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Epi
@Epi
1Anno·

Dear Quin Experts,


anyone who witnessed the dotcom boom knows that the highest returns throughout the IPOs were possible with venture capital firms.

Assuming that AI is about to experience a comparable boom, VC shares would certainly be there again.


My question: does anyone happen to know of any VC firms specializing in AI startups? Apart from the general store $SFTBY (+11,9%) I could not find any.


(Please respond to the question only!).

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Magellan@Magellan
1Anno
There are no VCs that specialize purely in AI. You can only reach them indirectly via the big tech giants. The top AI VC is Intel Capital, but of course it's also just a mixture.
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Epi@Epi
1Anno
@Magellan Thanks for your answer! Do you think there is a systematic reason that there are no AI-only VCs? Or is it just a bit too early and you could keep your eyes open for an appropriate IPO?
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Magellan@Magellan
1Anno
@Epi I can only estimate that. I myself work for a VC but for blockchains. In general, even in the tech industry, there is simply no reason for IPOs. Why IPO? 1. founder wants to expand the company and needs debt financing. They in turn invest in such a specific industry already have a bunch of capital. The VC founder doesn't necessarily need the money to co-invest. 2. founder wants an exit to buy a yacht or whatever. If the founder in turn exits, I personally become skeptical, usually the company then runs worse, because the research runs worse. Should AI in 10 years make up a large part of our lives, there may be VCs with appropriate focus, which also go to the stock market and run, but currently there is no reason to found such a company and go public.
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Epi@Epi
1Anno
@Magellan Thanks for the background. Sounds plausible. So no AI VC AGs for now. 🤷
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Tabularasa@Tabularasa
1Anno
Sounds to me like BDC's,... if I'm not mistaken,... $HTGC could go in that direction. They also participate and if I'm not completely wrong now also in Silicon Valley and there will certainly be one or the other Ki company. Otherwise it would be grossly negligent as a large company to rely only on Ki startups. BDC's are just scattered and there is a mixture. Am I about what you're looking for?
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Epi@Epi
1Anno
@Tabularasa Thanks for your answer! Actually I'm looking for something along the lines of CMGI from the 90s. So a highly specialized VC.
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Investor@Investorentagebuch
1Anno
The problem with most listed players is that only the management vehicle is listed. The funds themselves, with which the investments are made, however, are not. This means that you usually participate only or at least mainly in the management fee (which in turn depends on the AUM). This could be compared to buying Blackrock shares but not Blackrock funds (Blackrock funds are listed on the stock exchange because they only invest in listed companies). The funds themselves are closed-end funds with mostly 10 years maturity and at least for Otto-Normalverbraucher not directly drawable, because the minimums are mostly 5-10 million (with the big known VC or PE investors sometimes even higher). That's why I make all my private equity and VC investments via feeder providers like Moonfare or Finvia (Liqid also exists, or fund of funds providers like Astorius Capital). There you can - as a semi-professional investor - usually be involved from 100k. However, I don't know of any funds that are purely specialized in AI, since a certain diversification is desirable. If one would bet only on AI, and the timing would turn out to be wrong in retrospect (as if one would have bet on e-mobility in 2010, for example), they would not be able to raise a follow-on fund in case of bad development.
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Epi@Epi
1Anno
@Investorentagebuch Thanks for your interesting reflections. Do you still know CMGI from the 90s? How did it go there?
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Investor@Investorentagebuch
1Anno
@Epi I started investing in '99, just before the bubble burst. Heard the name before, but couldn't place it anymore. Just googled it, possibly they did it from their own balance sheet. But the typical VC funds like Sequoia, Accel, Kleiner Perkins and like they are called usually set up closed funds with 10 years term (+ e.g. 2 years extension option, if in the 9th year an event like COVID happens and you can't make good exits). It is the same with PE companies, even if they have listed management vehicles like KKR, Blackstone or EQT. What I like about this typical structure is that it is easier to align the interests of all parties involved over a period of 10 years (investors, fund management, management of portfolio companies, it is like a 400m sprint). Also, the investment team has to invest a not insignificant part of their own money in the respective fund, and carry (profit sharing) is only given when the hurdle of mostly 8% is reached.
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Epi@Epi
1Anno
@Investorentagebuch If I remember correctly, CMGI bought a majority stake in various Internet companies, then financed them, built them up and subsequently floated their shares on the stock market. Profits rose accordingly, especially during the IPO hype. In 1992-2000, CMGI rose 100,000%.
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1Anno
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Epi@Epi
1Anno
@Sun Thanks! Do you think there might be a spinoff coming soon?
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Epi@Epi
1Anno
@Sun Not only. Intel, Alphabet, Softbank, etc. - just one of the big general stores.
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Epi@Epi
1Anno
@Sun With Softbank, you have all the other things as well. It's interesting that there isn't really a special AI VC there yet. In view of all the start-ups in the AI environment, that would actually make sense.
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Epi@Epi
1Anno
@Sun Take it easy. That almost sounds like FOMO. Nothing is happening at Softbank. Who knows what skeletons they still have in the closet. Also, the AI boom doesn't even seem to have started yet. Right now the equipment suppliers (Nvidia etc) are running. Then come the companies that will use this equipment (developers) and at the end the service providers that bring these developments to the man. Such a cycle takes time. So 5-10 years, I would say. I had already considered going deeper into such a cycle analysis in a longer article. But my first test balloon here showed me that this would still be a futile labor of love with the WorldEtf-loving community. 🤷😅 And with the reports of the Nvidia gains, the thought never occurred that these could be part of a larger cycle.
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