the beginning, but, you know, Vintage's first fund was our worst fund so far. And I think a lot of it is, okay, you know, you think you know what

• 22:54Speaker 01

  you're doing, and, but there's a lot, a lot of learnings. And we, you know, we do three offsites every year where we beat the crap out of ourselves to figure out what we did wrong and what we need to do better. And that's something that we started, you know, way back in the day in 2003. And again, you know, Fund One of ours should have been much, much better for a few clear reasons. And we changed that. And, you know, so far, the future funds have been, subsequent funds have all been better than that first one. First one was okay, but the next ones have been

• 23:24David Weisburd?

  I think the top LPs like the top VCs look at the manager's rate of change. You mentioned that fund, not only did they react to feedback quickly, they actually internally generated what was wrong with the strategy and improved before they even met with you. That's even better than being reactive to feedback. So you also have to look at the trajectory, not just the point in time. One thing that I've learned from talking to hundreds of investors, founders and business leaders is that planning for the future isn't just about growing assets, it's also about protecting the people who matter most. Life comes with a lot of important milestones. Maybe you're buying a home, starting a family, planning for college, or simply thinking more intentionally about your financial future.

• 24:06David Weisburd?

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• 24:33Speaker 01

  A hundred percent. And that could be around things even like sectors that you're investing in. This fund was also very interesting because they were invested in a particular sector because they had a view on it. And again, that first fund did a 1X in a period of time where again, 1X was not bad. But a lot of it had also to do with the sector they were investing in and they said, okay, this next one, we're going to have a thesis around these three sectors and that's where, because we believe that's where the puck is going, where the world is going. So that's also something like, we're seeing that. I'm seeing that more and more with funds and I respect that more and more. I would say if I had to go back 20 years and you asked me, I said, oh, if you know, funds are changing the areas and the sectors that they're focused on, I'd be like, I'd

• 25:18Speaker 01

  be a little wary about that. I'm a little wary about that. But even if I'm a fintech fund, but within fintech, I've always had new themes that I'm looking at. So I think that's critical.

• 25:30David Weisburd?

  A lot of times, these labels we've put on things like strategy drift versus changing strategy or evolving strategy, it's only clear in retrospect whether that was a positive or negative and people kind of paint these narratives to try to highlight or de-emphasize parts of the strategy. You guys have these offsites every year where you're constantly just rigorously debating your own strategy. Tell me about the process on that. How do you evolve your strategy year over year and what have you found that works best as a fund?

• 26:04Speaker 01

  It's a great question. Just from a specific process point of view, we pick a number of topics, some of them return on themselves all the time. Like, are we handling our reserves properly in our growth fund? In our secondary deals, should we be buying LP interest in managers that we don't think quite as highly of? Things are always going, we're always doing analysis to understand that. But the whole idea is to focus on a few different topics, dive in deep, and then out of that

• 26:45Speaker 01

  come back and say, hey, let's try to implement that in what we're doing. So I'll give you a great example. Over the years, we may be able to be accused of being, and this is even me personally, a bit too conservative. And when we would price companies, for example, when we were doing growth deals or when we would look at LP models on the secondary side, we would hone in on the winners and we often put in like what we think the outcomes could be, low base, high. And we always found with the best companies that our high case was always too low. So, and again, in the moment, you look back, you're like, you're saying, okay, wow, we put...

• 27:28Speaker 01

  You know, a billion dollar exit on that company and you know, now it's back then that's crazy, right? And now it's a hundred billion dollar company. And then in another case, it might be, oh, we put a five hundred million dollar exit. Oh, and now there's going to be an IPO at nine billion. So, you know, a lot of that work is then to say, okay, when we, when we look at deals, you know, if we're, if we feel good that we've honed in on who we think the great companies are, you know, let's figure out if we're not being, you know, too conservative around pricing deals. So that's just one example, but that's the idea is that we, we go, we, we take the data of the deals that we've done, we look at the analysis at the offsite, and then we come back and try to implement it in our, in our workflow. We had things around like, you know, diversification of portfolios, you know, where if we're buying on a

