1 00:00:05,559 --> 00:00:06,240 Speaker 1: Okner trillions. 2 00:00:06,240 --> 00:00:07,880 Speaker 2: I'm Joe Webber and I'm Eric Belchernas. 3 00:00:11,920 --> 00:00:14,840 Speaker 3: Eric, I'm really excited about today's episode, but you're probably 4 00:00:14,880 --> 00:00:16,160 Speaker 3: even more excited about it. 5 00:00:16,560 --> 00:00:18,959 Speaker 2: Yeah, because I have been writing about this topic for 6 00:00:19,160 --> 00:00:21,080 Speaker 2: like the past month heavily. 7 00:00:20,920 --> 00:00:22,600 Speaker 3: And would you want to tell us what that your 8 00:00:22,640 --> 00:00:23,160 Speaker 3: topic is? 9 00:00:23,800 --> 00:00:27,520 Speaker 2: Ever since SpaceX became like, you know, potential IPO biggest 10 00:00:27,520 --> 00:00:32,320 Speaker 2: ever probably, there's been this really intense interest in okay 11 00:00:32,320 --> 00:00:36,280 Speaker 2: which ETFs hold private companies. And there's one XOVR which 12 00:00:36,280 --> 00:00:39,159 Speaker 2: we've gone over several times, the public privates crossover that 13 00:00:39,200 --> 00:00:41,760 Speaker 2: has a little bit of SpaceX, almost like a little 14 00:00:41,800 --> 00:00:44,360 Speaker 2: copper wire inside an air conditioning unit, gives the whole 15 00:00:44,640 --> 00:00:48,160 Speaker 2: unit value. And all these people have flooded this ETF 16 00:00:48,320 --> 00:00:51,279 Speaker 2: just to get a tiny little piece of SpaceX. And 17 00:00:51,320 --> 00:00:53,880 Speaker 2: that really has shown me that there is intense interest 18 00:00:53,920 --> 00:00:56,960 Speaker 2: to get private companies in the ETF rapper. 19 00:00:57,040 --> 00:00:58,160 Speaker 3: How much SpaceX does it help? 20 00:00:58,320 --> 00:01:01,000 Speaker 2: It started like ten percent, but as more people came 21 00:01:01,000 --> 00:01:03,960 Speaker 2: into the fund and the assets grew, the percentage shrunk 22 00:01:04,000 --> 00:01:07,240 Speaker 2: to late it's like three and so it's I don't 23 00:01:07,280 --> 00:01:09,440 Speaker 2: think it's worth it at this point to buy that. 24 00:01:10,000 --> 00:01:13,800 Speaker 2: So as I was researching other ETFs that had private companies. 25 00:01:13,840 --> 00:01:17,680 Speaker 2: We only found three, but there's tons of mutual funds 26 00:01:17,720 --> 00:01:21,000 Speaker 2: with private companies, and probably the one that's the most 27 00:01:21,560 --> 00:01:25,399 Speaker 2: full of like the coolest hot private companies is the 28 00:01:25,560 --> 00:01:29,280 Speaker 2: ARC Venture Fund, which is from ARC. It was launched 29 00:01:29,319 --> 00:01:32,400 Speaker 2: in twenty twenty two, kind of you know, rate sort 30 00:01:32,400 --> 00:01:35,000 Speaker 2: of on the back end of ARC mania, and this 31 00:01:35,120 --> 00:01:38,440 Speaker 2: has got some of the it's got SpaceX, it's got 32 00:01:38,480 --> 00:01:44,479 Speaker 2: open AI, Neurlink XAI, on and on, and the weightings 33 00:01:44,480 --> 00:01:48,360 Speaker 2: are high, you know, between eight percent, seven percent, six percent. 34 00:01:49,320 --> 00:01:52,160 Speaker 2: The problem is it's a mutual fund. So it's interesting 35 00:01:52,200 --> 00:01:54,520 Speaker 2: to me this fund is outperforming the S and P 36 00:01:54,560 --> 00:01:57,040 Speaker 2: five hundred by forty five percentage points, so it's done 37 00:01:57,080 --> 00:02:00,920 Speaker 2: its job. But it's got five hundred million in assets, 38 00:02:00,960 --> 00:02:04,280 Speaker 2: which isn't nothing. But you know, XOVR has like one 39 00:02:04,320 --> 00:02:07,640 Speaker 2: point five billion and it's got three percent SpaceX ron 40 00:02:07,680 --> 00:02:10,640 Speaker 2: BAARN has some mutual funds which similarly also owns some 41 00:02:10,720 --> 00:02:14,359 Speaker 2: of these private companies, and it has not seen inflows, 42 00:02:14,400 --> 00:02:17,680 Speaker 2: and Fidelity has a couple and it's seen outflows. So 43 00:02:17,720 --> 00:02:21,200 Speaker 2: it's kind of like an interesting moment here where you've 44 00:02:21,200 --> 00:02:23,679 Speaker 2: got ETFs starting to dabble in this. Mutual funds have 45 00:02:23,760 --> 00:02:26,480 Speaker 2: done it traditionally, and to me, ARC is perfectly placed 46 00:02:26,520 --> 00:02:28,600 Speaker 2: because they have the one with the most private companies. 