"So for the opportunity fund, we're going to double down. We've done 115 companies in total and we want to invest in roughly 10% of them. We're going to deploy $10 million each at the Series B stage with a 25% reserve ratio. So 150 divided by that equals about 50, then 150 plus 50 equals $200 million. That's how they are calculating their portfolio construction." - Jeremy Au, Host of BRAVE Southeast Asia Tech Podcast" - Jeremy Au
"Construction is different because we're saying this is how we deploy your money, not how we spend your money. We built a large portfolio and created strong top-line numbers. Our companies always have a follow-on round, which is faster than the average seed fund, and the best Series A funds lead out, proving the signaling piece is correct. Now is the time to double down. We have seen many VC funds in the past, but what's interesting is the same power law curve internally. Within our portfolio, 60 to 75% of the value comes from one company, and because of that, we want an opportunity fund to continue investing in this number one company." - Jeremy Au, Host of BRAVE Southeast Asia Tech Podcast" - Jeremy Au
"Normally your pro rata will happen in year two to year four because your best companies one year afterwards will already raise a new round. It may stretch up to year five if the right investments are made around that time frame, while the rest of the years are silent as you wait for them to grow further. Most capital, about 50%, will probably be called within the first two years because you need to deploy early and then follow on with investments. A fund will usually do a maximum of three capital calls: the first at year zero to get started, the second around year 1.5 to fund some pro rata investments and the last set of initial investments, and the third as the final call for the remaining quantum." - Jeremy Au, Host of BRAVE Southeast Asia Tech Podcast" - Jeremy Au
In this episode, Jeremy Au speaks on portfolio construction, power laws, and fund differentiation in venture capital.
Keywords: Portfolio Construction, Power Laws, Fund Differentiation in Venture Capital, Singapore, Southeast Asia, VC, Thought Leadership