• 28:12Speaker 01

  secondary basis, like how to think about that, if is, is a more diverse portfolio a much better opportunity than one that maybe has a couple of, you know, amazing companies and it, or at the time that we think our amazing companies are not and so on and so forth. So it's really like practical things that we deal with when we look at transactions and then do the analysis and see what, what the outcome should be and then come back. Now, a lot of it ends up being, is always more art than science, but it's just, it's, it's important to go through that. And then we also just talk about strategies in general, like our fund of funds, for example, you know, our fourth fund of funds, you know, we started with an Israeli fund of funds only, and then started investing outside of Israel. By the time we got to our fourth fund of funds, it was Israel funds,

• 28:56Speaker 01

  big funds, small funds, US funds, European funds. It was this big mishmash of, you know, fifty or sixty different lines in our fund of funds. And, you know, when we realized it didn't make sense to have all that in one fund of funds, and that's why we ended up breaking it up into different vehicles, just because A, they behave differently, and also to give more flexibility to our investors, you know, to pick and choose what type of strategy they might want. So it's also those types of topics as well. So, yeah. And then now, by the way, like, we're, we're gonna have an offsite where a lot of it is around like, how do we, you know, want to play what's going on in AI? You know, again, this is a conversation that we've been having for the past two years, and it comes up each one, but we're gonna have another one to say, hey, you know, where are we

• 29:38Speaker 01

  today in the market with that? Because we've invested in a bunch of different companies, we're doing well with a bunch of different companies, you know, but we want to dive deeper and see like, where we're making money and where our investors are making money in the sector thus far. So. It's those types of things.

• 29:54David Weisburd?

  We'll get right back to interview, but first, we're looking for the next great guest. If you or someone you know is a capital allocator and would make for a great guest, please reach out to me directly at [email protected]. It sounds like a lot of what you're doing in offsites is you pick these sacred cows, these things that you're never supposed to question. Diversification, conservatism, valuation, and you attack it systematically. And the offsite gives you the mind space to have everybody in the room talking about these things. And I'm sure a lot of times the takeaway is we're doing things how we should be doing them. It's not always, let's, let's change this, this is bad. Sometimes you double down on your strategy, which itself could have value.

• 30:34Speaker 01

  Yeah, for sure. Although, most of it is just us beating ourselves up for the stuff that we wish we would have done better. But it's, it's interesting. Another part of it, I mean, again, is that, you know, Alan, who started the firm, you know, says that when he comes to the offsite, he likes to be the first one to talk and talk about all the mistakes that he made. So it kind of sets the tone and just gives it kind of that space to say, hey, you know, that's really, you know, we, we want to get better. And you're right, it's not just about like, let's beat everybody to a pulp and depress everybody, but it's like saying, okay, let's take a serious look, like you said, these sacred cows and, you know, and, and figure out how do we get better at what, at what we're doing. So it's, yeah, it's a, it's a really important part of what, what we do.

• 31:16David Weisburd?

  One of the things that makes you guys unique is you use the same team against different strategies, which sounds kind of intuitive, but then you look at, you have fund of funds, you have growth investments, you have secondaries. Personally, my bias is I consider secondary is a completely different animal from, from the rest of the industry, but you guys have it in one team. Why is that?