47 00:02:28,919 --> 00:02:31,520 Speaker 2: But they also were experts in ETFs and so I 48 00:02:31,560 --> 00:02:33,160 Speaker 2: just wanted to get their take on this because I 49 00:02:33,160 --> 00:02:35,600 Speaker 2: think there's going to be increasing interest to get ahead 50 00:02:35,600 --> 00:02:39,760 Speaker 2: of some of these IPOs through the ETF format or 51 00:02:39,840 --> 00:02:42,400 Speaker 2: if the mutual funds can make the case through that format. 52 00:02:42,680 --> 00:02:46,720 Speaker 3: So of course ARC is led by CEO and chief 53 00:02:46,760 --> 00:02:48,760 Speaker 3: investment offer to Kathy Woods. She's going to be joining us. 54 00:02:48,880 --> 00:02:51,400 Speaker 3: She's done on the podcast before, but we've never had 55 00:02:51,480 --> 00:02:54,160 Speaker 3: a couple other members of her team, So joining us 56 00:02:54,200 --> 00:02:57,120 Speaker 3: also going to be Brett Winton, who's the chief Future 57 00:02:57,200 --> 00:03:00,960 Speaker 3: Officer at ARC, and Charlie Roberts, who's the chief Investment 58 00:03:01,000 --> 00:03:04,120 Speaker 3: Structures of Private Equity. These three are the brain trusts 59 00:03:04,120 --> 00:03:07,920 Speaker 3: behind the ARC Venture Fund ticker A R and k X, 60 00:03:10,080 --> 00:03:16,320 Speaker 3: this time on Trillions ARC Venture Fund. Kathy, Brett, Charlie, 61 00:03:16,480 --> 00:03:17,280 Speaker 3: Welcome to Trillions. 62 00:03:17,440 --> 00:03:18,800 Speaker 1: Thank you, it's great to be here. 63 00:03:18,919 --> 00:03:20,880 Speaker 4: Yeah, thanks so much for having us. Looking forward to 64 00:03:20,919 --> 00:03:21,480 Speaker 4: the conversation. 65 00:03:21,960 --> 00:03:26,160 Speaker 5: Yeah, very excited to be on your show again. And congratulations. 66 00:03:26,160 --> 00:03:27,560 Speaker 5: I think you're almost ten years old. 67 00:03:27,639 --> 00:03:29,400 Speaker 3: Yeah, there's we're having a debate. 68 00:03:29,760 --> 00:03:32,440 Speaker 2: Look like an. 69 00:03:31,600 --> 00:03:35,600 Speaker 3: Angry married couple that can't keep track of their anniversary. Kathy, 70 00:03:35,600 --> 00:03:38,720 Speaker 3: I want to start with you. ARC is really synonymous 71 00:03:38,760 --> 00:03:42,320 Speaker 3: in my mind with ETFs. So what problem were you 72 00:03:42,360 --> 00:03:45,720 Speaker 3: trying to solve that you know, the ETF structure couldn't 73 00:03:45,760 --> 00:03:47,640 Speaker 3: provide when you dreamed up the venture fund. 74 00:03:49,400 --> 00:03:53,520 Speaker 5: Well, a few things. Early on, we were looking at 75 00:03:53,720 --> 00:04:00,760 Speaker 5: the best way to democratize venture capital for our client base, 76 00:04:00,960 --> 00:04:04,880 Speaker 5: and of course we would have naturally gone to ETFs, 77 00:04:06,040 --> 00:04:11,040 Speaker 5: given that's pretty much all we do. And then we 78 00:04:11,080 --> 00:04:15,840 Speaker 5: examined the structure and a big drawback for us, given 79 00:04:15,840 --> 00:04:19,640 Speaker 5: that we wanted to start a venture capital fund, A 80 00:04:19,640 --> 00:04:24,320 Speaker 5: big drawback was the fifteen percent ill liquidity clause. You 81 00:04:24,480 --> 00:04:28,640 Speaker 5: can't have more than fifteen percent in ill liquid assets, 82 00:04:28,800 --> 00:04:32,040 Speaker 5: and so we just kill an ETF wrapper, and so 83 00:04:32,080 --> 00:04:35,440 Speaker 5: we started casting around. I'm going to give Tom Stout, 84 00:04:35,440 --> 00:04:38,440 Speaker 5: our president and COO, a lot of credit for this. 85 00:04:39,800 --> 00:04:43,760 Speaker 5: We didn't We wanted to provide venture for our client base, 86 00:04:44,440 --> 00:04:48,240 Speaker 5: much of which is not accredited, and we happened upon 87 00:04:48,360 --> 00:04:51,800 Speaker 5: the interval fund structure. So it's not I don't know 88 00:04:52,160 --> 00:04:54,880 Speaker 5: technically it's a mutual fund. I don't think it is. 89 00:04:54,960 --> 00:04:58,760 Speaker 5: I think it's an interval fund. But you know, when 90 00:04:58,800 --> 00:05:02,760 Speaker 5: you're talking about regulation and sometimes you know you've got 91 00:05:02,760 --> 00:05:06,880 Speaker 5: the mutual funds and the ETFs, both forty Act funds. 