Plexo Capital

This year, RSA saw some exciting announcements by Cisco in the area of AI. Since software has "eaten the world," every company needs to think about AI not only for productivity but also for infrastructure, with security being an important component. Cisco is leading the way, and we are proud Plexo Capital is a partner with Cisco Investments. Here are some of the major announcements made by Cisco at the RSA Conference 2024: - Cisco XDR Integration with Splunk: Leveraging Splunk's broad security telemetry for enhanced threat detection after Cisco's acquisition of Splunk.    - Hypershield Update: New capabilities to detect and stop attacks exploiting unknown vulnerabilities using AI to analyze process execution patterns. - Duo Security Authentication Improvements: Updates to reduce "MFA fatigue" by tracking sessions at the operating system level, eliminating the need for continual user re-authentication. - AI Assistant for Security in XDR: Introduction of an AI Assistant providing contextual insights and recommended actions within the Cisco XDR platform. - Splunk Asset and Risk Intelligence: A new offering to improve visibility into security risks by correlating data from various devices, tools, and environments. We look forward to more announcements and working with the team at Cisco Investments to find the next generation of startups for investment. #CiscoInvests #AspireFund #VentureCapital https://lnkd.in/gUrqAiPv

One of my favorite weeks of the entire year in Los Angeles is the week of the Milken Institute Global Conference. This year was absolutely incredible with so many people in town to convene around topics including global financial markets, diversity, equity and inclusion (DEI), geopolitics, public policy and the environment. At Plexo Capital, we always find Milken Global a great time to connect with colleagues, members of the Plexo Capital General Partner (GP) Network and the generous supporters of our funds and the Plexo Foundation. This year, we hosted our third annual reception and had an amazing group of limited partners from the Plexo Capital Limited Partner (LP) Network. We enjoyed great conversation over drinks and food with contemporary art as the backdrop. In addition, Jennifer P. Hopp, the interim executive director of the Plexo Foundation, talked with Aaron Samuels about his experience with the GPx program and how it was helpful for him from both a coaching and fundraising perspective. I was also able to have a fireside chat with Jeremiah Gordon, the General Counsel of CapitalG, who is also a member of the Plexo Capital LP Advisory Committee. We had a great discussion that the group found engaging. The Milken Institute Global Conference provides an invaluable opportunity to strengthen connections, share knowledge, and gain new insights. It's always a highlight of the year for Plexo Capital, and we look forward to continuing to participate in and contribute to this important gathering of minds. Thanks to all who attended and made it a special event including: Plexo Capital LPs: Ford Foundation - Gerald P. + Nathan Eskender Alphabet Inc. - Jeremiah Gordon Hearst Ventures - Scott English Hampton University - represented by Keon T. Holmes, CFA Plexo Foundation Donors/Partners: Milken Institute - Nicole Valentine + Troy Duffie IIE.VC - chris trinetti SVB - Tosh E. Ford Foundation Alphabet Inc. #MIGlobal #MilkenInstitute #LimitedPartner

Before the Fab Co-Creation Studio Ventures panel yesterday, I was able to digest some data from a very informative article written by the team at Forerunner Ventures on the attractiveness of VC backed consumer companies relative to VC backed enterprise companies (dataset is 12,000+ companies that raised a Series B since 2010 which translated into 3,100+ consumer and 4,600+ enterprise companies). Some highlights from the article: 1/ Consumer had a higher conversion rate to IPO after Series B -> Consumer companies converted at 1.69% (or 88 companies) while enterprise converted at 1.50% (82 companies) 2/ Consumer companies had a better Rule of 40 (growth rate + profit margin where 40+ is good; this metric is a staple in enterprise investing) -> Consumer companies from the analysis landed at 52% with enterprise at 32%; also, 62% of consumer companies were above 40% compared to 44% of enterprise companies landing above the 40% benchmark 3/ Consumer companies had a higher valuation at IPO -> 18.8% of consumer companies had a valuation above $10B while only 9.6% of enterprise companies exceeded $10B at IPO 4/ Timeline to go public was shorter for consumer companies -> The median timeline for IPO from founding for consumer companies was 76 months compared to 78 months for enterprise companies. Very interesting data given how investors, specifically generalists, have moved away from consumer. That movement is understood given how difficult it can be to identify consumer companies that will become outliers + the pressure for consumer’s scarce dollars with more expensive economies (luxury excluded :). Nonetheless, the data shows when investors get consumer correct, the payoff is meaningful. https://lnkd.in/g5kGyitG

