Podcast Summary:

How I Invest with David Weisburd – Episode 215: The Pursuit of Uncorrelated Returns in Venture Capital (w/ Dan Kimerling, Deciens Capital)
Date: September 19, 2025

Overview

In this episode, host David Weisburd welcomes Dan Kimerling, Founder and Managing Partner at Deciens Capital, for a probing conversation about building uncorrelated alpha in venture capital. Kimerling unpacks the fund’s highly concentrated approach to early-stage investing in financial services and fintech, elucidates how Deciens seeks to stand out in a crowded field, and shares candid thoughts on fund construction, LP alignment, and what it means to “defy orthodoxy” in venture capital.

Key Discussion Points & Insights

1. Deciens Capital’s Investment Philosophy (00:33–02:02)

• Deciens is an early-stage fund focused exclusively on financial services and fintech startups, both B2B and B2C.
• Example investments: Chipper Cash, Treasury Prime, Sidecar, Tint Insurance, SimplyWise, Generous Energy.
• The fund aims to back the next generation of financial institutions (banks, asset managers, insurance companies, etc.), not just “tech-enabled” companies.

2. “Uncorrelated Alpha” and Differentiation in Venture (02:02–04:02)

• Kimerling asserts traditional venture funds add “venture beta”—predictable portfolio returns through diversification.
  • “We don’t want to invest in the same kinds of companies other people invest in. We want to provide very differentiated exposure… highly alpha seeking.” (A, 02:25)
• Deciens deliberately pursues an idiosyncratic, returns-convex portfolio, offering limited partners a “get rich or die trying venture fund.”
• He admits this leads to more variable fund outcomes but is attractive to mature LPs seeking meaningful alpha.

3. Managing LP Alignment and Expectations (04:41–07:00)

• Transparency is crucial: The team over-communicates their concentrated, high-variance strategy to set expectations and maintain alignment.
  • “I’m only as happy as my least happy limited partner. And what keeps my limited partners happy is that we have done what they expect us to do.” (A, 04:57)
• Deciens seeks LPs at the right point in their cycle—those who don’t want more beta or passive diversification.
• Recognizes LP decision-making depends on human factors within institutions (“principal-agent conflict”).

4. Portfolio Construction: The Concentrated Bet (07:00–14:13)

• Deciens utilizes computational simulations to model portfolio construction.
  • Key variables: ownership percentage per deal, number of portfolio companies, and reserve ratios.
  • Fund III targets: 10-15 companies, lead investments, 5x+ net returns.
• In contrast to diversification orthodoxy, Kimerling argues concentration enables both deeper involvement and better risk management.
  • “We have a small basket, we’re putting our eggs in it and we’re watching it like a hawk. And so I actually think what we do is very conservative, even though it sounds very, very avant garde.” (A, 08:36)

5. Financial Services as Venture-Scale Opportunities (14:13–20:02)

• The underlying thesis: Large, overlooked financial institutions (e.g., S&P Global, Renaissance Technologies, Bridgewater) generate extreme compounding—if accessed at the seed stage.
  • “If you could go back… and own 10% of Renaissance, that would have been an incredible seed investment.” (A, 14:44)
• The sector’s size (20% of global GDP), technological transformation, and potential for massive, defensible moats are underappreciated by mainstream VC.

6. Deciens’ Founder Archetype & Sourcing (17:27–20:02)

• Deciens finds many transformative founders have “in the bowels” industry backgrounds, not tech pedigrees—e.g., Sidecar’s founder.
• Willingness to invest outside Silicon Valley; looking for “Nicks of the world” who see opportunities for digital reinvention.

7. Liquidity and the “Venture Hamster Wheel” (20:02–26:29)

• Kimerling critiques the VC incentive for unprofitable, high-growth at all costs—often driven by the need for mark-ups and successive funding rounds (the “venture hamster wheel”).
  • Prefers profitable, compounders that aren’t structurally dependent on follow-on VC capital, and seeks liquidity via dividends or other means, not exclusively via exits.
  • “We can build incredible portfolios, have great returns for our LPs, help our entrepreneurs build game changing companies and we don’t need heroic assumptions to have heroic outcomes.” (A, 23:35)

8. Long-Duration, Co-Ownership Mindset (30:42–34:30)

• Deciens explicitly offers 14-year fund timelines, well-suited for “liability-matched” LPs (pensions, endowments, sovereigns).
  • “His obligation to these public service workers and their families being 70 years, 70 year long liabilities. And... they are the kinds of groups that can go long duration. And that’s what we really provide, a long duration product.” (A, 31:16)
• Emphasizes patient compounding (e.g., Nvidia, Berkshire Hathaway) over forced exits and short-term trading mindset.

