How I Invest with David Weisburd

Episode E186: Where’s the Alpha Opportunity in VC in 2025? w/Abe Finkelstein Release Date: July 14, 2025

1. Is European Venture Capital Dead?

Timestamp: [00:00] - [04:03]

In the opening segment, David Weisberg poses a provocative question to Abe Finkelstein: "So is European venture dead?" Contrary to the popular consensus, Abe firmly disagrees. He states, "I don't think so... we can get many of the European VCs or the US VCs that are over there get there first and give them the seed capital" ([00:47]). Abe highlights Vintage’s recent strategic move to add a partner in London, emphasizing their long-term commitment to European venture capital. Drawing parallels with Israel’s robust venture ecosystem over the past 15 years, Abe expresses optimism that Europe’s best years in venture capital lie ahead. He underscores the growing entrepreneurial spirit in Europe, fueled by successful exits from companies like Spotify and Revolut, which inspire a new generation of founders.

2. AI's Role in European VC: Opportunities and Challenges

Timestamp: [04:03] - [07:37]

The conversation shifts to the impact of artificial intelligence (AI) on the European venture capital landscape. David brings up the dual factors affecting European AI ventures: stringent regulatory environments and the emergence of AI hubs like Paris. Abe acknowledges the skepticism surrounding European VC but remains cautiously optimistic. He notes, "Venture capital investment is living in this bubble that's just doing amazingly well" ([04:34]). While recognizing regulatory challenges, Abe believes that the talent and innovative capacity in Europe, exemplified by companies like Mistral and Hugging Face, will continue to thrive. He advocates for enhanced tax incentives and greater corporate R&D investments to bolster the ecosystem, asserting that European entrepreneurs will persist despite regulatory hurdles.

3. Vintage's Investment Strategies: Fund of Funds, Growth, and Secondaries

Timestamp: [07:37] - [15:02]

Abe delves into Vintage Capital’s multifaceted investment approach. He explains that Vintage employs three primary strategies:

• Fund of Funds: Investing in venture capital funds across various stages and geographies, including specialized segments like Israeli funds and health-focused funds.
• Secondary Funds: Initiated in 2003, this strategy involves acquiring existing investments from other investors, providing liquidity and diversification.
• Growth Fund: Launched in 2011, this fund targets emerging companies in later growth stages, leveraging insights from Vintage’s Fund of Funds and Secondary Funds.

Abe emphasizes the synergy between these strategies, allowing Vintage to navigate the venture landscape comprehensively. He states, "At the center of it, I would say is our relationship though with the GPS of the funds" ([07:46]). This integrated approach enables Vintage to identify and support high-potential ventures effectively.

4. Investing in First Funds: Risks and Strategies

Timestamp: [15:02] - [20:33]

The discussion turns to the challenges and merits of investing in first-time funds. David queries the rationale behind backing initial funds when many institutional investors prefer to track a fund’s performance over time. Abe responds by highlighting Vintage’s stringent criteria for first-time investments, focusing on managers with proven track records. He asserts, "We don't have a lot of... those that have actually lost money" ([10:15]). By diversifying their investments across multiple smaller funds and emerging managers, Vintage mitigates risks associated with first-time funds. Abe shares experiences where second funds outperformed first ones, attributing success to managers’ ability to learn from past mistakes and adapt strategies accordingly.

5. Generational Transfer and Firm Succession

Timestamp: [34:07] - [38:30]

A critical component of Vintage’s longevity is their structured approach to generational transfer. David references a successful transition led by Alan Feld and asks Abe about the behaviors and processes that facilitated this seamless handover. Abe credits clear documentation and defined roles as key factors. He explains, "Things needed to be put down on paper... make clear lines of demarcation" ([34:31]). By establishing a succession plan where founding members step back from raising new funds but remain involved in existing ones, Vintage ensures continuity. This foresight not only preserves the firm’s legacy but also provides a clear career progression path for new partners, enhancing recruitment and retention.

6. Israel's Venture Ecosystem Amidst Geopolitical Challenges

Timestamp: [38:30] - [43:56]

Abe provides an insightful analysis of Israel’s venture ecosystem in the context of ongoing geopolitical tensions. Despite regional conflicts, Israel's startup scene remains vibrant and resilient. He cites recent high-profile exits and IPOs, such as Melio's $3 billion acquisition and Wiz's $32 billion sale, as evidence of the ecosystem’s robustness. Abe remarks, "The Israeli ecosystem has like skipped a beat" ([38:59]). He believes that conflicts have, paradoxically, strengthened Israel’s innovation drive, particularly in sectors like cybersecurity and AI. Moreover, significant investments from global giants like Nvidia establishing R&D centers in Israel underscore the country's enduring attractiveness as a tech hub. Abe remains optimistic about the future, anticipating that peace initiatives could further enhance the market dynamics, although he acknowledges the persistent uncertainties.

7. Advice to Younger Self and Managing Investment Challenges

Timestamp: [43:56] - [49:56]

Reflecting on his 22-year tenure in venture capital, Abe shares invaluable advice for his younger self. He emphasizes the importance of resilience, stating, "Don't let the stuff you get wrong eat away at you too much" ([46:08]). Abe advocates for taking calculated risks and building strong, genuine relationships within the industry. He advises focusing on partnerships with people you enjoy working with, saying, "If there's somebody who you know that you, you don't totally gel with, find another deal" ([46:08]).

When discussing how to cope with investment losses, Abe admits, "It's very, it's very hard" ([49:07]). He highlights Vintage’s culture of transparency and continuous improvement through annual off-sites where the team rigorously debates and refines their strategies. Celebrating wins and learning from losses are integral to maintaining a balanced perspective. Abe underscores the significance of prioritizing personal well-being and relationships to mitigate the emotional toll of investment challenges.

Notable Quotes

• On European VC’s Future:

  • "I don't think [European venture is dead]. We can get many of the European VCs or the US VCs that are over there get there first and give them the seed capital." ([00:47])

• On Venture Capital Resilience:

  • "Venture capital investment is living in this bubble that's just doing amazingly well." ([04:34])

• On Investing in First Funds:

  • "We don't have a lot of... those that have actually lost money." ([10:15])

• On Generational Transfer:

  • "Things needed to be put down on paper... make clear lines of demarcation." ([34:31])

• On Israel’s Ecosystem:

  • "The Israeli ecosystem has like skipped a beat." ([38:59])

• Advice to Younger Self:

  • "Don't let the stuff you get wrong eat away at you too much." ([46:08])

Conclusion

In this enlightening episode, Abe Finkelstein provides a comprehensive overview of Vintage Capital's strategic approaches, the dynamic state of European and Israeli venture ecosystems, and the intricate balance of managing first-time fund investments. His insights into generational succession and personal reflections on the emotional aspects of venture investing offer valuable lessons for both seasoned and aspiring investors. Abe’s optimistic yet pragmatic outlook underscores the enduring potential of venture capital amidst evolving global landscapes.