Transcription
[Music] Welcome everyone to this second session of Antler's Window Into Progress, our digital series. I'm the CEO of Antler, Magnus Gremli. Very excited to have you all here. Uh, we're going to talk a little bit about our unique investment approach and what gives us a particular advantage across innovation and investing into new tech companies across 27 cities, across the entire globe, across six continents.
Today's session, we call "Under the Hood: How Antler Sources and Assesses Great Founders." And we've brought together a couple of our experts within Antler in that field. So, Lavanya Indra Lingam will speak about our scouting strategy and how it's evolved over the last five years. She runs Scouting for Antler globally. We have Ryan Somerville, who's one of our partners in the U.S. He'll talk about how we assess founders and make our investment decisions. And then we have Ann Sulhag Tutar, who will share an overview of how we then support our portfolio. We're also very excited to welcome Eric Seabush, who is one of the most knowledgeable investors into venture capital companies and tech companies all across the globe, who leads Mercer's Alternatives Group and is very knowledgeable about making those type of investment decisions. So, I think today will be a very, very exciting session, and thank you for joining us.
At the end of the session, we will open up for Q&A. So, if you have any questions as we proceed, please put them in the chat, and we'll try to get to as many of them as possible.
I'm gonna kick us off and talk a little bit about, you know, why we built Antler and how Antler is set up. So, the reason why we founded Antler is to make progress inevitable. It might sound like a lofty ambition, but ultimately, we fundamentally believe that the world will only move forward and civilization will always only get better if great people all across the globe choose to use their app, their experience, and their skill set to innovate and build new companies around solving the world's most important problems. And that's really all what we're about. In Antler, is finding incredible founders, backing them, being a great partner to them in the early days, and through that, build the great companies of the future.
We live in a world which is pretty interesting from that perspective because over the last kind of 30 or 40 years or so, a lot of innovation has been dominated by a couple of ecosystems across the globe. And obviously, the center of gravity has been around Silicon Valley in the U.S. Now, what we're seeing currently is a lot of ecosystems all across the globe, and also within the U.S., a lot of ecosystems outside of Silicon Valley, in Austin, Texas, Atlanta, Boston, New York, um, Miami, LA, say, all across the U.S. I use the ecosystems growing incredibly fast, and you also see that in the rest of the world. Um, so there's a tremendous kind of decentralization of entrepreneurship happening, where great founders are now building the companies out of the cities where they see the biggest opportunity to to solve that specific problem, and that might be anywhere in the world and anywhere in the U.S.
So, over the last decade, we've gone from 38 cities in the world with a unicorn to 170 cities. And you see the rate of growth in terms of innovation outside of Silicon Valley in the U.S. and in the rest of the world growing much faster than in the Valley. And that's basically one of the core things that Antler is working on. So, we have literally have started to set up a network of offices and funds and the partnership of Exeter founders who run these funds all across the globe in the most exciting, innovative ecosystems outside of Silicon Valley. So, we're now present across North America, South America, Europe, Africa, the Middle East, Asia, and Australia. And we're in the progress of launching a few more cities where we are looking to find the very best founders there and back them from day zero.
So, what's Antler's investment methodology? Well, it's a little bit different than most VCs. So, we actually look for founders and not for companies to start with. We fundamentally believe that in the early stages, the most important part and the most important thing to assess when you're making an investment decision is how strong is the founder team. And, um, we have benefited from a lot, or more people across the globe deciding that they want to use their skill set in in building new businesses. If you look at Antler's application growth of founders who want to work with us, um, in Q1 2021, we had about two and a half thousand applicants. Q1 2022, about 10,000 applicants. Q1 this year, 25,700 applicants for founders who want to work with us. So, across the globe now, we get more than 100,000 founders applicants per year. Probably this year, we get around 120,000 applicants, and we work on selecting the the best of them.
We invite them to come to one of our offices somewhere across the globe in batches of 60 to 100 people, and we work with them for two to three months to help with access to co-founders, help validate their business model, and then put in the first bit of capital. So, we're leading the pre-seed round. And then what makes this a little bit different from other, you know, really early-stage investors is we also built a later-stage capability where we can back those companies in the seed round, Series A round, Series B, and Series C round. And in the year or two, we'll launch our growth capability, which means that we can back the very best founders all the way till they're exit. So, we're a long-term partner to our founders.
The type of founders that we look for are experienced founders who built something before, who've been part of building something great before. We're ever not the founder. And there's an interesting phenomenon all across the globe. In the U.S., obviously seen it for a long time with the PayPal Mafia, building Tesla, Palantir, Basis, YouTube, LinkedIn, a bunch of other great companies. But you see the same happening in every single ecosystem in the world. This is, this is Lazada in Southeast Asia, this is Gojek, Grab in Southeast Asia, this is Careem in the Middle East. You can literally go to any ecosystem and you will see that out of a great tech company comes the next generation great founders. And we are really looking for these people and to be a great part of them as they're just getting started.