On Thursday, Reddit (Plexo Capital portfolio company) will enter the public markets via an IPO and watched very closely by individual investors, institutional investors (both public and private), venture capitalists and CEOs of private (venture backed) tech companies. The journey for Reddit to the public market has been a long road, which in many ways is emblematic of the potential opening of the IPO window. Since the height of the IPO window in 2021 when 1,035 companies went public in the US, only 335 companies went public in 2022 + 2023 combined. So far this year, there have been only 33 IPOs. IPOs are critical for the venture capital (VC) ecosystem as they provide liquidity to the VCs. That liquidity is also beneficial to the institutions who invest into VC funds (known as limited partners or LPs). These LPs will often reinvest proceeds received back into other venture capital funds. Therefore, IPOS not only provide a return on investment but also free up cash for more VC investments. Reddit will be watched closely for many reasons; however, there are two important factors many will track: 1/ the company’s stock performance (both at IPO and longer term) + 2/ the company’s financial performance. Obviously, the two are related, but the most recent information is available in the S-1 filing for the company’s performance, so we will see how investors react to it at the IPO. Looking at the numbers, Reddit closed 2023 with $804M in revenue, which is a 21% increase over 2022. Reddit’s primary source of revenue is advertising and monetized its users at an average revenue of $12.31 in 2023 (average revenue per active user or ARPU). However, Reddit is not yet profitable and lost $90.8M in 2023. For comparison, Snap’s revenue for 2023 was $4,606M with an ARPU of $11.49 (please see the comments for a chart of comparable companies in the social media space). Reddit is expected to price between $5B and $6.5B. If the IPO is priced at the high end of the range, then the revenue multiple would be 8.1. The revenue multiple of Snap is 4.0 while Meta comes in at 9.4. It is important to note that the last valuation of Reddit in the private markets was ~$10B, so even at the high end of the range, the valuation is off 35%. Pinterest was the last social media company to go public, which happened in 2019. Pinterest went public at a valuation of $10B which was down from its last private market valuation of $12B (17% decline). At the end of 2018, Pinterest had revenue of $756M, so the revenue multiple was 13.2, and a loss of $63M at that time. A successful Reddit IPO alone will not open the IPO window. There are many highly anticipated companies in the IPO pipeline (e.g., Stripe, Databricks + Turo to name a few), and we need to see solid performance from many companies to return to normalcy (or a new normal). That said, if Reddit stumbles, that will likely induce more damage to the IPO market than a successful IPO will provide support. #reddit #ipo #VC

The Milken Institute and Plexo Capital hosted an intimate dinner last evening with allocators + GPs. Our main topic was the Milken Institute’s initiative around Inclusive Capitalism lead by Blair C. Smith, Troy Duffie and Melanie S. We had an amazing conversation with so many great points to follow up and explore. Thanks to everyone who made it out on short notice in the LA rain! Read more about the initiative here: https://lnkd.in/grbFXhGP #milkeninstitute #venturecapital #longla

💡 Charmel Maynard became the Chief Investment Officer of University of Miami at 32, becoming one of the youngest CIO’s of an endowment nationwide. 🎤 How did Charmel achieve this? I interviewed Charmel on this and: 1️⃣ Whether VCs can raise via Zoom 2️⃣ Whether DPI is overrated? 3️⃣ How LPs and GPs can leverage geography Video clip below - Sound on. Click “+ Follow” by my name to see more clips. P.S. Link to full episode in comments.   #VentureCapital #VC #Startups #OpenLP Turpentine

