Interview
Peter Singlehurst: Lessons from Turning Down Stripe, Coinbase and Losing Money on Northvalt
- Plans to deploy minimal capital during 2022 and 2023 due to elevated valuations, with a forecast to resume significant investment in 2024 once prices normalize.
- Forecasts median portfolio companies will generate approximately $200 million in revenue while growing at roughly 70% year over year, with EBITDA margins around minus 14%.
- Targets a modeling consistency strategy requiring a five times upside for reviewed companies, aiming for a 30 to 50 percent probability of such growth rather than the roughly five percent baseline.
- Expects nine out of ten of the firm's largest investments to remain founder-led at current operating levels.
- Will likely avoid investing in companies similar to Intarsia, having shifted focus for the last five to six years to true growth stage companies without product risk.
- Plans to use a 10-question framework to assess growth opportunities over the next five to ten years and beyond.
- Forecasts that multiples in Series C rounds and beyond in the U.S. remain below 2021 levels but are still elevated.
- Anticipates that many portfolio companies will become profitable or self-funding, thereby reducing dilution risk, citing Amazon and Tesla as examples of scaling from unprofitability.
- Predicts that companies with $200 million in revenue and mid-teens growth may find a home with Bending Spoons rather than pursuing standalone IPOs or private equity exits.
- Expects that large company-facilitated secondary rounds will evolve into a standard market feature, providing liquidity for employees and reducing the immediate necessity for IPOs.
- Forecasts that an increasing number of companies will stay private for extended durations to maintain focus, though liquidity needs or regulatory requirements may eventually force public listings.
- Plans to invest in companies across various countries, citing specific recent activity in Portugal, Brazil, India, and Israel.
- Will not invest in major AI Large Language Model (LLM) companies such as OpenAI, Grok, or Anthropic until a competitive advantage at that specific level is defined.
- Maintains a base case assumption that TikTok will be banned in the United States, yet anticipates a path to at least a five times return on its ByteDance investment due to strength in China.
- Predicts ByteDance will eventually go public, with a listing either in the U.S. or Hong Kong.
- Anticipates that a generation of enterprise companies may fail to achieve sufficient revenue scaling to secure future funding in a new market environment.
- Warns that the mental model of excessive capitalization in startups from 2019 to 2021 may cause business models to fail.
- Expresses worry that deglobalization and the creation of barriers between countries will negatively impact investing and humanity.
- Predicts China will remain a significant investment opportunity despite current market fears.
- Forecasts that the firm's ten biggest investments will be held for the next 10 years, specifically citing a conviction to hold Bending Spoons as an "immune cell" to acquire and fix broken businesses.
- Asserts that Google represents a highly underappreciated opportunity due to its distribution endpoints and potential to leverage AI.
- Acknowledges that the probability of a randomly selected company increasing fivefold is roughly five percent, while considering a 30 to 50 percent probability to be attractive odds.
- Expects that the median company in the portfolio will grow to be many times larger than its entry size, citing Wise as an example of a business that became a multi-billion dollar enterprise.
- Anticipates that foundational problems in building products will remain difficult for AI to fully replicate, though AI will impact financial technology.
- Predicts that some pre-AI era companies will remain exceptional due to specific product-building methods that are difficult for AI to replicate.
- Believes it can take more risk on path-to-exit scenarios provided they are compensated appropriately for that risk.
- Anticipates that institutionalization of the growth stage market will lead to rational investors making solid analytical decisions.
- Notes that he met 1,000 companies, looked at 600 private financing rounds, and made 11 new investments in the previous year.
- Acknowledges participating in Stripe's down round as a mistake and predicts Stripe could potentially reach a $250 billion valuation.
- Expects the current market conditions to represent a "golden mean" of capital availability, providing enough funds without the negative effects of excess capital.
- Warns that current investors may be outdated in assessing very challenging technical problems compared to previous venture heuristics.
- Predicts Anduril possesses a combination of difficult solved hardware problems, a stable industry, and clear competitive space similar to Tesla and SpaceX.
- Expects that forces like liquidity needs or regulatory requirements may eventually make going public the easier option for companies.
- Anticipates that the industry will continue to exhibit herd-like psychology, driving capital concentration into a smaller number of prominent names.
- Plans to advise younger selves to be less purist regarding permanent capital vehicles to better accommodate client needs for traditional fund structures.
- Predicts that Bailey Gifford can successfully serve clients through both permanent capital vehicles and more traditional investment structures.