E369: Midas List VC: Why Smart VCs Are Buying Secondaries

Summary

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Podcast Summary: How I Invest with David Weisburd

Episode 369: Midas List VC - Why Smart VCs Are Buying Secondaries
Guest: Ryan (Midas List VC, Founder of Revenant, ex-Accomplice)
Date: May 14, 2026

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Episode Overview

In this episode, David Weisburd sits down with Ryan, a veteran venture capitalist recently known for pivoting from primary venture investing to secondary deals. They dive into the shifting dynamics of the venture capital landscape, why sophisticated VCs are focusing on secondary opportunities, and how evolving fund structures and LP expectations are reshaping the industry. Ryan shares tactical insights, lessons from 25+ years in venture, and candid perspectives on founders, groupthink, co-invest strategies, and how to build a lasting brand in secondary markets.

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Key Discussion Points & Insights

The Pivot from Primary to Secondary Investing

[00:00 – 01:03]

• Motivation for Change:
  • Liquidity timeframes for seed investments have become prohibitively long—often 15-20 years—prompting both LP skepticism and personal reevaluation.
  • Secondary investing offers a “more rapid payback” and a chance to “tighten the loop” between investment and liquidity.
• Creating a New Brand:
  • Ryan saw an opportunity for a new, founder-friendly secondary brand with a venture mentality, bridging the gap between pure secondary firms and primary VCs.

“I felt secondary was a more interesting way to tighten that loop.” — Ryan [00:14]

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Secondary Market Strategy & Philosophy

[01:03 – 02:48]

• Inflection Point Investing:
  • Ryan targets investments just before key financial or growth inflection points—leveraging relationships and detailed information for access ahead of the curve.
  • He’s less focused on discounts and more on accessing the “best businesses that are maybe misunderstood and less followed.”
• Competition:
  • The real competition is insiders, not other secondary buyers. Insiders have informational and governance advantages.
  • However, co-investing alongside insiders (who double down) is an ideal diligence filter and positive signal.

“Hygiene, an insider leading a secondary round on its own deal, it doesn’t necessarily pass the mustard… I love to see an insider doubling down. There’s no better signal.” — Ryan [02:52]

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The Value of Cap Table Continuity

[03:16 – 04:29]

• Solving for Continuity:
  • Continuity on the cap table is valued by founders: they prefer existing stakeholders to deepen stakes rather than introducing unfamiliar investors.
  • Liquidity events for old investors are typically not the entrepreneur’s burning issue.

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Building a Strategic LP Base of GPs

[04:31 – 07:06]

• Bringing GPs as LPs:
  • Ryan built Revenant’s LP base from 30+ GP friends—unlocking not just deal flow but a rich information network.
• Tactical LP Value:
  • Having seed GPs as LPs opens governance doors and founder relationships, critical for negotiation and access.
• First Investor Dynamic:
  • The first investor relationship carries unique loyalty with founders, persisting for decades.

“Those relationships that get forged in the earliest stages of a business are the strongest… because they believed in you when no one else did.” — Ryan [07:15]

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Founders, Education, and What Really Matters

[08:40 – 11:48]

• Talent vs. Credentials:
  • Ryan downplays elite education, emphasizing that “99% of the value creation is the execution, not the idea.”
  • Education’s true role is in sparking ambition and competition.
• Founder Execution:
  • “What have you done in your life that required survival?” is a key proxy for founder grit.
  • Elite universities offer a glimpse into what truly exceptional talent looks like, which is hard to spot otherwise.

“The most interesting entrepreneurs… have been trained in resilience. Whether they went to school or not.” — Ryan [08:54]

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Fund Strategy, Scarcity, and Portfolio Construction

[12:12 – 20:18]

• Fund Size as a Strategic Choice:
  • Revenant purposely keeps its fund small ($100M), enabling efficient deployment and co-investment flexibility.
  • Scarcity drives demand and helps in fundraising: “There’s no better way to fundraise than scarcity.”
• Co-Investment as Product Innovation:
  • The co-invest program satisfies family office preferences for direct deals alongside blind pools.

“You want to run the strategy you want to run. So keep the fund size at the right level. You can create ancillary products... but keep the integrity of your fund size the same.” — Ryan [19:39]

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Contrarian Views: Power Law, Underwriting, and Loss Ratios

[20:26 – 22:41]

• Not Chasing Power Laws:
  • Ryan avoids the “power law” game, favoring deeper diligence and closer relationships with teams at key inflection points.
  • As a secondary investor, he expects his loss ratio to be near zero, contrasting with the traditional venture loss model.
• Underwriting Standard:
  • High underwriting standards—personal meetings, financials, access—are essential even if it means paying up (sometimes above par).

“My loss ratio should be close to zero… because I’m coming in and underwriting in a meaningful moment when it’s a more mature business.” — Ryan [21:24]

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Pricing Secondary Deals

[23:27 – 24:17]

• Not Discount-Hunting:
  • Secondary deals are not just about getting a discount but underwriting potential for 3–5x returns—with or without a “par” price.
  • Inside knowledge and pending inflection points drive willingness to pay fair or even premium prices.

