Why Lead Edge founder Mitchell Green keeps buying Bytedance shares

Hi, I'm Connie Loizas, and this is Alex Gove, and this is Strictly VC Download. Hello, fine listeners. Hope you're well. Welcome back to Strictly VC Download, a show that aims to bring you closer to the people worth knowing in the industry. This week's guest is Mitchell Green, an investor I've long found fascinating as he was operating outside the lines of traditional VC before became more fashionable for other outfits to do so. For one thing, his firm Lead Edge Capital doesn't have a few giant institutional investors, but rather hundreds and hundreds like more than 500 wealthy individual investors and family offices that seem to think he's the bee's knees. He's also invested in Chinese companies longer than many American investors, reaping big wins from an early bet on Alibaba and steadily increasing his position in TikTok parent bytans. But Lead Edge does more than that. While it did much more VC investing in its early days, it closed its very first fund with $52 million in 2011. The firm, which now has more than $5 billion in assets under management, now pours just a third of its capital into VC-style deals, investing a growing amount of that capital in smaller bio-deals, and in other companies that aren't on VC's radar. In fact, Greene has some strong thoughts about the health of the venture industry and what's around the corner for it. Alex and I really enjoy talking with him. We hope you enjoy it too. Until next time. Well, so I always really enjoy talking to S as Alex. And I was just looking back, Mitchel, at our coverage of you. And so it seems like we talk every two years or so. And every time I talk to you, you've raised more and more money. So we talked first in 2018, I think, and you had raised $520 million from 250 investors, which I remember thinking was really interesting because you had this enormous LP base. And we talked a couple of years later in 2020, a height of the pandemic. You raised $950 million from 500 investors. And then we talked again two years ago, and you had closed on $1.95 billion, which was the biggest shocker. And that was again from the 500 investors, who I guess just were really happy with what they were seeing on the return side. So I have to start by asking, it's 2024. Are you back in the markets? Nope, we are not. Well, we raised our last fund in 2022. We actually told all of our LPs we didn't want to be on a two-year fundraising cycle. We wanted to be able to work like it's three to four-year fundraising cycle. So we're not raising capital right now. You know, we'll raise some point in the next 12 to 18 non-sexual raise. We haven't said exact time for the end. And what about your LP base? Is that changing? Are you still kind of same? Same same old, you know, we have if you don't talk about returns publicly, but we've had a bunch of happy LPs who have supported us for a long time. Well, I guess I just wanted to know, you know, so you talked about your exits. Obviously, the last time we talked, you had a bunch of like big deal things. I mean, I think one of your biggest deals ever was investing in alibaba's IP. I think you invested in Bumble, which went public, right? Do a security and at the time, I think again, maybe 2022. One, one bet that you were really leaning into Ant Group. You're really interested in what was happening in China. So an financial raised money was supposed to go. I don't know. It was like 2018-ish, 17-ish. I think that raised that money. Don't quote me on that. But I think it was around that time frame. Like general Atlantic was in a big investor, silver lake investing at GIC invested. We put some money in that deal. Yeah, it was just to go public in 2020. It was three days away from going public and the Chinese government stopped it. You know, fast forward to today. Look, it's a giant business still, but it hasn't gone public. And we get the financials and I can't talk about that kind of stuff. So you can't say if you're buying or selling more neater. We're not buying or selling an financial. It's just like we made an investment in it. We're holding. We'll see what happened. And do you have any plans to invest in any other Chinese companies at this point? The only other Chinese company we own is Bite Dance. But again, a lot of our investments. Everybody wants to talk about Alibaba, Ant, Bite Dance, Toast, Gafana Labs. We invest in a lot of companies like almost two thirds of the companies we invest in. We're the first institutional investor in the company. You know, and you know, so they don't have other venture capitalists that are in them. And I think we define it as like you've never raised less. You've raised only less than 10 million dollars or something. And these are companies like so not long ago we invested in the company called pacemate. And the hotbed of technology, Sarasota, Florida. Only 10% of our less than I think it's like 9% of our companies are based actually in the Bay