Masters in Business: Deven Parekh on the State of Startup Investing

Bloomberg Radio's "Masters in Business" features in-depth discussions with influential figures shaping the markets, investing, and business landscapes. In the August 15, 2025 episode, host Barry Ritholtz engages in a comprehensive conversation with Deven Parekh, Managing Director at Insight Partners. This detailed summary encapsulates their discussion, highlighting key points, insights, and conclusions drawn from Deven's vast experience in venture capital and private equity.

Introduction

[00:32] Barry Ritholtz:
Barry introduces Deven Parekh as an exceptional guest, emphasizing his role at Insight Partners—a prominent venture capital and private equity firm with a global footprint. Insight Partners is renowned for its diverse portfolio, which spans early to late-stage investments across various software sectors.

"Insight Partners is unique because they have a foot in both venture and PE worlds." - Barry Ritholtz

Career Beginnings

[01:57] Barry Ritholtz:
Barry delves into Deven's early career aspirations, revealing his initial interest in the sciences during high school. A significant shift occurred during his time at Wharton, where interactions with business-oriented roommates steered him towards finance and investment banking.

[02:07] Deven Parekh:
Deven shares his transformation from a science enthusiast to a finance professional, highlighting his academic journey and early ventures into Wall Street.

"I thought maybe I could put these two interests together. I didn't know how." - Deven Parekh

Transition to Venture Capital and Insight Partners

[05:19] Barry Ritholtz:
Barry inquires about Deven’s transition from investment banking to venture capital, specifically how he navigated from mergers and acquisitions (M&A) to VC.

[05:23] Deven Parekh:
Deven recounts his tenure at Blackstone and subsequent involvement with Insight Partners' predecessors. He underscores the significance of mentorship and strategic decision-making in his career shift.

"I wanted this transition, but it's very different being an advisor... being a principal where your goal is not just to get a deal done, but to make sure it's a good deal." - Deven Parekh

Investment Philosophy and Approach

Stage Agnosticism

[16:07] Barry Ritholtz:
Barry probes into Insight Partners' investment strategies, particularly their focus on software and their stage-agnostic approach.

[16:31] Deven Parekh:
Deven elaborates on Insight's flexibility across investment stages—from Series A to buyouts—allowing the firm to adapt to market dynamics and leverage growth opportunities effectively.

"We are really software investors, but we're stage agnostic." - Deven Parekh

Deal Sourcing

[16:36] Deven Parekh:
Insight Partners employs a robust deal-sourcing mechanism, with over 60 full-time professionals dedicated to identifying potential investments. This team acts as an outbound sales force, engaging with up to 30,000 companies annually to maintain a pipeline of quality deals.

"We have tremendous market intelligence because we're talking to anywhere from 20 to 30,000 companies a year." - Deven Parekh

Value-Add Strategy

[16:40] Deven Parekh:
Insight distinguishes itself through its "Insight on Site" program, akin to consulting firms like McKinsey or Bain. Dedicated teams embedded within portfolio companies provide specialized support across various functional areas, ensuring operational excellence and strategic growth.

"We have a team for each functional area that's also stage-focused." - Deven Parekh

Global Presence and Strategy

[29:33] Deven Parekh:
Insight Partners' strategic global expansion—maintaining offices in New York, San Francisco, London, and Israel—enables the firm to tap into diverse markets without being confined to traditional hubs like Silicon Valley. This geographic diversity fosters independent decision-making and broadens investment horizons.

"Not being in the bubble lets you step back more and decide what you want to do as opposed to what everybody else is doing." - Deven Parekh

Current Investment Focus

Software and AI

[33:05] Deven Parekh:
Deven emphasizes Insight’s longstanding commitment to software investing, citing its resilience across economic cycles. Current trends show a heightened focus on Artificial Intelligence (AI), with AI becoming integral to virtually all business models.

"Every company that we invest in... we're talking about AI." - Deven Parekh
"[AI] is now affecting everything we do." - Deven Parekh [38:10]

Deven discusses the transformative impact of AI on various sectors, from healthcare to legal services, highlighting how AI drives both product innovation and operational efficiencies.

Other Sectors: Cybersecurity and Infrastructure

[42:38] Deven Parekh:
Beyond AI, cybersecurity remains a critical area of investment. Deven points to the emergence of AI-related security solutions and next-generation infrastructure as essential for supporting the evolving technological landscape.

"Whenever you have these big new platform shifts, you have infrastructure around that platform." - Deven Parekh [42:38]

Views on Crypto

[43:50] Deven Parekh:
Deven shares Insight’s cautious stance on cryptocurrency investments. Despite recognizing potential winners in the crypto space, Insight has opted not to prioritize it due to a lack of clear business use cases and scalability challenges.