We don't only support with capital. We built a team of more than a thousand experts globally. Now, we have more than 3,000 founder relationships with VCs and and the angels across the globe who will back the subsequent round in our portfolio companies. We really work closely with all the world's best VCs. We don't look at ourselves as competitors because we only lead the first round. In the subsequent round, we are a follow-on investor. We build a strong community of more than 6,000 founders, a strong talent network, and we have a lot of perks negotiated with the world's largest investors. Um, so there's a lot of value added on top of this, the capital.
The fund structure and Antler currently is is quite straightforward. We've built the pre-seed to seed fund around each location. Um, and then we have a feeder structure for people who really want early-stage global exposure. Um, so this is one of the first of its kind. It's, uh, it's a zero-fee feeder structure into pre-seed investments all across the globe, but at a very attractive intervaluation. That's the Antler Global Access Fund. And then we have Fund for Global Found, which we closed, um, earlier this year, which does follow-ons in Series A to C, on top of delivering strong returns to our investors. We, as we mentioned earlier, we truly believe that supporting the next generation great founders is what will drive civilization forward. And we're very excited to have supported a very diverse group of founders from all across the globe, really believe in creating a quality of opportunity and having companies solve really important problems for the world and contributing to the economy, growing the economy, creating more opportunities for work, and so on. So, that's kind of Antler's whole how we're structured up and how we think about what we're doing. Thanks a lot for for looking at that.
Moving over to Lavanya. As mentioned earlier, Lavanya runs our scouting process globally, how we find and how we assess our founders and the ones we let into the program. So, now, go ahead.
Thank you, Magnus. I'm excited to share takeaways from our founder scouting efforts, focusing on select areas that I hope will provide you with a good grounding for the work we do. I wanted to kick off with our global application growth in numbers since inception. We have experienced consistent growth in the number of applications received. This upward trend shows that there is increasing interest in our residencies and model globally, and the widespread appeal and impact we're making in the global startup ecosystem. This is also the sort of slide that really humbles us, right, as it also reflects the trust and confidence that founders from all corners of the globe have in our ability to support and nurture their ventures. After all, joining an Antler core is a full-time commitment, so the decision to take the plunge and all the risk involved is not something we take for granted. And although we're proud of our achievements to date, we're eager to push the boundaries even further.
So, how do we evaluate founders and what do we look for? Now, let's explore the defining characteristics that make these individuals we select unique and valuable to this end game that we work so hard for. Founders driving extraordinary success possess key traits that set them apart. They are highly aspirational and visionary with a clear and ambitious vision. They think, they connect ideas to a very holistic vision. They, you know, execution is their key strength. They swift return ideas into tangible building blocks, adapting strategies based on market feedback. They show steep growth trajectory, consistently achieving milestones, exceeding expectations, problem-solving abilities, decisive prioritization. That presence inspires.
Having said that, though, we recognize that there is no one-size-fits-all persona when it comes to founders with diverse characteristics. They come to us in all shapes and forms, very unique qualities. So, it's only during our residencies that we truly see all of it pieced together as we build conviction through time we spend together. Let's take a look at how our cohorts are structured at Antler. Here's an example from our Nordic fund, just to showcase the diversity we see in Antler cohorts, simplifying into three buckets: we have our tech and product builders, business and operator profiles, and domain experts. When they come together, they form a strong, well-rounded co-founding team. I'll just pick a couple of examples here. So, we have, when it comes to tech and product builders, we have Avi Latina, a seasoned product development expert, 15 years of experience in various startups and scale-ups, Masters of Science in System Design from MIT, deep understanding of technology, user-centric design has led the creation of innovative products. He joined a residency, co-founded a 3D game creation company, Lloyd, that just closed a round with A16Z. We have Thomas Johannesen, highly accomplished professional, 20 years of deep domain experience in offshore hydrodynamics, PhD from Imperial, invaluable expertise to our residency. He co-founded a groundbreaking renewable energy ocean oasis based on his years of research that would otherwise have not seen the light of day. And then we have a business operator profile like Teeny Fung, a serial entrepreneur with a successful exit and a background in investment banking. She's also had previous experience within the robotic space and proven track record in scaling businesses. Teeny joined our residency and co-founded a cutting-edge SaaS company, Hypertype.
So, here's the thing: our residencies are where individuals from diverse backgrounds come together. One founder said it best to me, essentially, what you're doing at Antler is putting together 20 years of networking experience into one room, giving us the time and space to go back, go home. I couldn't have said that better myself.
Now, I'll just quickly run through how we go beyond relying solely on organic applications and how we take a proactive approach in scouting for exceptional founders and ventures. We understand that great talent and innovative ideas come from various sources. That's why our scouting stack consists of multiple channels that enable us to cast a wide net to discover outstanding candidates. First, of course, we have organic sources. These include social media platforms, press coverage, events, word of mouth. For high quality, we leverage referrals from our alumni, still by far our best source of great deal flow, LPs, advisors, and other ecosystem players. Additionally, we actively reach out to promising individuals. Our targeted outbound strategy involves specialized channels where we identify and engage with seasoned professionals and aspiring founders who have the potential to create groundbreaking ventures. To further enhance our headhunting efforts, we leverage historical data and machine learning to crawl for profiles online. By analyzing past successes and patterns, we automate the process of identifying exceptional founders, allowing us to efficiently scout for the best talent at scale with a sniper approach. I won't let the cat out of the bag just yet, but let's just say we're in the midst of building our proprietary tool to level up here globally.