Area. So, you know, like I'll give you some examples of pacemate makes cardiac monitoring software. So if you put like a pacemaker loop device or defibrillator inside your body, that would translate data to a Bluetooth watch that would then connect to a Bluetooth base station at your house, which sends like send data to your cardiologist. Like we invested in that business it had, you know, raised some money from like 70 angel investors, no institutional investors, we were the first investors in it. Yeah, it's a business at scale growing nicely. You know, we came in and you know, I bought like 54% of the company. How did you, how did you find that one? The way we source most of our deals. You know, we have a team of I think it's now up to like 18 ish analyst and associate that are all zero to two years out of college. And that group of people speak to about 10,000 companies a year. And that results in, you know, we have these like eight criteria, which I think we've talked about before, that make like a lead edge perfect company. And if you were to call 10,000 companies, you might find one percent that meet all eight criteria. And obviously, like 100 companies in order to do five deals, five, seven deals a year. You know, that's obviously too small of a pond deficient. So what we find is if you just take five or more of these eight criteria, very objectively, you get about a 10% yield. So speak to 10,000 companies a thousand meet five or more criteria due diligence on about 150 of them. How do you get from a thousand to 150? Well, we're calling companies. They may not want to raise money. They may not want to sell their business. The market size may be too small. The founder may be crazy. Whatever reason that gets you about 150. Most of the time, they just don't want to do anything because you remember we're calling them. They're not calling us. Right. Most of them never raised money. You know, you do diligence on 150 to get the five to 70 year. And, you know, how do we find them out about go going higher 22 to 24 year olds. And these are a lot of these people are like former entrepreneurs, former, you know, college athletes. You're looking for like very persistent people that are very inquisitive. And, you know, very smart. You know, you know, you need to be able to get the seeded to be have persistence to get the CEO on the phone. You need to have, you know, dogged persistence. You didn't then need to have intelligence to have a keep it in like almost like journalism and just like curiosity to ask a lot of questions. And then you got to have intelligence and then pitch the partners and convince them, hey, this is like a company we're spending time to show. I don't know. People interview with lead edge a lot. I sure as heck wouldn't get a job here now. But now, you know, it's, you know, we what we hire, you know, eight to nine kind of, you know, zero to two years out of college every year. And they enjoyed our analyst program. And that's how we source deals. And I remember that you not only talk to talk, but you walk the walk. Because didn't you persistently call Jack Maugh in order to get into Alibaba? No, I got, that's not right. So Jack Alibaba, after I went to Wharton Business School, while I was at Wharton, I started looking for hedge fund that seeded Juliana Robinson. And the fact that was seeded by Juliana Roberts. Tiger Tiger. Tiger, one of the Tiger comes, not Tiger Global from called Eastern advisors. That fund had first bought into Alibaba group in, I don't know what it was 2004 is. Time frame 2004 2005. And then I was able to buy some hedge fund had a really good relation to the founder of hedge fund had a relationship with Alibaba. And as I was starting my firm, when I was spinning out of the hedge fund, you know, I was able to invite to them. I wish I had called Jack Maugh, but nope, I did not. Now again, there's lots of, there's lots of other stories about cool calling companies. And you know, duo security, we called called public Doug song 20 times until we finally got a meeting. You know, he wasn't raising money, he eventually raised money, we got in. And then you know, a huge amount of the companies we invest in, it's start not not always. Because obviously we've invested in other firms, we know bankers who call, you know, other funds, but like a lot of our deal flow comes from cold calling. So like that company in Sarasota, Florida, pacemate again, this company is not going to be simultaneously in our appeal. But you know, can we take it and you know, three to four X five X revenues and sell it to a private equity fund or a strategic. You know, we just, we bought another company called holistic plan in college station, Texas. It makes tax planning software for financial advisors for the massive fluid. Say that, you know, you work at LPL financial and you have clients from 250 grand at 3 million bucks. Well, we can, we offer a product at LPL and then like offer to all their clients to be like, hey, let me scan