• 31:33Speaker 01

  It's a good question. I'll say this, from a bottom line perspective, it's just, it's like data and information flow and intelligence. My partner, Seth, likes to call us an intelligence organization. You can tell he was in the army here. But that's really the idea is that if we had a fund of funds team and a growth team and a secondary team, you would just have siloed information and it's just so super synergistic. Like there's not a phone call that I, that I have with a GP where somehow something doesn't come up. Around potentially doing a secondary, maybe even a growth round in a company could be a secondary company could be even an LP interest. And, and I think if it was then like, okay, I have this

• 32:16Speaker 01

  relationship with the GP and then, okay, let me go turn it over to the, the team that does secondaries. I just think some people get lost in, along the way and maybe even lost in translation. So again, it's all super synergistic. At the end of the day, it's venture capital. You know, the companies are the building blocks. You know, the fund managers are at the, the center. And, you know, if I look at, you know, a secondary deal, at least the way we do them, you know, meaning like they're very like curated, you know, this kind of rifle shot secondary, smaller deals between, I don't know, one and 10 million typically. They're usually things where we're working together with our GPs because they might have an LP that wants to sell. And we

• 32:58Speaker 01

  know the portfolio because of the relationship with the fund. I would say as a team, there are some people who spend a bit more time working on the fund to funds deals and working on the secondary deals and working on the growth deals. But it's all, it's just too synergistic to, to separate all that. At the end of the day, it's about making, you know, it's about evaluating the underlying companies and the fund managers who are involved, whatever way you want to get to it. Even when we're doing a growth, they own a company, we look at it just as much as who else is invested there. You know, it's not going to cause us to make an investment or not make an investment, but that's also a critical part. Are these trusted partners around the table or not? And again, that just might get lost. You know, somebody then had to come over to me and start asking me about, hey, you know, there's this deal and there's these funds in it and I

• 33:41Speaker 01

  know you're closer to them and like those conversations you come naturally. But if it was that separation, I think it wouldn't, you know, be as, we wouldn't be as successful and it wouldn't be as efficient.

• 33:50David Weisburd?

  You recently had a successful generational transfer with Alan Feld, who I previously interviewed. And just to give you a sense for that, I tried to interview him again and he introduced me to you. So he, he lives by his generational transfer. He's a man of his word.

• 34:06Speaker 01

  That's right.

• 34:07David Weisburd?

  What are some of the behaviors or processes that the firm went to in order to have this successful generational transfer?

• 34:14Speaker 01

  Yeah. So it's a great question and. I appreciate Alan highly. I'm gonna do all his future podcasts, I guess. But, with pleasure. But, no, it's really like kudos to Alan, basically about 10 years ago. The trigger was actually, I mean, I'm sure Alan had it in his head before that. I mean, Alan's a very visionary type person. But, you know, when Asaf Horus joined us as a principal and then quickly became a partner and then, you know, promoted to general partner, you know, he was, I guess, in his early 40s at the time.

• 34:52Speaker 01

  You know, I was somewhere when he joined, probably in my mid 40s to late 40s. And then, you know, Alan said, "Look, I want Vintage to last forever." I guess he saw, he felt between a meat myself and a soft, there was a good core that could take it going forward. And he ended up doing research, among other funds, both that had successfully handled succession and those that hadn't. I forgot the number that he spoke with, but I think he came away with a few core ideas. One was that, you know, things need to be put down on paper, right? Both, you know, to sketch it out and also just legally, right? And then, you had to really make clear lines of demarcation.

• 35:37Speaker 01

  So, in the case of what Alan decided at Vintage, was that at the age of 62, you're no longer involved in new funds. And it just made it a clear line. Is that you've raised these prior funds, you've been investing out of these prior funds, you're involved with those over time. You know, there's maintenance, again, it's probably more than maintenance, that's probably belittling what you have to do, but still, it's much less. But 62, you're not involved in raising the next funds. That's what happened in the year that we raised our fourth growth fund, now our eighth fund of funds. So Alan isn't going to be involved in those going forward. But it just set the process going forward.

• 36:20Speaker 01

  So when a meat hits 62 in a couple of years, the same thing will happen with him. And then when I hit 62 in about a decade, that'll happen with me and so on and so forth. Then it just makes it clear to everybody. And that's something that we've told everybody within the firm that that's how it works. And we've told that to our investors as well, which is extremely important. And we've now been telling that to our funds as well and other people. And so the idea is to, you know... Set it down on paper, make clear lines of demarcation and then start to message that well in advance of that happening. And you know, so far that's working. It's been an important thing for myself and to meet myself as well, because we

• 37:01David Weisburd?