Through our comprehensive scouting stack, we're, you know, able to ensure that we don't rely solely on organic applications, but that we actively seek out exceptional candidates. This proactive approach enables us to tap into a much more diverse pool of talent and discover founders who may not have otherwise found their way into our pipelines. Our rigorous and data-driven process ensures that we select the most promising founders.
So, let me just quickly walk you through our approach, where I've, you know, simplified quite a fair bit here. So, just keep in mind, um, that the conversations we have with applicants are what weigh in most when we come when it comes to our decision-making process. So, here, first, we have the application stage, where applicants provide their motivation for joining and submit their CVs. This initial information helps us gain insights into their background and aspirations. Next, we conduct a validation call. This brief call allows us to verify and confirm their status, ensuring they meet all criteria and have the potential to thrive in a program, in a residency. Following that, we conduct a drive-in interview, conducted by an Antler scouting team member, who assesses their skills, mindset, and compatibility. Then comes the partner interview, which focuses on discovering areas of interest that they might have, ranging from problems to solving or ideas they already have, which provide us with deeper insights into their problem-solving abilities and entrepreneurial mindsets. To validate our decision, we then gather references from their previous roles or anyone that has worked with them in the past. They can give us a reference that it, that helps us, you know, kind of put everything together. Finally, we make the offer. The final decision is made, taking into account the insights gathered throughout the entire selection process. With this approach, we ensure that we select the most promising and capable individuals, setting them up also for success in the entrepreneurial journey.
So, what are some of our learnings? Well, most investors over-index in accomplishment and under-index potential. Our structural advantage is that we have a unique approach to investing, focusing on great teams with a steep trajectory. We invest in the slope, not just the intercept. If we recognize that the key to success lies in the team's potential and their ability to grow over time, we seek out exceptional teams that show a clear upward trajectory in their journey. Investing in the slope means that we prioritize the team's growth and their ability to execute on their vision. We understand that startups evolve and realign our investments with the team's continuous progress. By investing in great teams on a steep trajectory, we position ourselves for long-term success and contribute to the growth and success of our portfolio.
To wrap up, and I hope this does as much justice as I envisioned with piecing everything together, imagine if we focused solely on ideas that seemed conventional and safe, or that we knew enough about. We would risk missing out on the biggest outliers and game-changers in the startup world. We know that the biggest successes often look improbable at their founding. Take a moment to consider some of the most influential companies today. Instagram started as a simple check-in app. YouTube began as a dating site. Slack was initially a game studio. Twitter was once a podcast platform. And Twitch started as a platform for reality TV streaming. These examples highlight the importance of looking beyond the surface and embracing visionary founders. Without their ideas, while some investors may specialize in predicting the next technological change within a specific industry, we take a different approach. We invest across multiple industries and geographies, recognizing that the next big breakthrough can literally come from anywhere. Our focus is not on predicting the future, but on investing founders who are experts in their field. We have to be humble and acknowledge that they often possess greater knowledge and insights than we do. By supporting these exceptional founders, we position ourselves for success, even when the past may not align with our initial expectations. We understand that the journey from an unconventional idea to a transformative success is filled with twists and turns. That's why we remain open-minded, embracing all the differences and uniqueness of these individuals, especially if they don't fit the traditional investment mode.
To conclude from my end, scouting is the single largest driver of Antler's success. If we get the best, most exceptional founders and outliers out there, we unlock limitless potential. But it's an art, not science. Thank you for being part of this exciting adventure with us. Handing back to Magnus. And for anyone listening in, please send exceptional people our way. We'd love to back them and solving an important problem.
We'll move over to Ryan. Ryan will share a little bit about how we do this assessment in the U.S., having built up part of our operations in the U.S. and, you know, really doing this day to day, every day. So, over to you, Ryan.
Yeah, fantastic. So, um, but on the, the program side of the house, so this would be post-acceptance into the the residencies. Our core assumption here, um, to Magnus's point, is that founders are massively underserved at the earliest stage of entrepreneurship. Um, the alternative to a program like Antler is really building by yourself in a coffee shop or in your attic and trying to kind of piece it together, you know, without a really robust support network, which is an incredibly lonely journey, as you can imagine, and most often not very productive. And that reality, as Magnus's earlier point, is especially acute outside of Silicon Valley. You know, our thesis is that talent is fairly evenly distributed across the world, um, but capital and certainly resources are not. So, our objective in designing the program is to provide a platform for founders from day zero that really increases the odds of success. Um, and we designed that to really mitigate the pain points that we learned from founders, and many of us are our founders ourselves, and what we went through in the early days of building our companies. And that's, you know, building your team or finding your co-founder at the early stages is quite difficult. Um, you know, validating your problem statement and finding early customers is quite challenging to do on your own. And then accessing early-stage funding, you know, the alternative to Antler is more so family and friends capital, which, one, not everyone is necessarily interested in taking in, for obvious reasons, but also not everyone has, you know, valid access to, uh, to family versus capital. In addition, and then working alongside a community of fellow founders and advisors, I think is is massively beneficial.