your tax return and tell you how to save money. Hey, you should set up a donor advice fund, you know, hey, your wife works at, you know, proc her in gamble. Why are you giving $1,000 to the kid's school and cash, you should be giving it in stock. And for this like group of people, their tax advisors and their like financial advisors are never talking or never like coordinating really. And so this product, you know, was a bootstrap business growing nicely college station, never raising any money. You said, did you say you acquired that company? We acquired it. We acquired it. So like a third. So it sounds like you're turning into a little bit of a PE shop. We've always been doing that though. Since fun one, we're investing out of fun six about a third of our deals, our control deals. But to us, we don't really care if we own 21% of a company or 75% of a company, it's still the same company. There's some stat. I don't have the exact numbers, but it's like 70% of the time, I think it's even higher. Like 70 plus percent of the time, the founder or CEO running the company when we invest is still involved when we accept the company. No, they may not be the CEO anymore. They may have transitioned to some different role, but like we tend to be very like CEO founder friendly and want to come in and like build teams around people. And to us, you know, we're not coming in as a bio fund and being like, hey, we want to, you know, we're going to buy your business and run this 200 page operational playbook and say, no, we're girls investors. You've got a 20 million dollar revenue company will be happy to be 20% shareholders or will be 60% shareholders, but let's get that company from 20 million to 100 million revenue. Like it doesn't matter. We literally don't think of all percentage ownership. All right, tell me about let's go back to bite dance because I think everybody's wondering what's going to happen with bite dance now. What are what are you anticipating under the Trump administration? So that's a good question. Our thesis is actually like very simple. Our thesis invite to dance is you have a business that we're bought that, you know, grows like 30% a year, trades like it five times earnings and we can zero out the US business and we think we can make three to four times our money in the next few years. No idea what it's going public. No, it is anybody else at all. Nobody, not Philippe LaFont, not the not bill forward in general, panic, not us, not the guys in Susquehana. We're on a bunch, not all the funds in China. Nobody knows. And I think it's a combination of the founder is going to take it public when he wants to at the right time. It's a giant business like I mean, giant isn't understatement. It's one of the biggest companies in the world. And we value our base case assumption is that the US business gets shut down Donald Trump, you know, I said on the campaign trail that he's not going to ban it. You're gas there is as good as mine. So did you mark down your investment and by dance based on what's going on with TikTok? No, I mean, our we're buying TikTok shares. We've been buying shares to 20 to 3240 ish. I mean, they just announced they were doing a buyback at 300 billion. You can probably count on one hand the number of private companies that buy back stock. You know, there's one company only that buys back billions of dollars of stock with the private company. It's by different. It's important to understand we value the US business at zero. We have for the last three years. It doesn't make any money. So like it's not profitable. Like if anything Trump will offer upside to it and that it sounds like he's not going to ban it. But again, your guess is good as well. I think because JD Vance is a supporter, I think on a personal level of FTC chair, Lena Khan, obviously it seems very likely that she'll get transitioned out anyway. So how are you thinking about I know that you think that the regulatory environment has had a chilling effect on MNA is, of course, many people in Silicon Valley. Actually, you know, it's very interesting about the Lena condo, but I don't know we probably know people in common though, given that I went to Williams. I think she's 10 years younger than me and she went to Williams to do what I find fascinating about this like DOJ is is something made a comment to me last week that. Oh, like the biotech there's been so many like biotech empanadials done and a lot of her number like big companies like big companies buying small companies, like I don't really understand why the DOJ has taken the approach to like be really tough on the large internet companies or tech companies, but then be like lax and days ago on the largest biotech companies in the world are far more companies in the world, I don't really know why it's like an interesting debate. I'm sure change is coming to the DOJ I mean your guest would be as literally as good as mine again, but look I do think that some of these big tech companies