92 00:05:07,600 --> 00:05:10,599 Speaker 5: The interval fund is a forty Act fund, but I 93 00:05:10,600 --> 00:05:13,960 Speaker 5: don't think it's a mutual fund. In that fund structure, 94 00:05:14,000 --> 00:05:20,040 Speaker 5: we've been able to populate it with on average eighty 95 00:05:20,080 --> 00:05:26,680 Speaker 5: percent private exposure and twenty percent public. We have daily 96 00:05:26,720 --> 00:05:32,440 Speaker 5: inflows minimum five hundred dollars, quarterly outflows up to five 97 00:05:32,560 --> 00:05:37,520 Speaker 5: percent of nav and so we need the public positions 98 00:05:37,640 --> 00:05:42,160 Speaker 5: so that we can provide liquidity if our client's demanded 99 00:05:42,240 --> 00:05:43,200 Speaker 5: at the end of a quarter. 100 00:05:43,600 --> 00:05:45,560 Speaker 2: That is a good point. This is a non diversified 101 00:05:45,600 --> 00:05:49,239 Speaker 2: closed end management investment company that is an interval fund. 102 00:05:50,200 --> 00:05:53,120 Speaker 2: And that's why like the Fidelity and Baron funds that 103 00:05:53,200 --> 00:05:57,160 Speaker 2: own privates, it's in the fifteen percent that said, if 104 00:05:57,160 --> 00:05:59,280 Speaker 2: it grows beyond, you're allowed to keep it. That's why 105 00:05:59,400 --> 00:06:02,159 Speaker 2: SpaceX is a little more in Ron Baron's fund. But 106 00:06:02,200 --> 00:06:03,919 Speaker 2: the long and short of it is an actual mutual 107 00:06:03,920 --> 00:06:05,800 Speaker 2: fund can't hold more than fifteen percent of liquid or 108 00:06:05,800 --> 00:06:08,440 Speaker 2: an ETF. This fund can hold more as an interval 109 00:06:08,480 --> 00:06:11,839 Speaker 2: closed then fund, and that is why this one kind 110 00:06:11,839 --> 00:06:13,919 Speaker 2: of is the most interesting to me because it's full 111 00:06:13,960 --> 00:06:17,520 Speaker 2: of the companies. So that's a good point, thank you. 112 00:06:18,440 --> 00:06:21,800 Speaker 4: And just critically it's it's closed in, but it prices 113 00:06:21,839 --> 00:06:24,719 Speaker 4: at NAV as in there's some closed in funds that 114 00:06:24,760 --> 00:06:26,719 Speaker 4: are out there. They're like, here's a basket of goods, 115 00:06:27,000 --> 00:06:29,159 Speaker 4: buy it for what you want, and then it gets 116 00:06:29,200 --> 00:06:32,719 Speaker 4: bid up and you're you're paying a dollar to get 117 00:06:32,800 --> 00:06:35,960 Speaker 4: fifteen cents, you know, And that's clearly not a structure 118 00:06:36,000 --> 00:06:38,360 Speaker 4: we were attracted to either, and so you should think 119 00:06:38,360 --> 00:06:41,680 Speaker 4: of even remember back when you were interviewing Kathy and 120 00:06:41,760 --> 00:06:45,440 Speaker 4: we were doing actively managed ETFs, and you know who 121 00:06:45,520 --> 00:06:48,960 Speaker 4: does that. Nobody wants actively managed gts. People want me 122 00:06:49,000 --> 00:06:51,640 Speaker 4: massive ETFs. That's why would you do this? Well, here 123 00:06:51,960 --> 00:06:54,800 Speaker 4: we it would be really nice if we thought we 124 00:06:54,839 --> 00:06:59,680 Speaker 4: could like do real venture exposure in an ETF. But 125 00:07:00,400 --> 00:07:03,039 Speaker 4: we looked around the entire landscape and as Kathy said, 126 00:07:03,080 --> 00:07:06,760 Speaker 4: Tom identified the interval fund structure which was originally intended 127 00:07:06,839 --> 00:07:10,680 Speaker 4: for venture capital but was never used for that, and said, 128 00:07:10,720 --> 00:07:15,320 Speaker 4: this is the right vehicle to provide everybody with access 129 00:07:15,360 --> 00:07:21,400 Speaker 4: to first class venture exposure, including Neuralink, SpaceX Xai, Open Ai, 130 00:07:22,000 --> 00:07:26,360 Speaker 4: Tropic Replet, you know, all of these companies that actually 131 00:07:26,520 --> 00:07:32,120 Speaker 4: for SpaceX's AI compute adventure to work, you need these 132 00:07:32,120 --> 00:07:34,680 Speaker 4: other companies to do very well as well, and so 133 00:07:34,760 --> 00:07:37,640 Speaker 4: it provides you a full suite of exposure to the 134 00:07:37,680 --> 00:07:39,040 Speaker 4: first class venture companies. 