So, any kind of, you know, fostering that environment, Antler is able to really do two things, I think. The first one is create an incredibly positive experience for those founders. I mean, this is designed to be the most valuable professional experience that most founders will go through, you know, in their lives. And then secondly, as a VC, conduct due diligence on our side by really underwriting founders by working alongside them for several months. You know, typical program is is usually about 12 weeks for our global locations across the world. And then, given that early stage of investing, we're able to capture really attractive valuations, you know, for our LPs.
So, how do we, we do this? Um, so we accept about three percent of founders into the residency. So, those are the folks who land in these rooms across the world, to Magnus's point around the map and distribution. Um, once they're admitted into the program, they embark on this 12-week journey that's designed to really, um, you know, for our, I guess, from our standpoint, discover, diligence, and then eventually invest in the top performers. So, we're typically investing about one percent of that total. So, not everyone that goes through the program ultimately receives venture backing, but then secondly, produce a highly impactful, you know, experience for all the founders, kind of regardless of the outcome, you know, at the point of our investment committee.
And this slide speaks to the the program's structure. So, um, we split it into two phases. The first phase is, um, is focused on, um, essentially, you know, co-founder discovery, validating the problem statement, building initial technology. Um, and then the second phase, which is segmented by our investment committee, goes on to be more focused on kind of growth and business development. Um, but for phase one, founders, kind of, Antler program, initial focus is on identifying the co-founding team. That's a massive, you know, part of our value prop. Um, and our involvement here is never to really play matchmaker. It's more to create the right conditions for, you know, for success. With respect to programming, you know, we do this through things like design sprints on particular topics, social events, so anything from, you know, happy hours to fitness sessions, you know, really just creating an opportunity for founders to get to know one another in a variety of settings. We do a lot of speaker sessions to bring in, you know, excellent founders that have sold companies previously to talk about their learnings from the earliest days of developing their company. A weekly town hall is a major part of the programming, where founders kind of get up in front of the group and talk about their progress week on week with respect to validating their problem statement or building their technology. Um, and then office hours and coaching becomes a massive part of the value that as well.
I'll also mention that founders have the opportunity to bring in co-founders from their network, and we've seen some successful outcomes from that. But I think the emphasis in the earliest day, earliest stage rather, is working with the folks in the room to discover and identify co-founders that could be, for this journey, alongside them for the next, you know, 10-plus years. Um, and I'll say, you know, learning that I've certainly had in developing these programs over the course of the past, you know, four years, is it's important to strike the appropriate balance between, I guess, heavily structured programming, so like every kind of 30 minutes being dedicated to a particular session, versus creating the white space for founders to really identify one another. You know, what we found is that if you put 75 to 100 founders in a room, you know, and these are all three percenters, you know, super high achievers, the room is going to kind of work itself out, and the top founders will naturally self-select, identify one another, and then kind of, you know, build going forward.
Um, so once a team is is kind of paired up, they kind of go through a process with Antler we call tracking out, where they come to us with the rationale for why they want to pair up, the plan to, you know, build the company over the course of the remaining in the 12 weeks. And then, assuming alignment with our team, the founder experience becomes much more centered around the team's problem statement, customer validation, building initial product, and then getting as much commercial traction as possible, which we tend to see pretty astonishing outcomes from. I mean, I had a team in my last cohort in Boulder that achieved $100K in revenue from literally a problem statement at day zero through the 12-week process and our involvement. Um, you know, once a team is is kind of tracked out, becomes much more centered around coaching, office hours, all along the lines of the, um, the things that I mentioned earlier, as far as building and validation. But again, this is always twofold. You know, our job here is to add value to the founding team and provide strategic advice, but also to continually diligence the team, as well as the opportunity.
So, all the while, you know, during this process, we're collecting intel and data, you know, to underwrite the founding team at the point of our investment committee. And I think therein really lies the competitive advantage of Antler, you know, as opposed to most pre-seed VCs who see a team and, you know, a handful of settings, maybe in a boardroom or in a series of Zoom calls. We're working pretty high-touch alongside these teams throughout the course of the the 12 weeks. And that provides a much deeper understanding of what this team is, I suppose, likely to be once they're out in the wild and building on their own. You know, we're trying to evaluate the the grit and the tenacity, their ability for them to build product, the ability for them to sell product, and then eventually build their team with respect to the co-founders, early hires, and then fundraise initially, you know, from us, which is a good indication as to their fundraising ability a little bit further downstream.
So, yeah, this, this kind of, you know, allows us to build, I think, considerably deeper relationships with our founders, which is advantageous for, you know, things like securing allocation a little bit further along the lines, but also truly understand how these guys are likely to perform once they're out in the world and really building and scaling the company.