"We didn't have a clear business use, so we chose not to focus on it." - Deven Parekh [43:50]

Exits and Performance

[45:51] Deven Parekh:
Highlighting recent successful exits, Deven discusses significant deals led by Insight Partners, including Wiz's pending $32 billion acquisition by Google, Central Reach's sale for nearly $2 billion, and Dotmatics' acquisition by Siemens for over $5 billion.

"Venture returns with buyout dollar deployment, it's a good combination." - Deven Parekh [45:51]

Deven attributes these successes to Insight's emphasis on liquidity and responsiveness to investor feedback, implementing structured liquidity committees to prioritize and execute exits efficiently.

Lessons from Market Cycles

[49:51] Deven Parekh:
Drawing from his extensive experience through multiple boom and bust cycles, Deven underscores the inevitability of market fluctuations. He emphasizes the importance of resilience and confidence, advising investors to maintain a long-term perspective despite short-term volatility.

"Good times come, bad times will invariably come, and good times will invariably follow." - Deven Parekh [49:51]

Overlooked Risks in Investing

[52:29] Deven Parekh:
Deven highlights systemic cybersecurity risks as an often underappreciated threat. Beyond individual breaches, he warns of potential large-scale attacks on critical infrastructure like electrical grids and water purification systems.

"The level of risk if physical infrastructure were taken over is way bigger than we think it is." - Deven Parekh [52:29]

Personal Insights and Advice

Mentorship and Personal Growth

[54:26] Deven Parekh:
Reflecting on his personal journey, Deven credits pivotal mentors from his early education who recognized his potential and transformed his academic trajectory. He emphasizes the profound impact of mentorship on his success.

"Sixth grade Mr. Brown, very transformational mentor because he made me believe that I had something I didn't think I had." - Deven Parekh [54:26]

Advice for Aspiring Investors

[63:05] Deven Parekh:
Deven offers two key pieces of advice for recent graduates aspiring to enter venture capital or private equity:

1. Maintain Broad Intellectual Curiosity:
   Avoid narrowing your focus solely to investment-related content. Engage with diverse interests to become a well-rounded and interesting individual, which can enhance networking and deal-making opportunities.

   "Keep your intellectual curiosity broad... it makes you a better investor, a better person, more interesting." - Deven Parekh [63:05]

2. Embrace Serendipity:
   Allow room for unexpected opportunities and interests to guide your career path. Being open to unforeseen paths can lead to rewarding and impactful roles.

   "Allow a little serendipity in your life... try something and it turns out you might like it." - Deven Parekh [64:42]

Conclusion

[67:02] Deven Parekh:
Deven concludes by reiterating the importance of trusting one's instincts, developed through extensive experience and pattern recognition. He also echoes the sentiment that market fluctuations are transient and opportunities lie in both prosperous and challenging times.

"Good times come, bad times will invariably come, and good times will invariably follow." - Deven Parekh [67:02]

[68:37] Barry Ritholtz:
Barry wraps up the episode by thanking Deven for his insightful contributions and encourages listeners to explore Bloomberg’s extensive podcast library for more enriching conversations.

"If you enjoy this conversation, check out any of the 550 we've done over the past 11 years." - Barry Ritholtz [68:37]

Key Takeaways

1. Stage-Agnostic Investing:
   Insight Partners' ability to invest across various stages—from Series A to buyouts—provides flexibility and strategic advantage in navigating different market conditions.

2. Robust Deal Sourcing and Value Addition:
   Employing a dedicated deal-sourcing team and an embedded value-add strategy ensures that portfolio companies receive comprehensive support, fostering growth and operational excellence.

3. Global Strategic Presence:
   Maintaining offices in key global markets allows Insight Partners to access diverse opportunities without being confined to traditional investment hubs.

4. Focus on Resilient Sectors:
   A steadfast commitment to software and AI, coupled with investments in cybersecurity and infrastructure, positions Insight Partners to capitalize on enduring and emerging technological trends.

5. Emphasis on Liquidity:
   Responding to investor feedback by prioritizing liquidity has enhanced Insight Partners' ability to execute successful exits, contributing to robust returns.

6. Navigating Market Cycles:
   Experience through various economic cycles teaches the importance of resilience, long-term thinking, and learning from both successes and setbacks.

7. Addressing Overlooked Risks:
   Recognizing and preparing for systemic cybersecurity threats is crucial in an increasingly interconnected and technology-driven world.

8. Personal Growth and Mentorship:
   Early and transformative mentorship plays a pivotal role in shaping successful careers, underscoring the value of guidance and support.

9. Broad Intellectual Engagement:
   Cultivating diverse interests beyond investment-specific knowledge enhances personal development and professional effectiveness in the investment landscape.

10. Embracing Serendipity:
    Remaining open to unexpected opportunities and interests can lead to significant and fulfilling career advancements.

This summary captures the essence of Barry Ritholtz's engaging conversation with Deven Parekh, highlighting the strategic insights and career wisdom that emerged from their discussion. For those interested in the intricate dynamics of startup investing and venture capital, this episode offers invaluable perspectives from one of the industry's leading figures.