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Industry Pet Peeves & Talent

[24:17 – 26:46]

• Pet Peeves:
  • Groupthink: “I think the industry… tend[s] to talk each other into the same kind of deal.”
  • Over-crediting VCs: Some overstate their impact vs. what’s really due to founder execution.
• Talent Clustering:
  • Exceptional talent attracts more exceptional talent (“ninjas hire ninjas”) and is the rarest and most valuable resource in companies, especially post-zero interest rate era.

“Mediocre people hire worse people than themselves. And then before you know it, you’ve got a really average team.” — Ryan [26:51]

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Personal Investing Philosophy

[27:18 – 29:43]

• Personal Allocation:
  • Despite being a secondary/fund investor, Ryan is still “a sucker for innovation”: prefers writing checks to founders over investing in ETFs.
  • Values the direct connection and tangible relationship with founders over abstracted capital pools.

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Timeless Advice & Organizational Speed

[30:11 – 32:53]

• Best Advice: Trust Your Instinct:
  • Ryan would tell his younger self to trust his instincts earlier—intuition often trumps inexperience.
• “Organizational Metabolism”:
  • Winning companies are those with the fastest decision-making and execution pace—much more than prior metrics or P&L.

“The teams that move super fast are the teams you want to be in business with… P&L had nothing to do with it.” — Ryan [31:58]

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Change in Perspective: Team or Market?

[32:53 – 33:30]

• Initially, Ryan was “team, team, team,” but now believes you need both a great team and great market tailwinds. “Sometimes I’ve backed some great teams in mediocre markets… and they’re shrinking the TAM they’re in.”

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The Future of Revenant & The Fundraising Landscape

[33:30 – 36:46]

• Revenant’s Vision: Remain small, innovative, and become a sought-after brand in secondaries.
• The Shift Toward Co-Invest and Fund Structure Innovation:
  • The LP market is undergoing an extinction event for new fund brands. LPs demand co-investment, transparency, and faster payout timelines.
  • Success depends on listening to the customer (LP): “Give your customers what they want.”
• Family Office Co-Invest Reality:
  • Many talk co-invest, few can execute with the needed speed/emotional readiness.

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Memorable Quotes

• On secondary investing’s appeal:

  “I felt secondary was a more interesting way to tighten that loop.” — Ryan [00:14]

• On inside rounds:

  “I love to see an insider doubling down. There’s no better signal.” — Ryan [02:52]

• On the strength of early investor relationships:

  “Those relationships that get forged in the earliest stages of a business are the strongest… because they believed in you when no one else did.” — Ryan [07:15]

• On founder grit:

  “The most interesting entrepreneurs… have been trained in resilience. Whether they went to school or not.” — Ryan [08:54]

• On fundraising strategy:

  “There’s no better way to fundraise than scarcity.” — Ryan [19:39]

• On learning to trust his gut:

  “When I trust my instincts, they’re far greater than my experience.” — Ryan [30:11]

• On what drives returns:

  “Organizational metabolism and speed and instinct… that's why I want to get access to the teams I’m backing.” — Ryan [31:58]

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Important Segments & Timestamps

• The Move to Secondaries: [00:00 – 01:03]
• Inflection Point Investing: [01:03 – 02:48]
• Cap Table Dynamics & Insider Signals: [02:48 – 04:29]
• GP/LP Network Strategy: [04:31 – 07:06]
• On Founders vs. Credentials: [08:40 – 11:48]
• Fund Size & Co-Invest Model: [12:12 – 20:18]
• Portfolio Construction & Avoiding Power Laws: [20:26 – 24:17]
• Industry Groupthink & Talent: [24:17 – 26:46]
• Personal Investment Philosophy: [27:18 – 29:43]
• Best Career Advice: [30:11 – 32:53]
• Market vs. Team Realizations: [32:53 – 33:30]
• Revenant's Future, LP Demands & Co-Invest Execution: [33:30 – 36:46]

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Tone & Additional Insights

Ryan brings a candid, first-principles approach honed from decades in VC. He’s skeptical of industry groupthink, credits founders over financiers, and seeks authenticity with limited scale and direct LP engagement. Weisburd plays an informed, sometimes skeptical, sometimes devil’s advocate role, pushing Ryan to clarify and sharpen his contrarian stances.

This episode is a must-listen (or read) for VCs, LPs, emerging managers, and founders wanting to understand the inner workings of today’s venture and secondary markets—and what it actually takes to build a differentiated, lasting investment franchise.

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Transcript

[Interviewer]

Ryan, You've been a VC for over 25 years, prolific career, including being on the Midas list, the list of the top 100 VCs. A couple years ago you made a structural pivot to go from primary investing to secondary investing. Why did you do that?

[Ryan]

I mean, as I got older, I started to recognize more and more the time to liquidity for seed investing was just stretched to 15, in some cases even 20 years. And I felt it was a much more interesting place to play and a much more rapid payback. And I was starting to see some of the LPs start to question the asset class in the payback period. And I felt secondary was a more interesting way to tighten that loop.

[Interviewer]

And a secondary and asset class, is it a way to access opportunities?

[Ryan]

I felt the secondary market was ripe and I felt there was an opportunity to frankly create a new aspirational brand because there's some good secondary, pure secondary firms out there. But I felt I could bring a venture capital kind of mentality, service level approach to entrepreneurs and cap tables and access really good assets via the secondary market and create frankly a new brand in the asset class.

[Interviewer]

Give me a sense of what stage you're investing in when it comes to secondaries.