135 00:07:39,640 --> 00:07:43,400 Speaker 2: I think the reason it has mutual fund kind of 136 00:07:43,880 --> 00:07:45,720 Speaker 2: it looks like one is the five litter ticker. You know, 137 00:07:45,720 --> 00:07:47,920 Speaker 2: all mutual funds have five litter tickers, Ends and X. 138 00:07:48,120 --> 00:07:50,720 Speaker 2: But I think more than that, it just seems to 139 00:07:50,760 --> 00:07:53,600 Speaker 2: be like in this era, like people generally just want 140 00:07:53,760 --> 00:07:58,520 Speaker 2: everything in an ETF, and there's a lot of people 141 00:07:58,560 --> 00:08:01,480 Speaker 2: who felt maybe burned in mutual funds in the past. 142 00:08:01,880 --> 00:08:05,400 Speaker 2: And clothing funds aren't exactly like stellar reputation either because 143 00:08:05,440 --> 00:08:08,240 Speaker 2: they traded these big discounts. So I think part of 144 00:08:08,240 --> 00:08:10,480 Speaker 2: the challenge for fun like this is being in that 145 00:08:11,400 --> 00:08:14,240 Speaker 2: camp and not being able to use the ETFs halo. 146 00:08:16,000 --> 00:08:20,640 Speaker 5: Can I just correct one thing, Eric, We do not 147 00:08:20,880 --> 00:08:25,600 Speaker 5: trade at a discount or a premium. Ever. We actually 148 00:08:26,320 --> 00:08:33,080 Speaker 5: we sell at nav and end. Our pricing committee really 149 00:08:33,160 --> 00:08:36,720 Speaker 5: is working to price the portfolio every day. If there's 150 00:08:36,920 --> 00:08:40,800 Speaker 5: anything going on in any of the private funds, We're 151 00:08:40,840 --> 00:08:43,920 Speaker 5: all over it in terms of valuation, whether it's on 152 00:08:43,960 --> 00:08:49,080 Speaker 5: the secondary markets or the mutual funds themselves. If we 153 00:08:49,120 --> 00:08:51,000 Speaker 5: look at their marks at the end of a quarter 154 00:08:51,120 --> 00:08:56,640 Speaker 5: and we see we're not aligned, we'll go back and 155 00:08:56,720 --> 00:09:00,439 Speaker 5: do due diligence to either defend our price or or 156 00:09:00,520 --> 00:09:04,280 Speaker 5: change it so we don't sell at a premium or 157 00:09:04,400 --> 00:09:07,600 Speaker 5: a discount. It's a huge selling point for us. 158 00:09:08,280 --> 00:09:09,920 Speaker 3: Charlie, I want to bring you in because we haven't 159 00:09:10,120 --> 00:09:12,880 Speaker 3: heard from you yet. How does a strategist who now 160 00:09:12,880 --> 00:09:14,560 Speaker 3: has an interval fund that you're going to fill with 161 00:09:14,679 --> 00:09:18,120 Speaker 3: VC or P exposure, how do you go figuring out 162 00:09:18,200 --> 00:09:20,040 Speaker 3: how do you go about figuring out what exactly you 163 00:09:20,080 --> 00:09:21,439 Speaker 3: want to put in the fund? 164 00:09:21,840 --> 00:09:22,160 Speaker 1: Sure? 165 00:09:22,559 --> 00:09:24,600 Speaker 6: Well, if I may also just quickly build off a 166 00:09:24,600 --> 00:09:26,880 Speaker 6: couple of the points, one that Kathy made and one 167 00:09:27,080 --> 00:09:29,400 Speaker 6: one that Brett made to Brett's. 168 00:09:29,400 --> 00:09:31,679 Speaker 1: While they're related to Brett's. 169 00:09:31,280 --> 00:09:34,800 Speaker 6: Point, the you know, we don't have these wild swings 170 00:09:34,800 --> 00:09:38,199 Speaker 6: in prices, either to the upside or the downside because 171 00:09:38,200 --> 00:09:42,360 Speaker 6: of the way we do value and price. And a 172 00:09:42,440 --> 00:09:45,200 Speaker 6: critical point there is, of course that what really matters 173 00:09:45,240 --> 00:09:47,600 Speaker 6: on the private side as much as anything, as well 174 00:09:47,640 --> 00:09:50,679 Speaker 6: as doing great research selecting companies. Well, it's all about 175 00:09:50,679 --> 00:09:53,240 Speaker 6: getting into companies. It's not just like you can go 176 00:09:53,240 --> 00:09:55,480 Speaker 6: on in exchange and buy the asset you want right. 177 00:09:55,840 --> 00:09:59,760 Speaker 6: In fact, if anything, that is perhaps the defining skill 178 00:09:59,800 --> 00:10:03,000 Speaker 6: set that actually is required to turn ideas into a portfolio, 179 00:10:03,440 --> 00:10:06,960 Speaker 6: and the companies do not. The portfolio companies, certainly many 180 00:10:06,960 --> 00:10:09,640 Speaker 6: of that we've spoken to do not want to be 181 00:10:09,920 --> 00:10:12,920 Speaker 6: in some sort of a structure which allows their price 182 00:10:12,960 --> 00:10:15,480 Speaker 6: to be dictated by a bid us spread essentially in 183 00:10:15,520 --> 00:10:17,200 Speaker 6: a you know, supplying demand and to be bid up 184 00:10:17,280 --> 00:10:19,040 Speaker 6: or bid down because they don't want to be part 185 00:10:19,040 --> 00:10:22,920 Speaker 6: of the portfolio that's way under and and sort of 186 00:10:22,920 --> 00:10:25,000 Speaker 6: get all the negative halo from that. They also just 187 00:10:25,000 --> 00:10:25,560 Speaker 6: don't want the. 188 00:10:26,559 --> 00:10:28,000 Speaker 1: To be seen. 189 00:10:28,280 --> 00:10:30,280 Speaker 6: They don't want people to try and back into their 190 00:10:30,320 --> 00:10:32,520 Speaker 6: pricing in different ways, and they just don't want that 191 00:10:32,800 --> 00:10:33,880 Speaker 6: volatility and variability. 