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https://warpcast.com/~/channel/valueinvesting
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Clujso (David)
@d
The recent profile of @matthuang by Colossus shone some some light into the key factors that make @paradigm what it is today: - Family background was tech and investing - Angel checks into TikTok with 1000x on 50k, based on founder energy - First ever person to voluntarily quit Sequoia - 400M raised on fund I in 2018, 98% called instantly and invested into ETH and BTC on a high conviction bet - The firm has research engrained in it’s DNA, so far that they’ve shipped dev tools that the industry relies on - What if Sequoia not only invested in Google, but BUILT Google? Even though Paradigm is now of a size that might limit their returns, the early days are a great story of having conviction on an asset class and putting it all on the line
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Zach
@zd
something worth clarifying in your cast: fund size compresses *multiples*, not dollars returned an oversimplified example: - a 400m fund returning 10x = 4b returned - a 4b fund returning 2.5x = 10b returned the latter has lower MOIC, but higher cash on cash return so what changes with bigger funds? - you have to write bigger checks (and fewer companies can absorb them) - you underwrite to absolute outcomes (10B+ outcomes, not 500m+) - you play different games (like they're doing with building infra) tldr: growing fund size doesn’t limit returns, it just changes the math and the game to be played
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Clujso (David)
@d
Indeed!
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