  That must help with recruiting as well, right? Because you have, you have a clear path for the next generation.

• 37:08Speaker 01

  Yeah, 100%. And again, you know, most people aren't going to get there, but we have enough proof points in the firm. I always say like, you know, technically, I don't even remember what my title was, but I started as an associate. I mean, it was a venture partner or stuff, was a principal. Again, we brought on a couple of partners as partners as well, but the idea that you can, you can move up, you can stay here forever and move up over time if you want to. It's 100% the case. And, and I think, you know, the other thing is that, um, you know, Alan, like say he's in the process of retirement, but you know, it's probably next year sometime, he's going to go down to one day a week and he's, you know, that we have an equal partnership now. And there's no, you know, after, there's going to be no

• 37:53Speaker 01

  long tail of the founder. So nobody's going to get that going forward. So he's really, you know, somebody who set the tone also around that, that you have somebody, you need that. If you don't have that, I mean, you've seen other firms that there's somebody who just holds on forever. And, you know, that can work too, in some cases, but I don't think that's, it's not what Alan wanted. And it's not what we want either.

• 38:14David Weisburd?

  Let's talk Israel, just to give you a sense for how quickly this has evolved. When we had our pre-interview chat, it was before Israel and the US had taken out Iran's nuclear program. That seems to be very positive for Israel. Tell me more about Israel's ecosystem today, post kind of the dismantling of the Iranian nuclear program.

• 38:42Speaker 01

  So first of all, it's like, you know, there was that and now it's on to the next problem, right? Like, we have to deal with hostages and what's going on with Gaza. So that's never ending. But what I would say, like, even, you know, day before that and day after, I mean, I know it was only 12 days. I don't think like, and even since October 7th, I don't think that the Israeli ecosystem has like skipped a beat. Like, it's pretty incredible. Like, we talk about all the time, the resilience and things like that. But it's actually only getting more and more active. I'm losing my track of time, but I think immediately after that, there was the announcement of Melio getting bought for $3 billion. That's an Israeli

• 39:22Speaker 01

  company. A few months back, Wiz was bought for $32 billion. Next Insurance, $2.6 billion in the same week. We had the IPO of Etoro, which was the first VC-backed IPO. This year, it's an Israeli company. But now that kind of Iran has happened, you know, I don't know if more, you know, we're gonna have to do something else. There's gonna be additional conflict. I actually think like, when I look at the whole region, it's probably been de-risked dramatically from where it was on October 6, 2023. And maybe de-risked to the point, you know, where it's been less risky than ever, to be frank. So I think that's fantastic.

• 40:02Speaker 01

  And I definitely think there's renewed momentum to end the war in Gaza. And then there's renewed momentum to actually have peace with more of our neighbors, which, when you take a step back, it's pretty incredible. And if I had to make a bet, I suspect that within the next 12 months, you know, the war with Gaza will be over and that we'll have peace with Saudi Arabia. And that's the craziest thing, maybe even with Syria and like, you know, who would have thought? So I'm not naive enough not to worry about the next thing that's coming around the corner, like, who knows? But I definitely think like, all that's been de-risked. With all that being said, in the middle of a war, Sequoia reopened up their office here, Greylock reopened up their office here. We had these massive exits and

• 40:45Speaker 01

  IPOs and, you know, tons of money getting invested here. Just yesterday, Nvidia announced they're gonna build a massive R and D center in the north here in Israel. I mean, incredible, right? I don't know, it just keeps uh it just keeps going on. The Tel Aviv Stock Exchange was the best performing stock market, I think, over the past month, including during the time of the Iran War. Again, I'm not sure that's the best barometer in the world to judge things, but it just tells you something. And the shekel is like the strongest it's been in a in a couple of years, probably. So things are uh things are chugging along here. That's uh that's for sure. And I'm pretty optimistic.