need to be regulated actually and I probably am more in favor of regulation than less in Silicon Valley than a lot of people. I do think that the largest tech companies in the world have probably stifled small company innovation. I do think these guys should go to buy some companies though I think that stuff is probably a little too scrutinized, but I almost I almost think about it as you know that we have like water utilities. We have like telephone utilities. I almost think of like search or cloud is maybe like a next generation utility and I do think over the next 30 years you will start to see it more heavily regulated the US and I think it probably should be. Now I'm not saying the right thing is to break the company up or don't let them buy companies I probably strongly disagree with both I would say that those are both not things, but I think there are probably regulatory frameworks that need to be put in place. I mean I think the whole I ban bite dance thing ban tiktok in the US is kind of comical who does not want bite dance who more than any person on the planet would love tiktok to be kicked out of the United States. Well, I know one person Mark Zuckerberg. Right. And I'm sure Evan's people do right behind him. So now let's go look at how many lobbying dollars both of those companies are lobbying in Washington. And I don't know I find I think a lot of the stuff you got to have a cynical view on Washington in general just kind of makes me like sick. I know both parties, but hopefully change at the DOJ and like I love the idea of you one must come in to help run the government like maybe he went a little far and X in Twitter, but like you probably could fire have people from the government probably function just finer. A third or I think shaking things up is probably good thing. Well, I was going to say speaking of shaking things up and reducing government. I think part of the problem maybe why the FTC hasn't gone after biotech. They're really like constrained. It's really interesting. I had a chance to interview Lena Connor earlier this year and I asked so many people are at the FTC and there was I think she said like 1500 or 1300 something like that and you know like the budget is not huge. So it is kind of amazing to me how everybody has kind of been you know quaking in their boots over this relatively small agency. Of course, you know, as you mentioned DOJ as well. They're kind of working in concert, but I am kind of curious to see if they get sliced down even further. I suspect there's a lot of people with the DOJ. I don't envy any of these people. Everybody's got two sides of everything. They're just trying to do your job every day and show up to work and do the best job they can. Then I look, I'm not sitting in their shoes either and seeing all the data there. So I tend to like feel sympathy for people that get you know constantly being attacked by people they're only looking at it from one side of the view. So Mitchell, I mean, you have a great track record. I'm going to assume because you're not telling me what you're returning to like, but you've been the stake in bite times, which I'm sure is valuable. People want to know what you're interested in funding right now. You know, we've talked in the past about platform companies. Did you have a shot at investing in like any of these LLMs, like you know, open AI or Mistral. I'm pretty negative first generation AI companies, but I do I do want to I'll give you like my 30 second AI thing and then I actually do want to take it to where we're finding opportunities now. Actually, I'll talk about it from a deal perspective as well. I am bearish. I believe that a lot of these AI companies will all turn into donuts and it's going to like there's a lot of firms are going to lose a lot of money. And now and why I believe that is because I believe costs are going to plummet in 1997. As you built a website, it would cost you like 30 million dollars in son micro system servers, right fast forward to today. You know, you build a website that was better than 1998 for $20 at GoDaddy. The same thing is going to happen in AI. I truly believe that people. Always over estimate technological change in the near term and always underestimated in the long term AI is going to revolutionize the world, but it's going to take a lot longer than people think. I am sick of looking at companies growing crazy fast that have 50 60 plus percent gross dollar retention rates. And why do they have those because every company on planet earth talks about experimenting with AI. So they all have budgets and they all try the software. And it is like sometimes great, oftentimes fine. Most of the time doesn't do it. It said it's going to do perfectly well, which is why the gross dollar retention rates aren't that good. And so for us, like, you know, every one of our companies is starting to use AI into the like embedded into their products, but it's just going to take much longer than people think. But