9. Barriers to This Alternative Approach (34:30–39:19)

• Kimerling is transparent, sharing Deciens’ methodologies publicly, but says most VCs avoid this approach due to institutional “game rules” and sociological need for external validation.
  • “Sequoia built the Coliseum, they created the rules of combat and they picked the gladiators… But you don’t have to beat them at their game in order to do incredible [returns].” (A, 35:43)
  • Internal firm advancement is governed by markups and hot deals, not value creation.
• Deciens is happy “not to beat Sequoia at their own game,” but to create their own “coliseum.”

10. Movement-Building and Defying Orthodoxy (39:48–44:21)

• Kimerling positions Deciens as a movement opposing VC orthodoxy, championing courage, alignment, and real partnership.
  • “I don't think the world needs more venture capitalists. I think the world needs more courageous capitalists… as we’ve kind of like embraced this counter orthodoxy… you find like, strange and wonderful compatriots in this movement.” (A, 41:20)
• Criticizes “lifestyle business” slurs and the pressure to constantly fundraise or generate markups.

11. Lessons & Advice for Aspiring Differentiated Investors (46:58–51:11)

• Emphasizes the evolutionary and career necessity of true differentiation.
  • “Differentiation is survival. And to not be scared of that, to lean into the differentiation… in the world of venture capital you have to be differentiated.” (A, 47:17)
• Both host and guest reflect on how strong principles, a differentiated LP base, and unique duration/tax structures “compound” alpha and avoid commoditization.

12. The Six Levers of Alpha and the Future of VC Structures (51:11–56:07)

• Six sources of VC alpha: sourcing, picking, winning, supporting, exiting, portfolio construction. True enduring alpha arises when these create reinforcing feedback loops.
  • “If you can create a self-reinforcing system… then you’ve created like a alpha generation machine rather than just being lucky.” (A, 51:37)
• Continuation vehicles, permanent capital funds, and new structures that enable long-duration compounding will proliferate—but misalignments (and the “dopamine hits” of markups) persist in the LP/GP ecosystem.

13. Psychology, Dopamine, and Motivation in Venture (56:07–59:35)

• Many VC behaviors are driven by need for external validation/dopamine (markups, exits).
• Discusses ego: Kimerling aspires instead to align motivation with long-term team and LP outcomes, and with doing good (“tikkun olam” – the Jewish idea of leaving the world better).

Notable Quotes & Memorable Moments

• On being a “Get Rich or Die Trying” fund:
  • “One of our LPs says Deciens is the 'get rich or die trying' venture fund. And that's exactly right.” (A, 02:41)
• On the Darwinian nature of VC:
  • “Differentiation is survival. And to not be scared of that, to lean into the differentiation.” (A, 47:17)
• On the “venture hamster wheel”:
  • “There is definitely a kind of self-referential aspect to the VC ecosystem... we call this the venture hamster wheel.” (A, 21:00)
• On duration and compounding:
  • “If you sold Nvidia after 6, 8, 10 years you would have been very disappointed.” (A, 32:50)
• On alignment vs. lip service in VC:
  • “The most overused words in venture capital are alignment and partnership. But we want to actually live those values.” (A, 44:08)
• On movement-building:
  • “As we've kind of embraced this counter orthodoxy… you find like, strange and wonderful compatriots in this movement.” (A, 41:40)
• On the six levers of alpha:
  • “Within the world of venture capital there are six theoretical sources of alpha. Sourcing, picking, winning, supporting, exiting, and portfolio construction.” (A, 51:13)

Important Segments & Timestamps

• [00:33] Deciens Capital’s Investment Thesis and Example Portfolio Companies
• [02:02] Defining Uncorrelated Returns/Alpha
• [04:41] Managing LP Expectations and Alignment
• [07:05] Portfolio Construction – Modeling, Concentration, and Iteration
• [14:13] Why Financial Services? The Ultimate Venture Bets
• [20:44] Liquidity, the “Venture Hamster Wheel,” and Unorthodox Approaches to Exits
• [30:42] Fund Duration, the Compounding Mindset, and Long-Term LP Alignment
• [35:41] Why Most VCs Don’t Adopt This Approach – The Sociological and Incentive Dynamics
• [39:48] Building a Movement and the Joy of Defying Orthodoxy
• [47:17] Advice to the Younger Dan Kimerling: Differentiation Is Survival
• [51:11] Six Sources of Alpha and Self-Reinforcing Flywheels

Concluding Themes

Kimerling and Weisburd’s conversation offers a compelling argument for radical differentiation and genuine alignment in venture capital. Deciens Capital’s concentrated, long-duration, “get rich or die trying” approach challenges the dominant paradigm and provides a blueprint for creating meaningful, uncorrelated alpha—if investors and LPs can break free from the industry’s need for short-term validation and relentless mimicry.

For further reading, visit Deciens’ essays “Defying Orthodoxy,” “Betting on Convexity,” and “Heroic Assumptions and Heroic Outcomes” on their website.