[Ryan]

What I try to do is quote, unquote, inflection point, invest in advance of a P and L inflection point, a value inflection point where I'm trying to buy shares a couple of months, couple of quarters before that inflection point. So the key for me is not just access but real detailed information and frankly leverage relationships so I can get that access and that information.

[Interviewer]

I've had this thesis and maybe it's more of a thought experiment that some of the best opportunities via secondary is not buying some asset for 30, 40%, it's really actually buying, quote, unquote, at par for an asset that's grown two, three times in value since the last round.

[Ryan]

100%. Yeah. Why I wanted to get into the secondary market, I thought with the VC I wasn't super focused on like pencil pushing and FMV and discounts, so to speak. I'm just trying to access some of the best businesses that I know that are maybe misunderstood and frankly less followed. And that's where you can frankly find the value, if you will.

[Interviewer]

And it's interesting because you're competing against other secondary investors, not primary investors. So they don't have the same skill set or track record of fundamentally underwriting a business. That's why they have to go for these large discounts.

[Ryan]

You got it. So when I think about like my competition, of course I run into secondary, pure secondary buyers. That's, that's the business we're both in. But I view the real competitor, the incumbent cap table member. Like I think that's insiders. Insiders. Insiders is the real competition that, you know, when I talk to my LPs about who do I run into and who, who do I fear the most, it's the insiders. But they've got governance, knowledge, relationship, all of the things that I kind of employed it accomplished when I was buying secondaries. I'm not saying like the other secondary groups aren't good, it's just I can differentiate from them given my background. But insiders are a much more real competitor, if you will.

[Interviewer]

And the flip side of that is insiders are not buying. That's also itself a signal.

[Ryan]

What I have found is you can play a role and co invest alongside the insider because hygiene, an insider leading a secondary round on its own deal, it doesn't necessarily pass the mustard. So I've, I've looked at a couple of transactions where I've played the role of pricer and that just clears hygiene. And to your point, I love to see an insider doubling down. There's no better signal. And, and I've, I've kind of used that signal as actually a filter for diligence.

[Interviewer]

There used to be these firms that would come in and price rounds for the Sequoias, for the Greylocks, and then give most of the round back to those firms, but they needed that, that third party underwrite. So this is kind of a secondary version of that.

[Ryan]

We'll add my fifth deal to coming up here in, in a couple of weeks here. And it's exactly like that introduced by the insider, splitting the insider, cutting the insider in. And then I had to negotiate for my slice and I paid a service of pricing it and doing all the work and they're coming in and doubling down actually even in an SPV out of the fund and within their LPs and that's the best signal you can get.

[Interviewer]

In that case, you're solving the problem not just for the seller, but also

[Ryan]

for the buyer and the entrepreneur. Continuity of the cap table. Don't underestimate like the continuity of the cap table. When you're a founder, you just want to know the people you're dealing with and you want the people who've been with you for the last decade staying with you and concentrating more capital in

[Interviewer]

your business, such as less problems Less headaches.

[Ryan]

What I learned in venture for two decades is like it takes 20 years and there's a lot of things and along comes a secondary buyer. You don't really know them at all. So in a perfect world you would rather have your insiders concentrate more equity because it solves. You know, entrepreneurs understand they need liquidity or their seed investor needs liquidity, but they don't necessarily want to entertain a new relationship.

[Interviewer]

They want to be building their business, not building their cap table focus.

[Ryan]

Liquidity is not their problem.

[Interviewer]

One of the novel things that you did, I've heard a lot of GPS talk about this, but you actually execute on this is you had 30 GPs invest into your fund. Tell me about that strategy and how's that played out.

[Ryan]

Revenant was created off of a practice that I was running at accomplice. Over the last 10 years I did 35 secondaries all within the accomplice portfolio. So I kind of knew the model. But as, as the GP and the person co running the fund, I had all the relationships, all the information and I understood where to create alpha. So when I left and wanted to create my new fund, I wanted to do it on, quote unquote, someone else's book. So I went out to 30 friends in the business, people I've either co invested with, worked with, have done deals with and one, I wanted them to endorse me in a certain way and then two, I wanted deal flow, I wanted their, I wanted access to their portfolios. The thing I can see here now, like what, eight months since I closed those 30 GPs as LPs is I've got both of those things for sure. But the other thing which I didn't appreciate was how much information flow you get from having 30 GPs and not only about their portfolio, but everyone has an opinion on another deal. So the information flow has been probably the thing that I most valued but I didn't appreciate when I created it.

[Interviewer]

Similarly to making a small investment in a startup, a lot of people don't realize the downstream consequences of investing in a fund and how tied in you get very different by the way than having an equity stake or advisory stake, but having that skin in the game, even if it's a small check. This is why I don't write small checks into funds or things. I don't want to be really active in it. It becomes very problematic from that perspective. So building the strategic LP base around GPS is a very high leverage way for you to run your business.

[Ryan]

I live in a world where I think Founder led businesses are worth more. That's been proven in the last 15 years. And a lot of the GPS that are my LPs are seed funds because their relationship they have with the founder is on. Once you put somebody in business, they look at you different. I don't care if you own 0.1% or 5% of the business, but if you're a first check kind of investor, the entrepreneur will always hold you in a certain high regard. And I've learned eventually when competing with quote unquote incumbent insiders, I'm going to have to go to the founder and ask for a favor. And there's no better currency I can find than a first investor. So I have used that in the past where I've gone to know One of the GPs is an LP in my fund and I'll say, hey, can you get so and so to help me waive the like wave some sort of governance. And in my world, for the most part you would agree, founders usually carry a certain amount of cachet and, and they can steer governance your way. And that's another like tactical reason I brought that group in.