I do think it's in change the world, but I think you're going to see a ton of donuts there. And I also refuse to invest in companies at 100 times or 200 times or 500 times revenues that game will end very badly. And I guess people didn't learn anything from 2020 or 21 or, you know, 2001 or whatever. So, but that's that's what you want AI. Where are we seeing opportunities in the market. So we're different that a lot of funds and that we think about investing as walking down the street and looking for houses. And when you find a house that meets over five criteria, you then figure out how to buy a piece of part of the house or all the house. And no matter how you entered it, it's still the same house, which is still the same company. So let me give you an example. You walked up to these eight criteria and we will not invest if anything meets less than five. These are quantitative metrics. Are you 10 million plus revenue? Are you growing 25% a year? Do you have, you know, 80, 90 plus percent gross dollar retention? Do you have any customer over 10% of sales? And again, we're looking for companies that meet five out of eight of the criteria. 75. When we, so we thought we go, we walked out of street. We see the first house. It's three criteria. Walk by it to the next house. It's poor criteria walk by it. Get to the next house. It's six criteria. We walk up to the front door. Well, we can go into the front door and either do a minority deal in the company. So if it's a bootstrap business, it will be the first round. I guess it would technically be an A, but it's not an A-stage company. If it's like a venture-funded company, which only about a third of our deals are, then it would be like a series C or series D. But maybe like they don't need a lot of a minority deal. Maybe they only want to sell the whole company. It's okay. Then we're buying the whole company. It's a whole buyout, but we're still going to the front door. Now let's go to the side. Maybe that's not available. Maybe they don't want to sell the whole company. Maybe they don't want to sell 20% of the business because they don't need capital and the balance sheet. So the front door is like closed shut. Let's go to the side door and let's buy out early investors or early employees. Maybe that's not like open either. Maybe that door is closed or maybe existing investors would vote for your shares. Most people give up. But where we go is like, what's going to the base and when they're with a pickaxe and trying to like go in through like a back door away and get in. So if you are, isn't that illegal? No, let me, let me, no, I mean, this is called creative deal making. And so in a world we live in right now, LPs and GPs are desperate for liquidity. So think about a company that was funded 20 years ago. And there might be a fund that owns 20% of that company. Okay, and their LPs have been in the fund for 20 years and the fund still owns it. And if I go to the lead edge capital goes to that fund and says, Hey, can I tender your LPs at your mark for anybody that wants to sell and I'll step into the shoes of your LPs. If half of your LPs say they want to sell and I buy half of your fund and it's like the only thing left in your fund. Well, I just bought 10% of the company because they own 20% or if I convinced that fund to go do a continuation vehicle, then ask all the LPs, Hey, we own this asset. We're still bullish on it that the fund's 20 years old or 10 years old, who wants to roll their equity and who wants to sell. And if you own 20% and 75% say sell and we step in their shoes in their vehicle, we just bought 15% of the company. It's just, by the way, it's the same house. Nothing changed. Yeah, that's like very creative deal making and a world where LPs and GPs are looking for money. That area of our business is completely booming. It's not sexy. Yeah, you know, we're not going to get on the front page of the Wall Street Journal, like for the next $100 billion IPO doing it. But you know what, it's a really good way to make great risk adjusted returns for LPs. You know, I had talked to some LPs recently and they really, really do not love continuation funds unless the original fund has is least, you know, at the end of its lifetime. I mean, if it's a firm that's sort of like thinking about doing a continuation fund when it's like five, six, seven years into its life, they're really not that excited. Are you finding that's true? I am finding that LPs, so we're buyers of LPs. We've like never done a continuation fund ourselves like someone up with bought into them, like we'll buy into them. We love buying into them. Most LPs, most institutional fund LPs are not really set up to analyze a deal by deal basis. And that's why they don't like it. And they don't really want to be put a gun to their face to decide, hey, you have to decide, are you a buyer or sell? They're like, no, no, we pay the GP a bunch of money to buy or sell. And so, like, we've never done one ourselves. We