Ryan, Kinley, Alina discussed on The Twenty Minute VC


But by and large, I also see a general trend towards investment managers trying to raise larger refunds shoe collect those fees. No, I agree with you. And I couldn't debate not one because it is true. That there is a subset. I completely agree. We did mention that in the consumer discussion the elements of data and how it supplies consensus. I do want talk to you. Conceive MC is as you know from listening to the show Ryan, I'm a complete med when it comes to things brand DNV's unconceivable consumable Broadway with not mine that we've seen this explosion of these investment into the space starting at the top. I have to ask Alina consumable today. Ryan. Yeah. So when I have seen that worries me bit is these fees that don't have a background in consumer trying to get into consumer in having the discipline to diligence those companies as consumer businesses when I'm seeing a lot of is tech VC firms. Pulling a ton of money into companies in the consumer space that should be very capital officiant that should be able to be successful and get profitability without raising money. But we'll also have smaller exits candidly and typical taffy safer, and that's what's key. So we see a VC firm that Kinley doesn't know what they're doing. Give a nannies company hundred million dollars that terrifies me that nannies company shouldn't raise under million dollars, candidly, they should raise Chan these companies in the consumer space. They tend to get to convert ability by raising four to eight million dollars, not fifty to eight million dollars as they do in the tech space, consumer companies are more capital efficient on average than tech companies are, but the problem is when you have a tech investor that wants for white really big checks often because they work for larger firm. That's because that's what they're used to even overcapitalize a company the other thing that happens is they put a huge valuation on it. We saw that with on his company where on his company is a good company. It just got stuck in a. Money. Traff. It got passed over practitioner and now is in a little bit of recapitalization mode with Catterson because it raised too much at far too high evaluation. So I think we've got it in industry and consumer there's a lot to love. But I think tech these see firms need to be very cautious to diligence these companies into investment companies in a different way. And they're used to doing in the tech space. I have to he said post money Trump. What do you mean by post money trapping? And how do you kind of see that one playing out and how should found us think about that? So in the in the two quarreled oftentimes, not always oftentimes a techie c can believe if I bet on the right winner it'll own eighty percent of the market. If it owns eighty percent of the market that means the valuation at exit will be huge a billion ten billion. It'll be a big number in consumer tastes are fragmented tastes have been fragmenting because of personal preferences because Bayer's entry of declined as his fragments. The winners are smaller if the winner. Are smaller the exits are smaller if the exits are smaller, you can still make money, but you have to be disciplined when you come into the business. The valuations us on the end need to be reasonable. And that's not what we're seeing from check. These first Kentucky see firms, and we're seeing the nannies company of the nine hundred million dollar valuation in fifteen million dollars revenue that math doesn't make any sense. It's offensive. They're not going to have a successful exit. They will have an exit at some point. But be a massive down route. And so what we think needs to happen. It investors play in the space. They need to find ways to systematically deploy capital across a lot of companies at earlier stage, a lower valuation, and these companies don't raise as much money. The exits are still really healthy. You can invest attend sell.

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