[Interviewer]

At the end of the day, it doesn't necessarily matter why see, investors have this way or first investors have this way around a founder. But how would you explain it if you had to?

[Ryan]

I would say for every founder you have, you're obsessed with something. And that first person, whether it's a customer or an investor that says, yes, I believe in you, I believe in your vision and not only agreeing with you, I'm putting my skin in the game, I'm investing behind you and I want you to be successful in this mission. 20 years of seed investing, those relationships that get forged in the earliest stages of a business are the strongest and they can go the other way when they go, when they go negative. But I have found that first investor relationship is very unique because they believed in you when no one else did. And I've used that as a calling card and drawn on that relationship with my LPs.

[Interviewer]

What's the half life on that?

[Ryan]

That's a great question. I would say it's 30 years because I used to think about what's the half life of an entrepreneurial relationship? Let's think about it. You probably get 1, 2, 3 deals out of the person. They probably introduce you to your best deals. Because when I think back about everything that we did really well at Accomplice, every great deal came from another entrepreneur. And so what's so like the value

[Interviewer]

of why do you think that is.

[Ryan]

I think talent recognizes talent at its core level. Relationships are very, very valuable. If I'm going to step out and put my neck out there and say and endorse you to one of my investors or one of my friends, I'm. I don't do it a lot and I'm really, really. And I think the, the bar is very high for that.

[Interviewer]

VCs are obviously very smart oftentimes Ivy League, double double degrees, all, all this. But do you think there's something to be said that founders are more, at least first principled or more in touch with cutting edge technologies versus the venture community 100%.

[Ryan]

I mean I actually think I haven't been for another podcast another time. Like I'm kind of a sell on the whole education in the brand around it. I actually think, you know, I've lived a world where 99% of the value creation is the execution, never the idea. And I found the most interesting entrepreneurs have in their life been trained in resilience. Whether they went to school or not. It actually doesn't even matter is they have lived. They're obviously smart, they're obviously passion. And I think more and more like the third party, like validation of what intelligence is, is going out the window. That's like pretty exciting. That's one of the exciting byproducts of AI. But I come back to like, what have you done in your life that required survival? Because that's what it is. And that's like, that's that I'm drawn to that.

[Interviewer]

I completely agree. As a Double Ivy, I agree. I know you went to Ivy League school as well. So it's. We're trash, trashing our own, our own pedigrees. But I think it's necessary but not sufficient. I'm not up to date on Generation Alpha and Generation Z as I probably should be. But there still seems to be this foot in the door, this opportunity that comes to those that have the Ivy League degrees. Even if you, I would argue you don't learn that much or you don't learn something that you couldn't learn online, let's just say or through AI today. But it still seems to be very important and I've such a hard thing to AB test. Obviously this is why Peter Thiel created the Thiel Fellowship. We backed a fund based on Thiel Fellowship called Valerian for this very reason. I'm a huge believer in that. But even that's credentializing. So if you're not part of the Thiel Fellowship, which I think many people will take over a Harvard, Princeton, Dartmouth, et cetera. You still need that stamp, don't you?

[Ryan]

I think the brand of education still exists in the world. But I think back in my own experience, cause I was a middle class kid, grew up in Philadelphia, went to school at Princeton. And I think back, what did it do for me? It probably gave me validation. Whether I deserved it or not. I don't know. Did I learn anything? No. But what it really triggered in me was ambition. Because the one thing you can say about the Ivy League, there's a lot of people there who have, who have come from a fair bit of wealth and affluency. And it triggered ambition. And then I'm a competitive person by nature. So ambition and competitive. I wanted to win. And one of the ways you win is being successful against your peers. And that's the thing I look back on with 30 years of hindsight. At the time I had no idea. But I look back, I'm like, man, I was really. It ignited an ambition that I probably didn't appreciate.

[Interviewer]

You also saw what great looks like. That doesn't mean everybody at Princeton was smart. But the top 10% of Princeton are shaping society and doing all these things. You got to see what, what does it mean to be extremely smart? The average person, politically incorrect does not necessarily know the difference between a very smart person and extremely smart person. They just don't have that context. Going to Ivy's, you're able to see, you're able to also see your gap. When you meet somebody just exceptional, you're like, holy crap. There's like levels to this.

[Ryan]

I 100% agree. And I think even you go to Stanfords and the other schools, you want to be impactful. I think every entrepreneur, by their nature, they want to change the world and create something, but they're also competitive as hell and they want to be the best in their class, whatever that means. And I think you have to harness that and believe in it. And that's why I think these founders, they're so valuable to frankly society you've

[Interviewer]

seen venture across multiple decades. As I mentioned, you were on the Midas list. You went out and raised $100 million for revenant's fund. 1 what did you learn through that process?