192 00:10:33,920 --> 00:10:34,360 Speaker 1: So that's what I mean. 193 00:10:34,360 --> 00:10:36,360 Speaker 3: They're private, right, It's like, why why would I want 194 00:10:36,360 --> 00:10:39,760 Speaker 3: the house of the public market exactly. 195 00:10:39,280 --> 00:10:42,320 Speaker 6: It's right all downside for them from their view, sometimes 196 00:10:42,559 --> 00:10:44,959 Speaker 6: depends on the stage of the company. The other thing, 197 00:10:44,960 --> 00:10:48,120 Speaker 6: as well, to Kathy's point, is because we care so 198 00:10:48,240 --> 00:10:52,400 Speaker 6: much about a very good pricing process and evaluation being 199 00:10:52,520 --> 00:10:56,240 Speaker 6: appropriate and correct, and that the true market price at 200 00:10:56,240 --> 00:11:00,000 Speaker 6: the time, factoring in you know, immedia and longer term signals. 201 00:11:00,559 --> 00:11:03,680 Speaker 6: So something I sometimes say to people we're discussing the 202 00:11:03,679 --> 00:11:05,480 Speaker 6: fund that's quite important to bear in mind as well, 203 00:11:05,559 --> 00:11:08,240 Speaker 6: is as well as wanting to do the right thing 204 00:11:08,280 --> 00:11:12,560 Speaker 6: and having the right price, we're obviously absolutely incentivized by 205 00:11:12,559 --> 00:11:15,640 Speaker 6: the market mechanisms around the fund to be right up 206 00:11:15,679 --> 00:11:17,800 Speaker 6: the fair way when it comes to price. What I 207 00:11:17,800 --> 00:11:20,120 Speaker 6: mean by that is, obviously, on one level, it would 208 00:11:20,120 --> 00:11:21,960 Speaker 6: be good for the fund if you were to presume 209 00:11:21,960 --> 00:11:23,839 Speaker 6: that we were just acting out of self interest, it 210 00:11:23,880 --> 00:11:25,520 Speaker 6: would be good for the fund obviously for the price 211 00:11:25,559 --> 00:11:28,800 Speaker 6: to continue or scope go up because the performance looks great. However, 212 00:11:29,200 --> 00:11:31,960 Speaker 6: because we're redeeming and have providing liquidity up to five 213 00:11:31,960 --> 00:11:34,880 Speaker 6: percent of the fund every quarter, the last thing we 214 00:11:34,920 --> 00:11:37,240 Speaker 6: want is to be redeeming against the companies whose price 215 00:11:37,320 --> 00:11:39,520 Speaker 6: we do not believe in and has gone to the upside. 216 00:11:39,640 --> 00:11:41,679 Speaker 6: So it's a really important things to think about that 217 00:11:41,720 --> 00:11:44,359 Speaker 6: mechanism as well, and the fact that we're absolutely incentivized 218 00:11:44,400 --> 00:11:46,400 Speaker 6: for the price to be right, which is why to 219 00:11:46,480 --> 00:11:49,520 Speaker 6: Kathy's point, we spend so much, you know, calories and 220 00:11:50,080 --> 00:11:52,559 Speaker 6: really put in place very good structures which are all 221 00:11:52,679 --> 00:11:56,480 Speaker 6: third party observed and audited to make sure that the 222 00:11:56,520 --> 00:11:57,959 Speaker 6: valuation is correct. 223 00:11:58,240 --> 00:12:03,200 Speaker 5: I'd love to have Brett and Charlie address the real 224 00:12:03,320 --> 00:12:08,559 Speaker 5: secret sauce of how we put this portfolio together. And 225 00:12:09,320 --> 00:12:12,240 Speaker 5: it's a familiar refrain you'll hear from ARC. You hear 226 00:12:12,240 --> 00:12:17,160 Speaker 5: it all the time. Research research, research, research, and our 227 00:12:17,760 --> 00:12:22,000 Speaker 5: analysts on the public equities are the same analysts on 228 00:12:22,120 --> 00:12:26,679 Speaker 5: the private companies. We think these two worlds are coalescing. 229 00:12:27,600 --> 00:12:31,120 Speaker 5: So maybe Brett or Charlie, you'd like to go through 230 00:12:31,160 --> 00:12:32,040 Speaker 5: the research angle. 