The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch

20VC: Why Portfolio Construction Is Inefficient, Why The Only Thing That Matters In Venture Is Pricing & The Future of Venture; Bundled or Unbundled with Zach Coelius

Jun 3, 2019

Zach Coelius, Managing Partner at Coelius Capital and former CEO at Triggit, shares his eclectic insights into venture capital. He discusses the inefficiencies of portfolio construction and how pricing is key to success in venture funding. Zach also explores the future of venture—balancing between bundling and unbundling. He delves into lessons learned from the ad tech landscape and emphasizes the importance of community support in investment strategies. Plus, he highlights the innovative rise of a mushroom tea company showcasing unique investment opportunities.

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INSIGHT

Bundling and Unbundling of Venture

The venture capital industry is experiencing both bundling and unbundling simultaneously.
Established firms offer bundled platforms, while AngelList enables broader participation.

INSIGHT

Inefficiency of Portfolio Construction

Zach Coelius argues against rigid portfolio construction.
He prioritizes deal flow, access, and individual company potential over predefined portfolio allocations.

ADVICE

Insider Advantage

Initial small investments offer access to insider information.
Leverage this advantage for larger allocations in subsequent rounds, maximizing potential returns.

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Zach Coelius is Managing Partner @ Coelius Capital and in his own words, "a pretty eclectic investor who loves to see just about any deal". To date, Zach has made investments in the likes of mParticle, Cruise Automation, Branch Metrics, SkySafe, ProsperWorks and more. In addition, Zach is or has been an advisor to LiveRamp, Hellosign, Art19, Loom.ai, Survata and StartGrid just to name a few. Prior to his investing career, Zach was CEO @ Triggit, an online adtech company which he raised over $18m for and was ultimately acquired in 2015. If that was not enough, Zach is also a Senior Advisor to McKinsey & Co.

In Today's Episode You Will Learn:

1.) How Zach made his way from the world of operating and adtech to investing and advising startups today? When does Zach feel the ecosystem really started to take him seriously as an investor? What did Zach learn from being in the adtech space that he has applied to his investing today?

2.) The Future of Venture: Naval has previously said we will see "the unbundling of VC", does Zach agree with this view? Why does Zach feel we are seeing both the bundling and the unbundling of venture platforms? What unique challenges does this pose for both sides of the equation? How should entrepreneurs evaluate the different options, bundled vs unbundled?

3.) Portfolio Construction: Why does Zach believe that portfolio construction is fundamentally inefficient? What 2 core areas of venture does portfolio construction cause issues for? When does Zach view to be the ideal insertion point if optimising for absolute returns and not following portfolio construction?

4.) Reserve Allocation and Pricing: Why does Zach think that the current mechanism for reserve allocation is broken? Why is it a fundamentally bias process? What does the optimal investment decision-making process look like to Zach? How does Zach think about the asymmetric information that is gained from being early into a company? How can investors really use it to their advantage? Why do they not?

5.) Why does Zach compare being an entrepreneur to being a gladiator and a rocketship? Why does Alex believe the transition from space articulation to product articulation is the most important thing an entrepreneur can do? What is the true sign of this transition in customer interactions? Where do many entrepreneurs make mistakes here?

Items Mentioned In Today's Show:

Zach's Fave Book: The Snowball: Warren Buffett and the Business of Life

Zach's Most Recent Investment: Mud\Wtr

As always you can follow Harry, The Twenty Minute VC and Zach on Twitter here!

Likewise, you can follow Harry on Instagram here for mojito madness and all things 20VC.