So, with that diligence, we typically invite about 40 to 50, roughly, founders in a given cohort to present to our investment committee. And that's kind of a gate pass to get into the second phase. On average, we typically invest in about half of the folks who go through the investment committee. There's the 50 roughly will pitch, and then we'll invest in roughly 25 to 30 percent at the the end of the process.
So, what are we looking for? Um, at the point of the, the IC. So, yeah, touched on a few times as far as the thesis. Pretty straightforward. We're trying to evaluate execution above all else. You know, so there are a ton of founders who can build great presentations, but not everyone can actually go in and execute. And that's fundamentally what we're underwriting. Can they build product? Can they sell product? Can they build a really high-quality founding team? And doing that through high-touch coaching and and day-to-day, uh, interaction with those teams.
Thanks a lot, Ryan. I really appreciate that. Um, we're excited to see what's under the hood. With that, we're gonna hand it over to Ann. And I was part of building up our Nordic fund and, uh, just joined the the global team to lead our portfolio work globally, basically how we support our portfolio of companies we already invested into. So, um, Ann, over to you.
Thank you so much. I'm excited to share more about our effort to drive portfolio success. Before I do that, though, let's take a little bit of a look on the global portfolio, the actual portfolio at a glance. So, currently, we have 842 portfolio companies worldwide, and this year alone, we're going to make 400 investments. This makes us the fourth most active investor globally. Um, and with this type of scale, we offer an unparalleled diversification across markets and sectors. So, our founders come from more than 80 nationalities, 30% of our companies have at least one female co-founder, and we have almost 50 sectors represented in our portfolio. With this current speed, we expect to be a part of creating more than 210,000 jobs and contribute $34 billion US dollars to total GDP by 2030.
Having this scale and a truly global presence means that we can bring a differentiated edge to help our portfolios succeed from day zero. And we predominantly do this through five core initiatives, five core offerings that we have for our portfolio companies. First off is that we have the ambition to build the world's largest professional network of experts and operators. These are C-level executives of some of the best, most exciting tech companies from around the world, and they dedicate time to do one-to-one mentoring sessions with our portfolio founders. We have more than 300 operators currently in our network, and we expect to have around 500 by the end of the year. And with that, we're operating more than 2,000 one-to-one mentoring sessions per year.
Next to having experts and advisors to talk to, we also truly believe that you need a founder community. Building a company can be a very, very long, lonely journey. That's why all of the founders that receive investment from Antler are invited into our global community of early-stage founders. This online community now has more than 2,000 founders in it, and our founders use the network to ask questions, get support, get feedback on their products, um, test products, and and make powerful introductions for each other. And this means that our founders not only have our network to lean on, they also have the network of all the other founders. I'm currently in New York right now with some of our top performers, some of the companies from around the world that are about to break Series A, and we have a great program lined up for them. And I was just asking over dinner yesterday, what has been the most powerful part of this trip so far? And almost everyone said, to be honest, it's meeting all the other founders. It's sitting in the same room with other founders that are going through the same challenges that I am right now.
Beyond that, we also know that 23% of all startups they fail because they don't have the right team. And from our experience, we've also seen that the first five hires are critical to drive long-term success for our companies. And this is why we've now launched the Antler Talent Network. And this network has 14,000 pre-vetted candidates invited in on an annual basis. And by pre-vetted, I mean that they've talked to at least two Antler employees, they've been interviewed by at least two Antler employees before they get access to the talent network. And you might wonder how we have time to do all of this, was because we're actually plugging into our existing workflows. So, when we are interviewing candidates to be a part of the program, and we realize that, you know what, you might not be a great founder right now, but we think you could be a fantastic first hire, then we invite them as into this network. Same happens post-program. The founders that do not end up receiving funding, they are also invited to be a part of the talent network. And it means that our portfolio companies, when they need to hire, they can immediately reach all of these fantastic talents from around the world, and and it makes their hiring journey so much smoother.
We also source tech deals and resources on behalf of our portfolio companies. And the beauty of having a portfolio as big as this is that we can negotiate fantastic deals for our companies. So, right now, we have 270 providers offering discounts worth more than one million US dollars to our founders. And the beauty of the process that we've set up now is that if if more than 10 founders come to us and they ask us for a specific discount, we will go out and source that deal on behalf of them. We will go out and and reach out to the providers, and within a few days, typically, we land deals for our founders. And we also have, um, you know, gathered learnings from our 26 locations, our 800 portfolio companies, and gathered it into a resource library where our founders can find master classes, best practices, templates. And these are materials that are exclusively provided to our founders. And it means that our founders can spend time on building as opposed to Googling.
Last but definitely not least is our support in helping our founders raise capital. Right now, our portfolio is valued at around $4 billion US dollars. We had more than 130 rounds closed in our portfolio in the last six months. And keep in mind that isn't one of the toughest capital markets we've seen. And what I think is truly, truly, um, it says a lot about the impact that we have is that two-thirds of the capital that our companies have raised have been raised based on direct introductions made by Antler. So, introductions to VCs, to angels, to other forms of capital have resulted in two-thirds of the capital raised.