[Ryan]

I learned and the whole idea around a small fund was to get in business. And then also one of the interesting things about Revenant is we have a co invest program. So every deal we do, we try to offer co invest to our limited partners. And as a student of venture capital and really in the last 10 years I started to see a lot of these smarter family offices want direct access. They love their blind pools but they love their direct access. So Revenant was purpose built to be small. So I need co invest partners, people who can actually do it and write a check alongside me into a cap table. So it was literally that was part of the mousetrap. The foundation was the GP lp and then I went after all family offices that actually could do co invest. So it allows me to flex up and be a little bigger than a hundred. But then also I think you can create meaningful multiples of capital with a hundred million dollar fund.

[Interviewer]

Yeah, your fund size is your strategy.

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[Interviewer]

is so underrated to raise a fund and get it to a certain size. But just get into business and as I've interviewed hundreds of LPs and GPs across the years realized one extremely obvious point in retrospect, which is everything is upstream of your first close. If it's very difficult to do $150 million first close today and do a $300 million fund, do the second best thing, which is do a 50 million first close, do a hundred million fund, and by the time you would have gone to that $300 million, which I would argue is. Would be highly unlikely, not even saying it would take two years, I think more likely than not would not have happened. You're going to be on your second fund, which at that point you could do 200, 250. And people are just, I think they're set egotistically on a number or they're just anchored on a number or again, going, it goes back to this memetic copying. Their friend from Princeton raised a $200 million fund. They're like, that guy's an idiot, right? I should be able to do 300 million fund. Not understanding all the context. Maybe they raised two years ago. Maybe they had an anchor investor that came in early. Getting into business is just so underrated in every aspect, but certainly when it comes to fundraising, which is more binary than people realize, people think it's, you know, like a typical sales process, like a SaaS company. You go talk to a hundred investors, some, somewhat of them convert, and then you have this magical kind of pool of capital. It's not like that. It's a momentum game, and it's entirely contingent on that first one.

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When you find something that just fits right, you end up wearing it more than anything else. And for me, lately, that's been my rag and bone Miramar jeans. What really stood out to me is that they look like traditional denim, but honestly feel more like sweatpants. They've got that clean, structured look, but with a level of comfort that makes them easy to wear all day. I've been wearing them pretty consistently, whether I'm recording, traveling, or just out there during the day. And they become one of those go to pieces I don't really have to think about. Even after long days, they don't feel restrictive, which is something I didn't realize I was missing until I started wearing them regularly, which with rag and bone, it's not just about one pair of jeans. It's about having reliable staples in your closet. You could dress them up a bit or keep it casual, and they just work. The washes are clean, the cut is sharp, and they hold up really well over time. It's that balance of comfort and structure. That makes them stand out compared to most jeans. If you're looking to upgrade your denim, I definitely recommend checking out Rag and Bone Miramar jeans. You get 20% off site wide at www.rag-bone.com using code investors. Again, that's 20% off at www.r a G-B-O-N-E.com with code invest. When you find something that just fits right, you end up wearing it more than anything else. And for me, lately that's been my Rag and Bone Miramar jeans. What really stood out to me is that they look like traditional denim but honestly feel more like sweatpants. They've got that clean, structured look, but with a level of comfort that makes them easy to wear all day. I've been wearing them pretty consistently, whether I'm recording traveling or or just out there during the day, and they become one of those go to pieces I don't really have to think about. Even after long days, they don't feel restrictive, which is something I didn't realize I was missing until I started wearing them regularly. With Rag and Bone, it's not just about one pair of jeans. It's about having reliable staples in your closet. You could dress them up a bit or keep it casual and they just work. The washes are clean, the cut is sharp, and they hold up really well over time. It's that balance of comfort and structure that makes them stand out compared to most jeans. If you're looking to upgrade your denim, I definitely recommend checking out Rag and Bone Miramar jeans. You get 20% off site wide at www.rag-bone.com using code invest. Again, that's 20% off at www.r a g-b o n e.com with code invest. When you find something that just fits right, you end up wearing it more than anything else. And for me, lately that's been my Rag and Bone Miramar Jeans. What really stood out to me is that they look like traditional denim but honestly feel more like sweatpants. They've got that clean, structured look, but with a level of comfort that makes them easy to wear all day. I've been wearing them pretty consistently, whether I'm recording traveling or just out there during the day, and they become one of those go to pieces I don't really have to think about. Even after long days, they don't feel restrictive, which is something I didn't realize I was missing until I started wearing them regularly. With Rag and Bone, it's not just about one pair of jeans. It's about having reliable staples in your closet, you could dress them up a bit or keep it casual and they just work. The washes are clean, the cut is sharp, and they hold up really well over time. It's that balance of comfort and structure that makes them stand out compared to most jeans. If you're looking to upgrade your denim, I definitely recommend checking out Rag and Bone Miramar jeans. You get 20% off site wide at www.rag-bone.com using code invest. Again, that's 20% off at www.raG-B-O-N-E.com with code invest.

[Ryan]

A couple of things to unpack here. One of the ironies of asset management is you can run a strategy with a smaller fund, be very successful, then you raise too much money. You can't run the same strategy yet you have this brand and people back this brand. And I was a big believer in like you want to run the strategy, you want to run. So keep the fund size at the right level. You can create ancillary products and ancillary things to take on more capital, but do it in a more intelligent way that works for the LP and works for you. But keep the integrity of your fund size the same where you're going was I was like one. The GPS gave me deal flow and validation. Then I got some pretty well known family offices and then you're downhill and you play the scarcity game. And there's no better way to fundraise than scarcity. And the way you do that is you keep the fund size tight.

