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IVP’s Eric Liaw on the firm’s massive new fund, Klarna chaos, and why appearances can be deceiving when it comes to corporate succession

When IVP recently announced the closing of its 18th fund, I called Eric Liaw, a longtime general partner at the growth-stage firm, to ask a few questions. First, getting $1.6 billion in capital commitments from investors appears to be more challenging now than it was during the 2021 bubble, when IVP announced the launch of a $1.8 billion investment vehicle.

I also wonder about the question of succession for IVP, a company whose many bets include Figma and Robinhood and whose founders and early investors still hold significant positions in the company — both figuratively and literally. A recent Fortune report noted that photos of company founder Reed Dennis are still scattered “all over IVP’s San Francisco offices.” Meanwhile, Todd Chaffee, Norm Fogelsong and Sandy Miller (former general partner, now advisory partner) The photos are mixed in with the general partners on the company website, which leaves less space for the current generation, at least visually.

Finally, I want to talk to Liaw about Klarna, a portfolio company that made headlines last month when behind-the-scenes disagreements over who should sit on the board came into public view. This is part of our chat, edited for length and clarity. You can listen to the longer conversation in podcast form here .

Congratulations on your new fund. Now you can relax for a few months! Considering the market conditions, was the fundraising process more difficult this time?

It was indeed a tumultuous time. If you really go back in time, to 2018, when we raised our sixteenth fund, that was a “normal” environment. We got a slightly older one in 2021 and it was not a normal environment. One thing we’re glad we didn’t do was raise too much money relative to our strategy and then deploy all of it very quickly, while others in our industry [we’ve been] Very consistent.

Have you ever taken money from Saudi Arabia? Doing so has become more acceptable and widespread.I want to know if [Public Investment Fund] Be a new or existing LP.

We don’t typically comment on our limited partner base, but we don’t have capital coming from that region.

Speaking of regions, you spent many years in the Bay Area. You have two degrees from Stanford University. You are in London now. When and why did you take this action?

We moved about eight months ago. In fact, I’ve lived in the Bay Area since I was 18, when I came to Stanford as an undergrad. That was a few years ago, longer than I care to admit now. But for us, expanding into Europe is an organic extension of the strategy we’ve been pursuing. In 2006, we made our first investment in Europe, in Helsinki, Finland, in a company called MySQL, which was later acquired by Sun [Microsystems] A billion dollars, which was not normal at the time. Then, in 2013, we invested in Supercell, also based in Finland. In 2014, we became investors in Klarna.and [at this point], our European portfolio today is about 20 or so companies; it’s about 20% of our active portfolio, spread across 10 different countries. We feel like keeping our feet on the ground is the right move.

There was a lot of drama surrounding Klarna.What do you think of The Information’s report? [former Sequoia investor] Michael Moritz VS [Matt Miller]The Sequoia partner who most recently represented the firm was later replaced by another Sequoia partner, Andrew Reed?

We are small investors in Klarna. We do not actively participate in board discussions. We are excited about the performance of their business. In many ways, they experienced the worst of both worlds. They file documents publicly. They come under a lot of scrutiny.Everyone can see their numbers, but they don’t have the currency [i.e. that a publicly traded company enjoys].I think [CEO and co-founder] Sebastian [Siemiatkowski] There is now more openness to the fact that in the near future they will become a public entity and we are excited about that. I guess if the reports are accurate, I can’t understand the motivation behind it. I don’t know what happened. I’m glad he has put these things behind him and can focus on business.

You and I talked about different countries and some of their respective advantages. We’ve already talked about consumer startups. This is reminiscent of French social network BeReal, which is reportedly currently seeking Series C funding or may be up for sale. Has IVP already launched an attack on the company?

We’ve researched them and spoken with them in the past, but we’re not currently investors, so I don’t have much insight into their current strategy. I think networking is hard; the rewards are huge, but the road to getting there is pretty tough. I do think that every few years, even with the power of Facebook-slash-Meta, companies can find their footing. Snap continues to have strong traction; we invested in Snap early. Discord has carved out some space for itself in the market. It’s clear that TikTok has made quite a difference globally. So although the prize is great, it is difficult to obtain. That’s part of the challenge for the fund, investing in consumer applications, and we’ve done that, [figuring out] Which of these rocket ships has enough fuel to break through the atmosphere, and which one will return to Earth?

Regarding your new fund, the Fortune story noted that the firm was not named after founder Reed Dennis, proving that the firm was set up to outlive him. But it also noted that the IVP website is littered with photos of Dennis and other photos of past partners and current advisers at the firm. IVP talks about making room for younger partners; I do wonder if that actually happens.

I would say without a doubt that it is happening. We have a strong culture and tradition of providing people throughout their careers with opportunities to advance within the organization to the highest echelons of General Partner. I’m lucky enough to be one of those examples. So do many of my partners. This is not just a path for companies, but a real opportunity for people.

We don’t have a managing partner and we don’t have a CEO. We bring people into the firm, serve the firm and our limited partners, and as they get to different stages in their lives and careers, step back and move on to different things, which by definition does create more room and space . The responsibility to young people and those now reaching the prime years of their careers is to help move the institution forward.

I would like to ask: Can those consultants still receive arbitrage?

You can ask, but I don’t want to get into economics or anything of this dimension.So I will quietly refuse [that question]. But we do value their opinions and suggestions and contributions to the company over the years.

Clearly, every company is undergoing a valuation reset, and it seems like it’s not one big language modeling company, but a lot of companies. I guess this gives you greater access to top companies, but also hurts some of your existing portfolio companies. How is the company getting through this?

I think there’s always going to be a selection of the most promising companies in terms of companies raising money, and there’s always going to be competition for these rounds, so these rounds and the valuations associated with them are always going to feel expensive. I don’t think anyone has ever had a great venture capital outcome where they feel like, “Man, I got a bargain on that deal.” You always feel a little uncomfortable. But belief in the company’s future offsets the uncomfortable feeling. That’s part of the joy of working.

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