Building Bridges with 7GC & Co: How Strategic Investments Fuel Global Expansion

What motivated you personally to get started in private investing?

My journey began in the world of finance as a tech-focused investment banker at Morgan Stanley. This was during the global financial crisis, and I had the opportunity to work on landmark projects like the Facebook, Tesla, LinkedIn, and Pandora IPOs. These experiences gave me a deep understanding of high-growth internet businesses, particularly those backed by venture capital.

After my time at Morgan Stanley, I joined Hercules Growth Capital in Palo Alto, managing a substantial portfolio. Later, I transitioned to running a corporate venture group for Telefonica, focusing on European capital investments.

Throughout these experiences, I realized that successful investing in the US market required more than just financial backing. It demanded a strategic approach, deep relationships, and the ability to add tangible value beyond capital. This led to the founding of 7GC, where we prioritize enabling US companies to expand internationally, particularly in Europe.

How does 7GC & Co differentiate itself within the competitive VC landscape? Can you share some key insights on your investment thesis?

At the core of our approach is the understanding that we operate as a boutique firm. Our focus isn’t on quantity but on quality. We meticulously identify emerging trends that are truly going to capture a tremendous amount of value, will take market share from others and create new markets. This involves making only two or three investments per year, ensuring that each one aligns closely with our vision and expertise. By staying focused and selective, we position ourselves to invest in opportunities that stand the test of time and deliver sustainable returns.

Our investment thesis revolves around two key factors: market validation and disciplined pricing. We closely monitor emerging markets, evaluating factors such as commercial traction and market leadership. This ensures that we invest in companies with a clear reason for existence and the potential to become market leaders. Additionally, we maintain strict discipline when it comes to pricing. While some may prioritize positive momentum over cash returns, we recognize the importance of pricing discipline from the outset. By avoiding overvalued assets and remaining patient during market fluctuations, we aim to deliver consistent and sustainable returns for our investors.

Did you feel Anthropic, your most recent investment, was a perfect fit from the start? What role does AI play in your investment thesis?

Anthropic presented a unique opportunity that diverged slightly from our typical investments, yet aligned well with our strategic vision. While we reserve a portion of our capital for such groundbreaking ventures, Anthropic stood out due to its position as a key player in the rapidly evolving AI landscape. As AI continues to redefine industries, Anthropic’s focus on providing AI solutions for enterprise customers, coupled with its impressive growth trajectory and solid business fundamentals, made it an attractive investment. We believe that AI will fundamentally shape the future of software development, and Anthropic’s role in this paradigm shift positions it as a potential industry leader.

How would you define portfolio success beyond economic return?

We pride ourselves on having an international Network and international footprint. So when we can back great companies that are doing amazing in the US market and they can successfully launch and expand in Europe and really become prominent, that’s always fully delivering our value. Anyone we backed we usually have gotten to know them for it at least six months, if not prior, so I would just say there’s a personal side of it where it’s great to see the people you’ve backed win and do well and on to the next, and hopefully we can be a part of their next thing.

When it comes to private investing, what are some obstacles you’ve encountered?

It’s been just an absolutely crazy market. From when we launched fund one and it became fully invested, the market experienced a surge in capital inflow, transactions, and prices, exceeding two standard deviations. For many portfolio companies and investors, this market environment is unprecedented. There’s a lot that needs to be done at the company level to ensure they continue to perform well and recalibrate, and some tough conversations are to be had. In the past two years, the market has witnessed numerous down rounds and a significant number of companies liquidating. About a third of the growth market is currently experiencing liquidations, a consequence of market overheating. Managing through this requires a proactive approach. When things are going well, the workload is enjoyable, but during challenging times, it becomes all hands on deck, demanding significant attention across the portfolio.

What has been the primary factor(s) influencing your investment decisions in the past years?

I think the most important, which is also the hardest to truly understand, is being able to size the opportunity. In our investment decisions over recent years, we’ve recognized that ventures with the potential for significant value creation often appear more esoteric or unfamiliar. While it may feel like a riskier bet, these ventures represent the next wave of commerce and innovation. We acknowledge the temptation to lean towards familiar territory, where expertise exists and risks seem lower. However, we’ve learned that while such ventures may be more mature or established, their potential for significant value creation over the long term may be limited. Thus, striking a balance between the allure of the unknown and the comfort of familiarity remains a challenge in our decision-making process.

Could you share the best investment lesson you’ve learned during your career?

I think the best lesson, without a doubt, and this might sound a bit cliché, but it’s true on multiple levels, is the importance of alignment and communication within the team. When we join a board or become involved with a company, we’re essentially part of that team. It’s crucial that everyone on the team feels they have an equal voice and that there’s open communication, regardless of whether times are good or bad. When major decisions need to be made, alignment becomes even more critical. If everyone isn’t rowing in the same direction, problems can arise. While these issues can be fixed, it often results in lost time. When everyone is aligned, it makes navigating challenges much smoother and facilitates progress.

What’s your favorite non-business interest or hobby? We’d love to know a bit more about your personal side.

 I’m a really big live music fan. I’m also pretty active outdoors, I surf a lot and practice snowboard.

Please leave us a book recommendation. 

The Gambler ,a biography of Kirk Kerkorian. Another one that’s just required reading is Never Split the Difference.

On a scale of 0 to 10, what’s your take on the private market overall?

7

If you were talking about new opportunities, young companies with a future, I’d say, it’s 10. If you’re talking about private markets holistically, there’s still a lot of pain out there. So maybe we’ll just settle on a seven.