[Interviewer]

How do you communicate scarcity? Have a scarce product? Yes.

[Ryan]

Well, so I mean it. You do a lot of marketing, you get yourself to a certain level and then when you launch, you're scarce.

[Interviewer]

Last time we chatted, you said something that shocked me, especially given that you've been in the industry for several decades. You said you're not looking for power loss.

[Ryan]

My career has been made on underwriting really good people and underwriting some semblance of information. My experience in the quote unquote power law game is I have an hour, maybe 12 hours, maybe a day to make a decision and I have very stifled access. And it feels like I'm playing a momentum game and it's very successful that those are comfortable, that those can do that. I live in a world where I want to sit across or at least have a zoom with somebody I'm backing and I want some semblance of information to underwrite. And the power law. There's been such a frenzy and there's so much competition around it that my process doesn't necessarily work in that world. I still believe in it and I don't think about what I don't do. What I do do is I underwrite great teams in really interesting markets and I come in as a secondary buyer, oftentimes solving a problem.

[Interviewer]

Just to play devil's advocate, doesn't that break the venture model? Don't you need that power law outcome to drive the entire portfolio to 3,

[Ryan]

4, 5x secondary buyers look at their loss ratio. Venture people don't, you know, but my loss ratio should be close to zero. Right. As a secondary buyer because I'm coming in and underwriting in a meaningful moment when it's a more mature business.

[Interviewer]

What stage are you going into?

[Ryan]

Like I said, I mean as early as I've gone is 25 million revenue and as big as 900 million. So it's a very wide swath. I'm really trying to pinpoint an inflection about to happen to the business and that's how I've been, that's how I've kind of been underwriting.

[Interviewer]

Is there no opportunity to buy secondary in, you know, a fast growing AI company that has an incredible cap table and has some implied expected value and you know, potentially a very high expected value.

[Ryan]

We look at these deals when we can that our challenge has been, or at least my challenge has been really trying to get access, the right amount of access which I committed to my LPs in terms of access to a team a little bit, access to some semblance of financials and what's happening in the business. I kind of hold myself to that standard, a higher underwriting standard and it doesn't matter the deal. Like I would love to do a late stage AI deal if I got to meet the founder and you said earlier maybe I pay 10, there's a trade off. Yeah, maybe I save 10% above par. Like I'm not looking to discount. If I want to be in a business, I'll pay the price I need to if I've underwrote it appropriately.

[Interviewer]

Mark Andreessen recently said there are no diamonds in the rough, only diamonds. Do you agree or disagree?

[Ryan]

Well, first of all, it's a little self serving, but if I ran a 15 billion platform I would probably say something like that to some degree. I guess he's right. But I don't view the company as the diamond. I view the founding team. I view the founders as diamonds.

[Interviewer]

So tell me about your portfolio construction.

[Ryan]

Yeah, so my portfolio construction, like I said, it's A wide swath industry agnostic not focused on themes here or there. What I'm really focused on is this inflection point. Am I buying into a business right before it triples? Am I buying into a business right before the valuation doubles? And so I I, I traffic and I need to be introduced at the right time in that moment by usually one of my GP lps and then I access some shares and then enjoy hopefully the performance that that happens afterward.

[Interviewer]

Last time I took a deep dive into the secondary market I saw this natural gravity to push prices close to the 409A or to the last round. Is this something that you're benefiting from this natural I guess discount in secondaries that get stunned a lot of times

[Ryan]

I am very efficient because I was a VC myself around can I make 5 times my money So I really price things off of what I believe the potential will be versus a discount. That's why in some examples we have bid par or even north of par because you see the inflection point happening or you have really good inside knowledge from maybe an insider that X, Y and Z is about to happen and that gets you comfortable that you can pay a price. But I'm really trying to underwrite to 3-5x quickly and that's how I think about pricing less than less than a discount.

[Interviewer]

You have several pet peeves about the venture industry. What's your number one pet peeve?

[Ryan]

Man, there are a lot of pet peeves I probably would say groupthink I would say I think the industry from LPs down tend to talk each other into the same kind of deal and I'm a big believer and you got to go where people aren't and the group think mentality and is probably the thing I, I I I dislike the most close second is it's all around the it's really the founder VCs like they sometimes get a little bit caught up in the investment they did when they really they just found a really good team and they executed and they overly attribute their role in the success

[Interviewer]

I invested in seed round I took the company from seed to $100 billion

[Ryan]

company that might be my greatest pet peeve that they don't appreciate. It's really all about the founder and you were fortunate to witness greatness and I'm sure you made an introduction here too but you witnessed greatness and you took a risk and you should be applauded for that. But let's just, let's be really clear on what you actually did in Building this business.

[Interviewer]

Just to play devil's advocate, they're not VCs that come in and completely change the trajectory of a company.

[Ryan]

VCs, it's an, it's an asset class that lives with brands. And I think there's something to be said about if a branded VC comes into your cap table, it facilitates talent aggregation. That's really it. And I'm sure there's some introductions here and there, but to me, when I'm a big believer and it's all around the execution and, and hiring great people, I do think VCs can definitely influence that.

[Interviewer]

And that's particularly at the early stage.

[Ryan]

Correct.

[Interviewer]

Because great talent is more effective at amalgamating great talent than the next vc.