231 00:12:33,160 --> 00:12:38,320 Speaker 4: Sure, you know, we in we co wrote a white 232 00:12:38,360 --> 00:12:42,040 Speaker 4: paper with Coinbase when they were raising their Series B 233 00:12:42,800 --> 00:12:44,880 Speaker 4: and at the time I remember in conversation with them, 234 00:12:44,880 --> 00:12:46,839 Speaker 4: They're like, oh, you should invest, and I was like, well, 235 00:12:47,280 --> 00:12:49,920 Speaker 4: we would love to invest, we just don't have a 236 00:12:49,960 --> 00:12:54,560 Speaker 4: client vehicle that allows us to invest. And so from 237 00:12:54,600 --> 00:12:58,360 Speaker 4: the beginning, because our analysts are focused technology by technology 238 00:12:58,480 --> 00:13:02,480 Speaker 4: rather than bisector and doing the hard work of figuring 239 00:13:02,480 --> 00:13:04,800 Speaker 4: out the cost of clients and the unit economic cases 240 00:13:04,800 --> 00:13:08,960 Speaker 4: for these technologies, they're in conversation with private companies already 241 00:13:09,000 --> 00:13:11,079 Speaker 4: they have to be in order to do their work. 242 00:13:11,559 --> 00:13:14,520 Speaker 4: And so you know, over a decade, we've built up 243 00:13:14,640 --> 00:13:16,880 Speaker 4: a lot of relationships with these companies that are now 244 00:13:16,920 --> 00:13:21,400 Speaker 4: in later stage, including you know, the SpaceX's and of 245 00:13:21,400 --> 00:13:23,960 Speaker 4: course the neuralinks and the Elon companies, but also other 246 00:13:24,280 --> 00:13:28,640 Speaker 4: kind of AI and and all technology platform focused companies. 247 00:13:29,360 --> 00:13:32,600 Speaker 4: And so the a difference between what we do and 248 00:13:33,040 --> 00:13:35,520 Speaker 4: you know, some of the mutual fund structures and certainly 249 00:13:35,600 --> 00:13:39,920 Speaker 4: some of the closed in fund structures is we're direct 250 00:13:39,920 --> 00:13:43,120 Speaker 4: on cap table with the companies. We're in conversation with management. 251 00:13:43,440 --> 00:13:46,480 Speaker 4: We we underwrite the companies in the same way we 252 00:13:46,520 --> 00:13:48,840 Speaker 4: do the public portfolio. So there's been plenty of times 253 00:13:48,880 --> 00:13:52,439 Speaker 4: where we've been like, well, this is interesting, provocative, and 254 00:13:52,640 --> 00:13:55,040 Speaker 4: it doesn't underwrite. Well, so we're not going to participate 255 00:13:55,080 --> 00:13:58,319 Speaker 4: because ultimately, you know, we're operating on behalf of our 256 00:13:58,400 --> 00:14:01,440 Speaker 4: clients to deliver you know, best return possible in these 257 00:14:01,559 --> 00:14:06,960 Speaker 4: venture exposures. And so both the credibility we've established in 258 00:14:07,600 --> 00:14:11,200 Speaker 4: doing innovation research over a decade, the degree to which 259 00:14:11,200 --> 00:14:13,199 Speaker 4: we've shown that we are a founder friendly and we 260 00:14:13,360 --> 00:14:15,400 Speaker 4: back founders to the hilt when we really believe that 261 00:14:15,800 --> 00:14:19,560 Speaker 4: in what they're doing, and kind of our ability to 262 00:14:19,920 --> 00:14:22,840 Speaker 4: assess and give kind of strategic guidance to companies but 263 00:14:22,880 --> 00:14:25,280 Speaker 4: also assess whether or not it's a good exposure for 264 00:14:25,320 --> 00:14:29,960 Speaker 4: our client really shapes the portfolio that we've developed. And then, 265 00:14:30,040 --> 00:14:32,720 Speaker 4: like Charlie said, and he's really the tip of the 266 00:14:32,760 --> 00:14:35,800 Speaker 4: sphere here. Also, you know, making sure that we can 267 00:14:35,840 --> 00:14:39,880 Speaker 4: get into and participate in the rounds that we're interested 268 00:14:39,880 --> 00:14:42,760 Speaker 4: in is a huge, hairy amount of work, and we 269 00:14:42,840 --> 00:14:48,560 Speaker 4: do so almost uniformly cleanly, direct on cap table, with conversations, 270 00:14:48,600 --> 00:14:52,600 Speaker 4: directly with management, access to data room, so that we 271 00:14:52,640 --> 00:14:57,840 Speaker 4: avoid also paying additional fees for SPV exposures or for oh, 272 00:14:57,880 --> 00:15:00,400 Speaker 4: this is an indirect exposure through some kind of forward 273 00:15:00,600 --> 00:15:03,240 Speaker 4: agreement with some employee who says he's going to sell 274 00:15:03,320 --> 00:15:05,080 Speaker 4: us our shares where you don't actually know if it's 275 00:15:05,120 --> 00:15:08,160 Speaker 4: going to come true. And so some of these structures 276 00:15:08,160 --> 00:15:10,760 Speaker 4: it's like, yes, I have exposure to you know, name 277 00:15:10,880 --> 00:15:13,360 Speaker 4: company X, but do you really have exposure You don't 278 00:15:13,400 --> 00:15:17,440 Speaker 4: actually know. So we are very certain of our underlying 279 00:15:17,440 --> 00:15:18,360 Speaker 4: exposures as well. 280 