have no plans to do one. But I do think if you've got an asset that's 10 plus years old, I do think the reaction you get from LPs is much different than if you have assets that's like four years old. And do it. But again, every LP is now having to do them because so many funds are doing it. It hasn't really gone into the venture space. That monster's been a few multi asset continuation vehicles with some funds. I mean, I can probably count on one hand, the number of venture funds that have done it. But it's very popular in like bit market and large biophones. It's happening all the time. You know, I'm also kind of just interested. What I don't think I heard in there. Maybe I did. Maybe it was the side door. But you know, we talked to General Catalyst not that long ago and they were talking about some other product that they have where they basically go in and buy up a late stage companies marketing and it's like a new financing product that I think is probably ultimately meant to kind of boost their IRR because they're getting money back for this. They kind of set a budget for it. They get paid back and then they don't collect any more money from the company. It's a little bit. I'm not explaining this very well at all I apologize, but I guess my question maybe is, are you using any kind of new thing called like financing product, which I do think we are starting to see from firms that are managing as you are billions of dollars. No, no, we're not. We're boring. We make an investment in the company. We call capital for it. We exit the company and return money back to our employees. We have not used like nav loans or debt or any of these things. It's not really used much in like the venture world. Because a lot of the debt providers don't or like strips, some mean strip sales and like see multi asset CVs, like are very popular in like bio funds. They really haven't come into venture yet. I mean, I spent a few funds that have done them. I know who've done them. I just don't want to comment because I don't know if they're publicly disclosed or not. And so I'm just sensitive to that. There's been a few big funds that have done it, but like nothing real like the bio space. And also, I don't think like a lot of bio funds have used nab loans, like borrow a bunch of money against the portfolio and then return it back to help these that really hasn't happened in the venture space because it's most banks won't lend against these companies because they're not profitable. You said you invest about a third of your capital into venture deals. Was that always the case? I did think of you as more of a venture investor at the outset. Yeah, for a long time, I would say a venture deal. A third of our about two thirds of our companies. We are the first institutional investor. One third is not the like one third of the companies are backed by like venture funds when we invest like real true institutional venture funds. But yeah, I mean, look, we had bootstrapped, maybe maybe over the last 10 years in 2015, you know, in our first fund, Refinery 29 was a bootstrap business that we invested in, you know, and that had never raised capital in sight and had never raised capital. We did a couple buyouts in our first fund. We did them with a much larger firm, fun three, we let our first buyout, you know, company called GVL, which makes animal compliance certificates. Like if you want to transport a goat or a horse across state lines in the United States, like you need to comply it certificate for the spread of animal diseases. Not again, it's not exactly the biggest market in the world, but you know, we sold that business last year. Our largest deal and fund five is a buyout called safe send makes tax accounting software. I guess I just wanted to know like what you think of the health of the venture market and if the fact that you're too much money chasing two companies that override that's it. So why did we start looking for more bootstrap businesses? Well, we thought valuations were completely silly, you know, in San Francisco and like in the whole ecosystem with the thing. And better we started pivoting away. I would say 2016, 17 and 18. We really started to like focus on other things. But again, we were doing it in fun one, too, because it all starts with the lead edge eight. And it was the lead edge six and fun one and then I think 2017 or 18. We added a couple more criteria. Well, the problem with the venture ecosystem is they also run and listen to each other and, you know, frankly Twitter and social media just make it all worse. And no, I haven't appreciation for some of the venture funds. They go out and do completely just different things like what Chris Sock is doing it lower carbon or like what Josh does it looks capital. Like I think those are like truly differentiated firms. And then I think look, I've been benchmarks in Sequoia early stage funds in the world. Like I think there's a handful of funds that just have index I put in that