[Ryan]

Ninjas. Want to work with ninjas. When I was a seed investor, I was like, your first three hires have to be absolute ninjas. Ninjas. Because if I'm coming to join a company, how good are the other people? It's the first thing I think of when I leave. So you really have to hold that bar really high.

[Interviewer]

How scarce is great talent? Is this something that's pretty scarce? Is it just extremely rare?

[Ryan]

I actually think it is probably the rarest thing and I think that's what zero interest rate environment, mediocre people got funded and that's really hurt the asset class.

[Interviewer]

Obviously there's the spacexes, the Andrews of the world. But across the board, is it very common to see these clusters of talent at companies? Is that more the rule than the exception?

[Ryan]

Is the rule? Because I really think, like I said, talent aggregates more talent. I think talent compounds maybe more than anything. And then before you know it, you've just got an awesome team and then they're going to born out the next set of companies. Obviously the PayPal mafia being like probably the poster child for it.

[Interviewer]

And the opposite is also true where you have no talent, somebody extremely talented comes in, then they friction off in six months.

[Ryan]

If there's a really average person at the company, you're looking around like why is he, why are he or she's still here? And then you start to question the leadership, like why, why are they suffering? Why are they, why are they allowing mediocrity in our company? Because it's kind of the lowest common denominator. Mediocre people hire worse people than themselves. And then before you know it, you've got a really average team.

[Interviewer]

Yeah, it's a Steve Job saying A's hires, A's, B's hires, C's.

[Ryan]

Yeah, you got it.

[Interviewer]

As I've gotten to know you, you're. I won't use the word contrarian, but you're a great first principles thinker. How do you invest your money outside of Revenant, your own money?

[Ryan]

I'm such a sucker for innovation. You know, you'd think I would be a little more diversified in my own like personal finance. Yes, I have some real estate here and there and some safe stuff, but I'm still a very active angel investor because I still want to be, you know, and actually one of the deals they quote, unquote source from Revenant I was the GP as an angel investor. I'm a secondary buyer buying into later stage businesses today. But in my person, my PA I would much rather give an entrepreneur a $50,000 check than buy, put, put money in an ETF.

[Interviewer]

I have some good news for you. So I sat down for what I didn't realize would be a therapy session with the C. CIO of Mark Andreessen Ben, which is family office, a 16Z perennial Michelle Del Buno. And I let him know my portfolio construction, which was over 90% startups now across many different verticals, hundreds of positions. And he said something that was very surprising to me, especially somebody in asset management, is that it's not necessarily a bad portfolio, it's a very illiquid portfolio, but it is not fundamentally flawed and even more so, it's not fundamentally not diversified. There's this dogma in asset management that you have private credit, private equity, bonds, stocks. The opposite is true by the way as well. In 2022, investors woke up and realized their stocks and their bonds were correlated. They thought they were diversified and their model said that they were diversified. Obviously the models were based on previous correlation, but they weren't diversified. So I've evolved my thinking, this was just a couple weeks ago in that sure, liquidity is very important and sure you want to have some diversification and sure you should never put your eggs in one basket, but if you have a sizable enough diversification, being overweight to where you have alpha, where you have access, all these things is not the craziest thing.

[Ryan]

And also so many of these asset classes that I'm not involved in is there's often a middle level management. One of the things I love about startups is I'm looking across from the person I'm actually writing a check to or sending a wire to and there's something tangible, feasible about that. And that's what you know, if you're going to invest, I'd rather Like know who's going to be managing my money? This founder. And I love the creation of that and I love just being involved in that hectic stage of startup.

[Interviewer]

I love that the founder is your wealth manager. Pretty much he just has a very small stake of your wealth.

[Ryan]

Exactly.

[Interviewer]

You played football at Princeton, you were a linebacker, you went into venture capital, started this firm called Accomplice, you were the first investor and angelist. You've had the storied career, as I mentioned, if you could go back and give yourself one piece of advice when you had just graduated Princeton, one timeless piece of advice that would have either accelerated your career or helped you avoid costly mistakes, what would that be?

[Ryan]

Trust your instinct. When you're young, you're taught you don't know anything, you're inexperienced, especially in the 90s when I was kind of growing, growing up in my, in my, in my investment career. And I look back and your instincts are often right and you gotta trust them even though, even if you're not experienced. So I look at my investment career and when I trust my instincts, they're far greater than my experience. So if I was 22 or 23, I would've trusted my instincts earlier.

[Interviewer]

Is this around founders?

[Ryan]

So it's around everything frankly. Like what do I want to do with my career? Do I want to go work at a bulge bracket? Do I want to go do something more startup oriented? Trust your instinct. And you know, like I learned really early, I'm a much better, like throw me in the deep end. I learn a lot by doing. I wasn't a great student per se, but I'm a great worker because I've got a quick mind, it can iterate quickly. And then what I've learned is I should have trusted my instinct the whole time, but I was kind of taught near inexperienced. Maybe your instinct's wrong. And in hindsight there's this Gary V.

[Interviewer]

Meme which is one hour of doing equals a hundred hours of thinking.

[Ryan]

Gary Vee's got a lot of great ones. That's a great one.