00:15:18,600 --> 00:15:22,320 Speaker 5: That's a really important point, Eric, just that if you 281 00:15:22,520 --> 00:15:26,200 Speaker 5: look at the funds you've mentioned, who hold private not 282 00:15:26,360 --> 00:15:30,800 Speaker 5: ron barons, of course, and I'm not quite sure about 283 00:15:30,800 --> 00:15:34,000 Speaker 5: all of them, but invariably, as we have looked at 284 00:15:34,360 --> 00:15:39,960 Speaker 5: these funds, they are populated, if they own much at all, 285 00:15:40,440 --> 00:15:45,800 Speaker 5: by SPVs, so special purpose vehicles. And so what's happening 286 00:15:46,040 --> 00:15:50,800 Speaker 5: is the clients of those funds are paying fees upon 287 00:15:50,840 --> 00:15:56,400 Speaker 5: fees upon fees. Sometimes they're triple aer SPVs. And I 288 00:15:56,400 --> 00:16:01,120 Speaker 5: will tell you, we know this that the private companies 289 00:16:01,120 --> 00:16:04,080 Speaker 5: in which we're invested, they do not want to be 290 00:16:04,160 --> 00:16:09,360 Speaker 5: part of SPV vehicles. They do not they want to 291 00:16:09,520 --> 00:16:17,720 Speaker 5: know their shareholders. 292 00:16:18,400 --> 00:16:22,760 Speaker 2: So something like XOVR owns the SpaceX SPV. So somewhere 293 00:16:22,760 --> 00:16:25,600 Speaker 2: along the lines, somebody took some of the shares of 294 00:16:25,600 --> 00:16:29,480 Speaker 2: SpaceX that were private and put them into this other vehicle. 295 00:16:29,800 --> 00:16:33,160 Speaker 2: The ETF then buys that on some kind of an exchange. 296 00:16:33,760 --> 00:16:36,720 Speaker 2: You guys go out and you're like almost an actual 297 00:16:36,840 --> 00:16:40,040 Speaker 2: VC investor where you're part of the rounds, so you're 298 00:16:40,400 --> 00:16:45,560 Speaker 2: skipping the SPV. You're direct And just give me a 299 00:16:45,640 --> 00:16:49,840 Speaker 2: little bit of a macro. Look here, if SpaceX has 300 00:16:50,080 --> 00:16:54,040 Speaker 2: x amount of shares out there held by private people 301 00:16:54,200 --> 00:16:57,400 Speaker 2: or help privately, what percentage of them are in SPVs, like, 302 00:16:57,480 --> 00:17:00,720 Speaker 2: is the SPV market big or small? And should you 303 00:17:00,760 --> 00:17:02,760 Speaker 2: avoid it at all costs or is it sometimes the 304 00:17:02,800 --> 00:17:03,600 Speaker 2: only way to do it? 305 00:17:04,840 --> 00:17:07,800 Speaker 5: Can I just before we answer that question, and I 306 00:17:07,800 --> 00:17:10,600 Speaker 5: think you'll be interested in this, Eric, from the ETF 307 00:17:10,640 --> 00:17:14,719 Speaker 5: point of view, we have tried, because we do have 308 00:17:14,840 --> 00:17:20,639 Speaker 5: direct contact with these companies. We have encouraged, you know, 309 00:17:20,720 --> 00:17:26,280 Speaker 5: especially our highest conviction names to become a part of 310 00:17:26,320 --> 00:17:31,480 Speaker 5: our ETFs, and we have close relationships with these companies 311 00:17:32,600 --> 00:17:36,520 Speaker 5: and they have they have refused us, and it is 312 00:17:36,600 --> 00:17:42,600 Speaker 5: why you probably see Fidelity owning private companies in its 313 00:17:42,760 --> 00:17:47,199 Speaker 5: mutual funds, but not ETFs. So I just wanted to 314 00:17:47,240 --> 00:17:50,000 Speaker 5: make that clear in terms of the size of the 315 00:17:50,160 --> 00:17:54,120 Speaker 5: SPV market, it's burgeoning and it's clandestine, I would say, 316 00:17:54,800 --> 00:17:58,239 Speaker 5: to some extent, but maybe Brett or Charlie you have 317 00:17:58,800 --> 00:18:01,520 Speaker 5: a better answer than that. It's smile in the scheme 318 00:18:01,560 --> 00:18:02,040 Speaker 5: of things. 319 00:18:02,359 --> 00:18:06,600 Speaker 6: We have actually seen cases of the companies themselves canceling 320 00:18:06,960 --> 00:18:09,480 Speaker 6: shareholdings two SPVs. So that's one other thing is that 321 00:18:09,520 --> 00:18:12,440 Speaker 6: it's a rocky boat because of things like that. 322 00:18:12,560 --> 00:18:15,080 Speaker 1: They've not there's various aspects they've not liked about it. 323 00:18:15,119 --> 00:18:18,280 Speaker 6: There's some other SPVs that we've come across again, as 324 00:18:18,320 --> 00:18:20,320 Speaker 6: Kathy says, while avoiding them because we're not doing them, 325 00:18:20,359 --> 00:18:23,720 Speaker 6: but that we've heard of where actually the SPV doesn't 326 00:18:23,720 --> 00:18:26,359 