Beyond supporting with capital raising, though, and and getting great introductions, we also invest ourselves. So, all of our local funds are setting aside on average about 40% of the fund to do follow-on investments and double down into our winners. And like Magnus mentioned earlier, we also have a later-stage fund, Antler Elevate, that invests from Series A until Series C. And what this means is that we can, we can support our founders from day zero until Series C, um, with the vehicles that we have, um, and the different funds that we have. And this is a wildly unique value proposition.
You might ask now, why we're doing all this effort and putting so much into anything from building a community to sourcing perks and gathering a talent network? Well, it's because a strong VC platform is proven to have direct impact on fund returns. So, when pooling VC returns from 2010 until 2019, across more than 100 funds in each of these categories, and the research showed that the the companies, the VCs that had a significant platform, which is what we do at Antler, they delivered both higher net IRR and also higher net multiple than the ones that had no platform. So, what is the power of the platform? It means that we can increase our deal flow. It means that we have a higher success rate in closing deals. It means that we can enhance the portfolio likelihood of success. We can accelerate the portfolio growth and also have improved valuations and exit outcomes. So, all of this, what that means is better fund returns. In conclusion, doubling down on our portfolio platform, delivering great services to our founders, is the most impactful action we can take to drive returns post-investment.
Thank you. I'm, I'm very appreciated. Um, so this gives a little bit of a highlight of how we support our portfolio. It's very important for us to put the entire kind of force of our platform globally to work to ensure that we are as helpful as possible to the great founders that we find in their early journey and as they grow and become bigger. Uh, we thought as well in this session, it would be very helpful to bring on board one of the most experienced investors in the tech space and, and both into direct deals and into, uh, into VCs globally. Um, so very, very happy to to invite there, Eric Seabush. Eric Seabush is the global strategy leader for VC and Growth Equity at Mercer Alternative Group. He works with clients from single family offices to certain wealth funds to construct their private equity allocations. Prior to Mercer, he was a partner with San Francisco-based venture capital and growth equity manager Presidio Partners. And before that, I spent a decade focused on innovation and corporate venture capital at UPS, as well as that, they get us a higher net worth financial consultant for Merrill Lynch. So, Eric is really seeing the entire value chain. On top of that incredible background, he's just a tremendous guy. So, very happy to have you here, Eric. I'm going to ask a few questions. So, I'll start off with the video, a little bit, the current market situation, right? So, in light of the turbulent market conditions we've been experiencing for the last year plus, what has changed or evolved in your manager selection process?
Well, first, I'd like to thank you for that very kind introduction and give him the opportunity to speak, uh, in the platform on behalf of Mercer. Um, the, the question's interesting because, uh, we're in a new environment, and I've been through a few cycles, as you were introducing me and talking about my background and saying this day I was there a decade, I was there a decade, you know, it sort of says my age a little bit. But, uh, the good thing is I've experienced downturns, as many of our team members have at Mercer. And due diligence, we're lucky that we had picked managers that were resilient, that were either investors in downturns or operators through downturns, or there's team members there. Uh, it was something we looked for in the beginning. So, I think a lot of our managers are placed very well. But when we're looking at re-ups and performing our due diligence now in the market that we had with such an extreme correction in the tech side, which we did anticipate, we really have to start underwriting the portfolio a little bit more. We have to look at the financing availability for those companies, not only by the the venture capitalists in the portfolio, but also the syndicate partners. Is there going to be available capital with the syndicate partners to support these companies? The best technology doesn't win, it's the best financed technology. And so, so for us to take a look and underwrite all of that, and also take a look at the cop set from an evaluation perspective, they were using two years ago, and what is the comp set they're using today, and are those comps appropriate and show that value? Because there's going to be unicorns that are not going to raise any money and potentially go out of business. Um, there's going to be larger corrections to come with some of these very high valuations if these businesses haven't grown into the valuation and the revenue set. Because before it was paid for growth at all costs, now we're back to the investment banking value metrics. And so, really, what's changed in our due diligence is, um, you know, deeper looking into the value of the businesses, as well as their ability to be well-financed with the syndicate. And are, is the CEO a good fundraiser? Is that firm a good fundraiser as well?
I think you've raised the very important points there, Eric, and also something that that we are looking a lot at for our relationship portfolio. Um, so, really appreciate that. Um, second question. Um, Ann mentioning our talk, that research suggests strong VC fund platforms tend to outperform. What areas of platform support have you seen the most effective globally?
So, there's a lot of, I think, different models that different groups have different objectives, and I think people define platforms differently. Um, and, you know, some are more incubator-like or accelerator-like or studio model or a platform that is almost buyout-ask from an advisory side. I think you have little bits of all of those evolving. I think competitively, people are going to have to, venture capital funds are going to have to create some sort of platform. You add being something more than just money to compete in this marketplace. It's going to become more and more difficult to find companies because a company can choose to go to a great platform that has a community, has tools, has resources, has things that help them do their business, instead of just money or a board member that's a, you know, sounding board once a month or once a quarter. I think that those will become more valuable. There'll still always be the other venture firms or the firms that have great sourcing, they have lots of experience, they can still add value on boards, but I think it's becoming increasingly competitive, so you have to have some sort of differentiation.