[Interviewer]

And it's a trap. And the higher IQ people, your classmates at Brinson Mine, at Dartmouth and Harvard, that is a very common trap. The overthinker. And the more IQ you have, the more ego you get and the less you want to look stupid. We talk with my business partner Curtis about this all the time. The first 150 episodes or so we didn't have a lot of listeners and it's brutal for the ego. And now you have an identity around this now I have an identity around doing something that a lot of people don't listen to. And it's a brutal thing. And having the ego strength to do that is a significant competitive advantage. And it's one that I don't believe is priced into the market.

[Ryan]

One of the things that I learned as a seed investor in the last 20 years was people were like, how did you know what to double down on? Was it P and L? No. P and L can be a lagging indicator. It was organizational metabolism. The teams that move super fast are the teams you want to be in business with. The teams that are breaking glass. Making a mistake so quick and iterating before you even knew it was a mistake. That's where we made all our money. P and L had nothing to do with it. It was like organizational metabolism and speed and instinct. And that's kind of where I like. That's what, that's why I want to get access to the teams I'm backing because it's really hard to do at scale.

[Interviewer]

Perhaps a dumb question, but how are you able to tell the organizational metabolism of team?

[Ryan]

It's part instinct, it's part like conversations with people on the board or investors. And you know, that's kind of like really why I try to hone in on. I'm still trying to back teams and this just as a secondary buyer.

[Interviewer]

Been in hundreds of investments, you've seen thousands of deals. What have you changed your mind on the last couple years?

[Ryan]

That's a great question. You know what's probably changed my mind on I used to be team, team, team, team, team. But I recognize really and in the last few years is I don't care how great the jockey is, you have to be in a good market. Market tailwinds will drive success as much as any great team. And sometimes I've backed some great teams in mediocre markets and they're actually so innovative they're shrinking the tam they're in. And I've recognized more and more you gotta have the combination that's the one plus one is five. Great team.

[Interviewer]

Where is Revenant going to be in five to 10 years?

[Ryan]

It's a great question. Hopefully on our fourth fund with a great cabinet of LPs that love the co invest partnership that we've created small funds, maybe different kind of products. But I think we'll always keep the integrity of the, of the fund small. This and hopefully it's one of the brands, an aspirational brand in the secondary market. We want to be sought out by our GPs and our founders to solve liquidity in the BFS secondary. And that would be a win.

[Interviewer]

We have this unique vantage point here on the podcast. I have a pre interview and interview and now roughly 360 episodes. And one of the things I think GPs are not aware of is this pullback. We started the conversation talking about this, but this pullback from the dedicated blind pool fund and how little appetite there is for LPs to back new brands. Some people see this as fatalistic. They decide not to be a vc, they go out to do something else. And other people are leading with their co invest, are leading with their innovative structures to give the customer aka the LP's exactly what they need. And those are the funds that are going to succeed. If you think about this extinction level event that's happening in the merging manager market, somewhere between 2,500 to 3,000 merchant managers a couple years ago, some accounts, some people think 50% of them will be gone, some of them 75% will be gone, meaning they won't raise another fund on the opposite side of that. There's a lot of opportunities and the question becomes, how do you get over that hump? How do you pass that chasm between default dead and default alive when it comes to emerging managers? And the answer is give your customers what they want. I've had IV endowments that are telling me, all things being equal, they want to deploy into pools of co invest or other pools of capital where A they know the assets that you're getting and B, they don't have to wait these kind of 14 years. So I think you're on the right track in terms of product innovation, how you're building your firm.

[Ryan]

I probably did 35 secondaries when I was at Accomplice and a lot of the dollars I raised for these deals, we didn't have a dedicated, we didn't have a dedicated secondary fund. I did it via the three letter word SPVs, before it was a three, you know, before it was a thing. And I did it with family offices and I recognized firsthand those that if you give them a right amount of information, let them underwrite it, it's a great product. So when I sought this, when I, when I started this fund, I targeted family offices that had that muscle because I think it's a really important and I think it's where the industry's going. It's great to hear the institutional LPs you talk with and traffic with that. Frankly, I don't a lot.

[Interviewer]

I was surprised by it to be?

[Ryan]

Yeah, Ivy, an endowment going direct. I know for years in the buyout land there were these co invest vehicles, but I think more and more across every asset class, it's a very interesting product that makes a ton of sense and frankly is healthy for everyone because you don't wait for the waterfall of the fund to pay out. You can, you can win. When a company goes public, it's a win for you. And then you can reinvest a proportion of that into the next thing. And I think for too long people have been scared of that.

[Interviewer]

Just double click on what you said. You said that you looked after family offices that had a predisposition to do co invest. I've never met a family office that didn't say they wanted to do conest.

[Ryan]

How did.

[Interviewer]

How are you able to have the

[Ryan]

track record of doing it? Everyone talks about it, but then you, you know, you know the game. Can you really pull the trigger in 60 days? That's a little fast.

[Interviewer]

And you ask the LPs before they.

[Ryan]

For sure. For sure. Because I say to them, like, listen, I'm offering co invest. Know what this means in practice? It means when I bring you a deal and you want an allocation for it, you need to close it within 40 days, sometimes sooner. Do you have the muscle memory and the ability and frankly the staff and the risk appetite to do that? And very often not. Not yet, but we want to. Can you show us?

[Interviewer]

It's a great framing. Well, Ryan, you're absolute legend. It's a pleasure to have you on the podcast. Looking forward to doing this again soon.

[Ryan]

Thanks. Thanks for having me.