• 41:26David Weisburd?

  As an asset allocator, investing, you guys are obviously based in Israel, but you're also investing in Israel. Do you see a peace premium, a post-Iran and maybe a post-Saudi peace deal premium to the Israeli market? Or is that already priced in?

• 41:43Speaker 01

  Unfortunately, yes. I don't know. As an investor, I do think, you know, there's this new generation of people who are going to be coming out of the, you know, the war that had, you know, a type of really unique bonding that may lead to a real like ramp up in the number of startups, which is amazing. We're seeing startups getting started in new areas, whether it's quantum or defense. But what we're seeing is, again, have and have not. So we're seeing it's much harder to raise. And again, I feel this is in all the markets. It's much harder to go from a seed round to an A round in general for, you know, it's not like 2021, when anybody who raised the seed round got to an A round, pretty much. So that's the that's the challenge. With that being said, we're seeing tons of money flying

• 42:27Speaker 01

  into the best companies and tons of M and A. And companies are continually raising hundred million dollar rounds, 200 million dollar rounds, 300 million dollar rounds at amazing valuations. So I do think there's already a premium on the market. And I do think, you know, there's a chance it only goes up. And I it's just simply going back to the basis, kind of supply and demand. You know, there's only a finite number of companies to invest in every year here. And the whole world is investing here. And as soon as things come down even more, more people will come over to seek investments. So there may be something macro that goes on globally that for some reason depresses investing in venture. But the supply demand dynamic in Israel is only just, I think there's going to be more demand

• 43:11Speaker 01

  than the supply will be able to match. And that's just going to cause, you know, prices to go up.

• 43:18David Weisburd?

  Perhaps the ultimate champagne problem, but one, just to take the counter of that is if there are no wars, if Israel is in peace with all its neighbors, will Israeli entrepreneurs still have that same edge that they currently have? Because they are literally battle-tested. VCs love battle-tested entrepreneurs. Israeli entrepreneurs are literally battle-tested.

• 43:40Speaker 01

  That's a, it's a great take. I mean, look, I, unfortunately, I don't think all of our conflicts are going away. You know, I think, for example, if I take like, you know, cyber, where it's just going to get more and more intense globally, you know, there's always going to be enemies from somewhere. They don't need to necessarily be your neighbors. So I think that that's, that's something. I also think when we see how AI is just changing the world, like Israel realizes that it can't fall behind on that. So it's going to continue to invest tons of money around that. That's going to become a bigger, bigger part of warfare in the future, for example, and quantum. And so I think Israel is always having this mindset

• 44:23Speaker 01

  and, and, you know, to be ahead of the curve on things. But you're right. I mean, I don't want to, obviously, I would love a world where there are no wars, but there's no doubt that the conflict in the region has been a big boost for, you know, the entrepreneurship in Israel. But I don't think the conflicts are going to, you know, I think that some of the conflicts are going to calm down locally, but I don't think they're going to go away completely, you know, forever. That's for sure. And I would just say, I also think, again, we're in an ecosystem where, you know, the Israeli teenager gets up and he sees that somebody just sold their vibe-coding one-man company for $80 million. Like, you

• 45:04Speaker 01

  know, that's, that's something to aspire to, right? Or that, again, that Wiz gets sold for $32 billion, or, you know, eTura, which I, you know, they use on a daily basis, goes public. So, you know, they, they have a lot of examples of what to aspire to. And I think that that's, you know, that's going to drive them as well. But I don't think we're going to be, unfortunately, dismantling our military anytime soon.

• 45:27David Weisburd?

  You've been in venture now for 22 years, which I, I mentioned earlier, you know, countless cycles, countless paradigms, countless ventures dead, now venture's the hottest thing, now venture's dead again.

• 45:40David Weisburd?

  What is one thing that you wish you knew when you started in 2003 in venture? What advice would you give to a younger Abe right before you had started?

• 45:51Speaker 01

  Wow, that's a, that's a tough one.