Thank you, Eric. No, I, I think that's right. And, and when you talk to, when you talk to entrepreneurs, you, you ask them, what's your value proposition with that technology or your company? Same thing with venture capital funds, what's your value proposition?
Yeah, it's a very good point. Right. Uh, remind the entrepreneurs that, you know, venture capitalists have to grovel to somebody else too. So, not only them have to fundraise, but sort of venture capitalists.
Yeah, yeah. No, it's, uh, it's a great point. And you do actually see that in really great founders these days, and they, they leverage, um, our platform incredibly well. Um, and they, they are demanding in terms of the support that we provide to them, right? It's also just the platform being there is not enough. You actually need to kind of leverage it properly. And, uh, and then others do exactly what you say, they demand that level of support. And even on the LP side, we at Mercer have to determine how we can be more than just money. What other value add can we offer? Can we help and give our perspective on the market for terms and conditions? You know, what, what models we're seeing and evolving? Um, what positions that are probably required at certain times in organizations' growth cycles? You know, we've been there, we've done that. We look at more than a thousand funds a year, and so we can offer a perspective, and we're happy to do that. And we believe it's a bit of an obligation from the LP side to be helpful, not just push them through research and then maybe give them, uh, some capital. We want partnerships. The limited partnership agreement, sometimes is too much focus on limited, not enough on partnership. We like that partnership.
Yeah, I think it's a very good point. And there, I can speak from a first-hand experience. I mean, you, you see, as you said, you know, thousands of VCs, and, uh, we, we had great discussions with you strategically, which is unrelated to an investment, because before we were even discussing an investment, around how do we structure up a fund, how do we structure up the carry, how do you carry investing, how do you do a number of these things, which, you know, obviously we would have the capacity to call, you know, 100 VCs and and ask them how they they're structured, but you literally have the research on more than a thousand of them. So, it's just an incredible source of insight and knowledge on what works and what doesn't work. I think that's a very important role that you and Mercer play. So, yeah, very appreciated.
Um, uh, next question. So, you know, while VCs have invested in the most innovative companies for a long time, VC firms, on their investment models, have been slow to evolve. What models are you most excited about for the next 10 to 15 years? Like, what do you see in terms of how the VC space is evolving, and language companies have to move and innovate on themselves?
Well, I, I like the firms that are trying to be innovative and reinventing themselves all the time, right? What is that tip of the spear that they're going to need to have or they're going to need to do? Um, I know AI is a big buzzword, and, you know, it could be as big as the internet, but, um, I, you know, it could be, uh, similar to the internet where it, it was a bubble at first, and then, uh, evolves. But some of the tools and the AI tools that are integrated yet to truly prove, uh, tons of value. I mean, there is definite value from a sourcing perspective, but I'm very interested to see how AI will be utilized in what it is that venture capitalists do and how they help their stakeholders, being entrepreneurs and LPs, with tools and information. You know, maybe one day the reporting needs that we might have, or myself as an individual versus my colleague, um, in Richmond, Virginia, might need certain bits of information that we're always asking for on an update, and maybe it's purposely built for that individual. Already knows that these are the things I like to see. Outside of reporting, I think some of those things. And then from a sector perspective, I've always liked biotech. I've always liked the ability to cure cancer, you know, increase life. There's longevity funds, there's, you know, American initiative funds. And, and I do think that as you have noted, and and you definitely have proved it out, that venture capital is a global business. The secret of entrepreneurship has spread across the globe. It's the rise of the rest was a North American term, and pockets outside of Silicon Valley or the main places where where interesting technologies were going to occur. Now, it's the rise of the rest of the globe. And I think those will be very interesting in some frontier markets and interesting technologies where countries can actually leapfrog bug opportunities. So, I think all those little bit of combination of things that are fun and and sectors are going to be really interesting in the future. And really look forward. I feel blessed that we get to work in an industry with people that want to change the world. It is, it is pretty exciting.
Oh, I think the last point mentioned is very true, right? For exciting to work with so many talented individuals who really.
Put all their available time into solving important problems and uh, it's an exciting space to be in. Thanks a lot, Derek, for for sharing those perspectives. Really appreciate it.
Thank you for having me. As as mentioned, uh, you know, if you have questions, please put them in the chat. Um, there's a few questions that have already been pre-submitted, so I'm going to kick off with those. If you have more, put them in the chat and we'll try to get to them. We have another 10 minutes or so for Q&A.
Um, so the first question is for you, Lavanya. So, um, you know, in in scouting, how do you strike a balance between mitigating risks and maintaining, um, openness during the evaluation process?