bucket, have an unfair competitive advantage in early stage venture. And, you know, I put the best one bucket to and I think you try to compete with these firms. It's like good luck. But there's too much money in the space. That's the problem. Would you say that drive capital falls into that bucket. They've made a lot of concentrated investments billions of billions of dollars into companies like open AI. I've never seen Josh's returns. I can say I don't think they're like benchmarks returns. I've never seen benchmarks either. But like I mean Josh is obviously making a huge bet on on open AI. He's made huge bets and other things. I think some have worked and some have worked and time will tell. I think there's too much money in the venture capital ecosystem. Like I think that is a general statement. So there's too much money chasing too few deals. There's too much money chasing too few high quality companies as a result when you find a high quality company. The valuations are crazy given supplied demand dynamics. So our view is like, look, let's go or other people are efficient. Right. If you've got a pond that has lots of fish in it. And ever all the fishermen are there. Let's go find another pond down the street that there's less people in. They may not be as big a fish, but we can still catch a lot of fish and we can put them all together in the pot. You can still make a lot of money. So there's that and the MNA market is what it is. And the IPO market seems to be closed, although that's UBS. That is what VCs are like delusional thinking to themselves. There have been 10 software IPOs, 10 tech IPOs in the last 12 to 15 months. 9 out of 10 of them are above their IPO price. I mean, have you seen the price of read it lately? I believe a couple weeks ago, what was the stock at? Like, yeah, I can't help you. I don't know. 146 bucks, you know, stock with public at like 40. Like don't tell me stock with public at the first day of trading 46 hours, March of 22 March, 22, 24. It's now 146. Don't tell me the IPO market's broken. Here's the problem with the IPO market. There is a handful of 15 to 20 companies that are like unicorns that are great businesses. That could go public. Here's the problem. They all have so much money on the balance sheet. There's no reason to go public and why go public? You've got 300, 400, 500 million dollars of cash. There are another 800 unicorns that would love to go public. They just can't go because their financial profile is not very good. You grow 15, 20% a year. You're burning money. You're like fidelity or Wellington or an investor at zero. It's easier to go buy freaking Nvidia or Microsoft or like Apple or Amazon. Like why school around some small little reeky dick illiquid company that goes 20% a year that's losing a bunch of money. What happens to those? It's mind blowing. It is mind blowing. That's what happens to them at some point. Oh, they're like the living debt. Let's put it. Let's step back between 2005 to 2019 when a company went public. When most companies went public, they would raise $100 to $500 million. They would go public and then they never raised money again because they were like public companies. In 1987 or 1988, whatever Microsoft would public. It probably raised like $40 million. And when companies in the internet, public and raised like 50 to $150 million deals. Like these deals have gotten bigger, right? In 2021, when private companies raised money, they raised $100 to $500 million. They effectively completed IPOs. A huge number of these companies will never need to raise money again. I have no idea how people get out of a bunch of these companies. No idea. But it is going to be. It is not that the IPO market's dead. The IPO market is dead for crappy companies that are not growing fast that are burning money. And there is a direct correlation. I could send it to you of data we put together that shows I'm like rule of 40 is to find is like revenue plus even that margin. Like you grow 50. You lose 10%. You're a rule of 40. Yeah, 40% even that margin to grow 5% your rule of 45. It is directly correlated. It's like a 60% correlation for multiples versus what what rule they are so like rule of like 10 businesses rule of 20 businesses. Trade like crap rule of like 80 businesses trade amazingly and the problem is you got a whole bunch of companies in those unicorns. I don't mean like I mean the majority are all like rule of zero to rule of 20 companies like good luck getting out of all of them. Yeah, it's it's going to be a bloodbath. I it's still kind of hard to rock it down. Thank you so much for making time for this. I really am so glad that we were able to reconnect this week. The Strictly V.C. Download podcast is hosted by TechCrunch Editor-in-Chief Connie Loizos and me Alex Gov of Strictly V.C. Strictly V.C. Download is produced by Maggie Nye with editing assistance by Theresa Lunkansolo and Kale. Thanks for listening. We'll see you back here next week. (upbeat music)