• 45:59Speaker 01

  You know, it's fine. I probably would say like, don't, don't, don't let the, the stuff you get it wrong eat away at you too much. Maybe within our business model that we could have probably, we could probably be a bit more, risk tolerant is the way I would put it, you know, take more swings on certain things.

• 46:19Speaker 01

  And I would also say if it's advice, I would say the key thing is just building close relationships with people as much as possible that you like and working with people that you like. If there's somebody who,

• 46:31Speaker 01

  you know, that you, you don't totally gel with, find another deal, right? Like, and there'll be something else that comes down, comes down the pipe. I went to a dinner with one of the, a local, was a local GP at a fund here. And I was trying to figure out how long I know him for. And it's like, when I say, wow, it's been 20 years already. It's like, it's fantastic. And it's somebody who like, I'm glad I got to know for 20 years. I would say really focus, you know, you can make good investments in people that you like. And you can avoid, you don't need to make, and you know, there'll be good investments in people you don't like, but you don't need to make them. It's all right.

• 47:05David Weisburd?

  For some people, 20 years feels like two years. And for some people, two years feels like 20 years.

• 47:10Speaker 01

  That's right.

• 47:11David Weisburd?

  You mentioned you don't want to be overly critical. I struggle with this as well. I'll listen to a podcast or look at a deal and I'll look at the one thing. I might get everything right, but I sold three months early in the public markets. Have you found a solid weather as a team at your offsite? How do you operationalize being kinder to yourself and giving yourself more benefit?

• 47:34Speaker 01

  It's not easy. Again, on the one hand, like we said, we want to start off with the mistakes. So I guess it does make it sort of like a safe space in that sense, because. You know, if the person, the, if the, the people at the top of the firm are talking about their mistakes, then you realize that you, you should talk about them and admit them and not just, you know, brush them under the rug. But, um, look, we also celebrate our wins and we celebrate as a team. And, um, you know, I, I find out maybe that's the challenge is that I, if I had to give advice to somebody is that I find that very fleeting is that I enjoy the wins for, you know, until I have to go on to the next one and the losses just eat away at me for a very long time. And that's, uh, you know, that's, it, it is what it is, but we try to celebrate the wins as well.

• 48:18Speaker 01

  Um, you know, ultimately, again, we've been in business now for over 20 years. I, I'm, um, you know, I'm very happy about, uh, you know, even the, the relationships with our investors, which I hold dear, dear to myself, you know, they, they put us in business and they continue to put us in business. So I, uh, I try to focus on much of that, like we're doing the right thing for them. And, you know, ultimately making them the returns, uh, that they want to make. And, you know, so far we've been able to do that. Um, but it's hard. I don't know. You know, it's just very, it's, it's very, very hard. I'm not sure I have a great answer to say how to, uh, you know, not let it eat away.

• 48:50David Weisburd?

  It's, it's something, it's something I think about often. It is hard to make those losses eat away at you less. So I think you have to do the opposite, which is spend time doing things that you love, spend time with people that you love and let that, uh, let, let that take up more space in your life than the losses, which will be painful. And, and maybe they should be painful. Maybe that's how you learn from them.

• 49:13Speaker 01

  Yeah, yeah, yeah, totally. And again, occasionally I'll look back and I'll see some deals and I'll be like, oh, wow, that was a good one, you know, and then I'll chalk it up to luck and move on. But, uh, but yeah, it's, uh, it's not, not an easy answer, uh, for that. That's another podcast, maybe.

• 49:28David Weisburd?

  Well, we'll leave that for the next podcast. Abe, this has been absolutely wonderful. Thanks for jumping on the podcast.

• 49:33Speaker 01

  My pleasure. It was great. Really appreciate it.

• 49:35David Weisburd?

  Thanks for listening to my conversation. If you enjoyed this episode, please share with a friend. This helps us grow, also provides the very best feedback when we review the episode's analytics. Thank you for your support.