Over the past few years there has been a lot of excitement from GPs, particularly US based, at the prospect of fundraising in the Middle East. A significant portion of the capital from the Middle East is managed by sovereign wealth funds (SWFs). According to the Global SWF research group, the 40 State Owned Investors (the majority of which are SWFs) manage over $4.8 Trillion in assets. The region also includes a number of large single family offices that are very active investors as well. However, one cannot simply parachute into the region and leave with an investment - it takes relationships which must be built over time. At Plexo Capital, we have been traveling to the region building relationships since 2018. Our trips have included: Riyadh, Doha, Abu Dhabi + Dubai; and this year, we completed our sixth trip to the region for an event around the season finale F1 race in Abu Dhabi and returned a little over a week later for Milken Institute Middle East Africa. Abu Dhabi F1 Grand Prix We were very pleased that we were able to partner with Charles der Kinderen's DXB Club with Plexo Capital as a sponsor for their Flagship Event. This year the event was held over four days on a yacht berthed at the Yas Marina overlooking the race course. The event was invitation only with guests representing over $4 trillion of capital from the region's largest families, institutions and sovereign wealth funds. I was fortunate to participate as a panelist on two panels with heavyweights such as Dr. Klaus Hommel, Chairman - Lakestar and Manuel Rogl, CAIA, Deputy Director - JIMCO (Jameel Investment Management Co.), which is a Plexo Capital Partner. In addition, I moderated a panel on SWF deals with Miguel Azevedo, Head of Investment Banking MEA - Citi; Roberto Croci, Director, Value Creation + Transformation - Public Investment Fund (PIF) + Jaap Kalkman, Group CIO - ADQ. Milken Middle East Africa This year, Milken MEA was held concurrent with #COP28, which provided some great crossover opportunities for attendees. It was a good reason for me to travel back after a week at home! The theme for Milken this year was "Navigating Complexity through Collaboration." I spoke on the panel "Resilience Under Pressure: State of Venture Capital" with panelists including Katherine Keating, Partner - SOUNDWaves + Adam Mastrelli, Partner - Woodstock Fund with a rock star moderator in Annelie Ajami. This was a special year for me with Milken as I attended Milken Asia and also spoke at Milken Global (Los Angeles), which means that I attended all three Milken conferences this year. Thanks Blair C. Smith, Nicole Valentine + Troy Duffie for welcoming me into the "Milken Family" and providing an amazing platform to build global relationships. Finally, I attended the DCVC COP28 dinner with Oliver Stone and ended the trip with the SailGP race in Dubai viewed from a yacht anchored by the course. Thanks Zachary Bogue + Nathan Pillai. #MIGlobal #AbuDhabi #F1 #COP28 #Africa

I am excited to speak at the Milken Institute Midde East and Africa Summit in Abu Dhabi on Friday. The panel is “Resilience Under Pressure: State of Venture Capital” and should be an exciting conversation. At Plexo Capital, we are very excited about the opportunities in the Middle East and Africa. We have invested into funds and startups in Africa and feel there is an opportunity to do the same in the Middle East. #MIGlobal

On behalf of Plexo Capital and the Plexo Foundation, I would like to thank everyone from our community that supported the Plexo Capital Summit. Last month, we held our annual convening of LPs, GPs, entrepreneurs and ecosystem participants at the CapitalG office in San Francisco. We provide a platform for the members of the current GPx Cohort (4.0) as well as members from past GPx Cohorts to present to LPs. In total, we had twelve polished GP presentations. In addition, I am proud we were able to hear from both Laela Sturdy, the Managing Partner of CapitalG, and Marx Cazenave, the founder and former CEO of Progress Investment Management, who is my mentor, former manager and a good friend. For GPx Cohort 4.0, we did something different, which was to have our first geographic focused cohort. We chose Latin America as our first geography as we have many investments in the region, and I have personally spent time in Mexico, Colombia + Brazil. Thanks to all those from our community that came out to support and a special thanks to our LPs and donors to the Plexo Foundation.  We would like to thank a portion of the folks from the Plexo Capital ecosystem who made the event happen and came to support: Alphabet Inc. as an LP and donor to the Plexo Foundation CapitalG for generously allowing us to use their magnificent space in the Ferry Building Intel Capital as an LP Cisco Investments as an LP and the sponsor of the Plexo Capital Summit Ford Foundation as an LP and donor to the Plexo Foundation MassMutual as an LP IIE.VC as a donor to the Plexo Foundation Practical VC as a donor to the Plexo Foundation Silicon Valley Bank as a donor to the Plexo Foundation  Thurman White as an LP Plexo Foundation board member KPMG US for tax + audit for Plexo Capital City National Bank for banking services for Plexo Capital Shout out to the other LPs and service providers present: Blueprint Capital Advisors LLC Citizens Bank Denning & Company Outcomes Fund SamCERA Verdis Investment Management A special thanks to Jennifer P. Hopp who now leads our GPx program and organized the event.  Under her leadership, the GPx program has gone to another level. Jennifer is a Plexo Capital GP and member of Cohort 1.0, so she understands what it takes to be successful given all the challenges a new firm faces.  We also had great support from Sam Toney and Kuji Chahal.  Sam leads the selection process for Plexo Capital as well as for GPx.  Kuji leads investor relations and helps the GPx Cohorts prepare for institutional quality presentations. Cc: Jeremiah Gordon, Trina Van Pelt, Dave Mueller, Chukwuka (Chuki) Ofili, Saqib Jalil, Przemyslaw Kowalski, Christine Looney, Jason Allen, Ariana Lucera, Aman Verjee, CFA, John Rauschkolb III, CPA, Rod Werner, Jacob Walthour, Andrew F., Kimathi Marangu, Paul Denning and Jamie Rhode, CFA.