Uh, great question. Uh, I guess one of the sort of like essential sort of aspects of our approach is the strong selection with an open mindset, right? Like we acknowledge that the biggest risks we face at Antler is the possibility of saying no to founders because they just don't look impressive on paper. Um, and we believe that the entrepreneur, the greatest like entrepreneurs, some of the super impressive people will not always fill in the mold of a traditional employee. They don't make good employees. Um, so to mitigate these bias biases and like to sort of to ensure a very open way of looking at this, we, you know, there's several things we look at. And maybe like the first one to to sort of point out is like this halo effect, where people tend to unconsciously favor people, you know, those with prestigious badges on their profiles. So we spend a lot of time basing our decision on the feedback and reflections that we gather during the interview process, right? Because we take time to get to know these people. Um, and then we also prioritize a lot of their achievements and accomplishments over the employees they've worked for.
And now, another bias we look at is to counter is confirmation bias, right? Interviewers all often recognize indicators that are similar to their own experiences and values, you know, that may weigh higher in their decision-making process. And we openly discuss this and actively promote that diversity of perspective within our scouting teams. So, you know, for us at Antler, the biggest risk for uh lies in the false negative, missing out on exceptional founders, rather than a false positive. Um, so at the end of the day, as I also covered in the scouting section, you know, we're willing to take those calculated risks on founders who show potential, even if they don't fit the mold, the sort of traditional model or mold, rather. And in this regard, I truly believe we found the the right balance here.
Great. Thank you, Lavanya. Thanks for sharing that. Um, another question that was submitted, uh, it's probably good for Ryan to answer. What happens to the founders that we don't invest in? Obviously, um, you know, we admit about three percent of founders into the programs, but we're on average only backing about one-third of them. But what happens to the remaining two-thirds?
Yeah, it's an incredibly important point and really an opportunity for us to to leverage what is kind of an alumni experience with Antler. Um, so to your point, the majority of founders who go through the initial phase of the program don't end up receiving the investment. Um, there's a number of ways those folks can still get involved. So, um, a really healthy alternative is potentially joining an early-stage company. So even if you weren't able to develop a concept on your own and get to the point of a successful investment committee, maybe there's a team in the room that you could be a great, you know, VP of engineering for or VP of sales and bring on early hires. Is one of the kind of core ways that the companies can can build and scale, that are arguably one of the most important things. So joining a portfolio company, we see quite healthy outcomes from that. Um, some folks will go back into the workforce. Given the early stage of what we do, some founders will decide that, you know, there's an SMB here, a great lifestyle business for themselves, but it's just not quite that trackable. And we'll pass along that feedback, but that's still a healthy outcome for them. Um, and then finally, the door is always open to come back. So I mean, I've had really strong outcomes from founders who weren't able to sufficiently validate what they were building to the point of our investment committee, but come back three months later, Adam founder, come back two years later. And it's important that that door is always open and we're the first door that those founders knock on. In this future, we've already underwritten the founder to a degree through their residency experience, but they're coming back with a new concept and we can spend time underwriting the new business that they're building. And that can be a kind of ever-growing and quite valuable source of deal flow for Antler.
Thank you, Ryan. Very helpful. Um, next question you came in is, you know, both Eric and Anne spoke about the Power Platform that platform is driving in some returns. What are the most powerful ways Antler leverages its global network to benefit the founders it builds with? Um, and, and can you answer this one?
Yeah, absolutely. Yeah, I mean, our our global network is probably one of the key differentiators and most valuable things that we have, right? Um, so for us, in order to make our network work for our founders, it's important that we kind of structure it up and are very systematic in the way that we work with our network. So for instance, internally, we have systems where we can track all interactions that we have with, you know, meeting with other VCs, meeting with other investors. We can always see which relationships are strongest across Antler. And it means that when a founder is asking for specific introductions, we can find, you know, what is the partner at Antler that knows this person the best. And then on the other side, we also keep track of and have high visibility on what's happening in our portfolio. So if someone in my network is coming to me and asking for, you know, do you have deal flow within, you know, we're looking for fintech investments, we want to see investments in the US, what do you have that you can send over? Then I can also filter across the whole global portfolio and actually identify those companies and share relevant deal flow so out into the network as well. Um, so being able to make like meaningful, meaningful connections for our founders is incredibly valuable and protecting our network while doing that is is the way that we will succeed at scale.
Great. Thanks. Thanks a lot, Anne. Um, with that, we're kind of approaching the the hour. Really, really appreciate all of you joining to to listen to us. We will record the part of this conversation and there's an opportunity to kind of look back and go through some of it. I particularly want to thank Eric Sabers, who joined us and shared his thoughts. You know, Mercer has been incredibly helpful for us in our journey and I really appreciate you coming on board here and and sharing some of your insights. And to Ryan and Lavanya for, uh, for sharing everything they work with at Antler. So, you know, thanks, thanks a lot for joining.
The next session that we'll have, uh, will be on "A Window into Progress." It's a digital event on Tuesday, July 11th. We'll we'll share all the details around that. Um, it will feature another amazing external guest called Aaron Harris, who used to work as a partner by Culminator for about a decade and now specializes on supporting companies to raise their their Series A and Series B. So that should be a really great session. July 11th. Thanks again for joining and hope to see a lot of you soon. Thank you.