Speaker 6: even own the underlying asset and there so there is 327 00:18:26,400 --> 00:18:28,280 Speaker 6: a bit of a wild west. Sometimes not in all 328 00:18:28,280 --> 00:18:30,520 Speaker 6: cases by any means, but that there has been there 329 00:18:30,560 --> 00:18:33,399 Speaker 6: are some examples. I don't think anyone knows exactly what 330 00:18:33,440 --> 00:18:36,199 Speaker 6: proportion of SpaceX is in SPVs, but it's you know, 331 00:18:36,800 --> 00:18:38,920 Speaker 6: as the company grows and all of these large late 332 00:18:38,920 --> 00:18:41,639 Speaker 6: stage private companies, there has been a significant amount of 333 00:18:42,000 --> 00:18:46,119 Speaker 6: SPV activity by and large across the space and but 334 00:18:46,280 --> 00:18:50,520 Speaker 6: companies have been shutting down on making that possible around 335 00:18:50,680 --> 00:18:53,240 Speaker 6: in their cap tables. In fact, many times there are 336 00:18:53,280 --> 00:18:56,639 Speaker 6: specific reps and warranties against that in late stage private deals. 337 00:18:56,640 --> 00:18:58,480 Speaker 6: So that that's another thing, is it's a there's a 338 00:18:58,480 --> 00:19:00,160 Speaker 6: bit of a race to the bottom aspect to it. 339 00:19:00,440 --> 00:19:06,600 Speaker 5: Many times the companies do not know how many layers 340 00:19:06,280 --> 00:19:11,840 Speaker 5: of SPVs there are. Uh, and I think they're they're 341 00:19:11,840 --> 00:19:15,320 Speaker 5: onto this now, so they're clamping down more and more 342 00:19:15,760 --> 00:19:16,800 Speaker 5: on this activity. 343 00:19:17,960 --> 00:19:23,119 Speaker 3: Okay, Charlie, I'm guessing that you get the job of 344 00:19:23,200 --> 00:19:27,439 Speaker 3: approaching and flirting and saying, hey, private company, you're really 345 00:19:27,560 --> 00:19:30,160 Speaker 3: cute and you know we've got a bag of money 346 00:19:30,160 --> 00:19:33,000 Speaker 3: over here. Can you tell me how that pitch actually 347 00:19:33,000 --> 00:19:36,360 Speaker 3: goes down? Clearly, there's a lot of legwork that you've 348 00:19:36,400 --> 00:19:39,280 Speaker 3: all have established through years of doing the research, But 349 00:19:39,680 --> 00:19:41,439 Speaker 3: when it actually comes down to like how do we 350 00:19:41,640 --> 00:19:43,960 Speaker 3: how do we get in on the series X y Z, 351 00:19:44,840 --> 00:19:47,240 Speaker 3: what's the pitch actually look like? Coming from from you? 352 00:19:48,480 --> 00:19:51,400 Speaker 6: Absolutely, you're reminding me of a quote I once heard, 353 00:19:51,440 --> 00:19:54,040 Speaker 6: I can't remember from whom it was, saying that the 354 00:19:54,040 --> 00:19:56,120 Speaker 6: best training for being an entrepreneur was to have dated 355 00:19:56,160 --> 00:19:59,360 Speaker 6: for several years before getting married. So maybe maybe there's 356 00:19:59,400 --> 00:20:03,040 Speaker 6: a bit of that in this case. Yes, So I 357 00:20:03,080 --> 00:20:05,760 Speaker 6: think the first thing is this picks up on an 358 00:20:05,760 --> 00:20:08,199 Speaker 6: earlier question that I didn't quite get to answering. But 359 00:20:09,200 --> 00:20:13,520 Speaker 6: one is, as Kathy's mentioned, we are absolutely research oriented, 360 00:20:13,560 --> 00:20:16,040 Speaker 6: and so we know ahead of time we're pre studying 361 00:20:16,080 --> 00:20:19,720 Speaker 6: these companies, and so we have a long research wish list, 362 00:20:19,760 --> 00:20:22,080 Speaker 6: which gets narrowed down into a short list, which gets 363 00:20:22,160 --> 00:20:25,960 Speaker 6: narrowed down into diligence lists. So because by and large 364 00:20:26,000 --> 00:20:28,760 Speaker 6: we are not going I mean, in some cases we 365 00:20:28,800 --> 00:20:30,640 Speaker 6: have actually done companies that are sort of in their 366 00:20:30,680 --> 00:20:32,640 Speaker 6: process of coming out of stealth. In fact, we did 367 00:20:32,640 --> 00:20:36,840 Speaker 6: the first external round for Xai because we're particularly close 368 00:20:36,880 --> 00:20:38,440 Speaker 6: to that group for instance, and you know, there have 369 00:20:38,560 --> 00:20:41,679 Speaker 6: been other examples, but typically we're going to companies that 370 00:20:41,760 --> 00:20:44,040 Speaker 6: have got a bit further along, they have a bit 371 00:20:44,080 --> 00:20:48,159 Speaker 6: of traction. We know that the company exists, so you know, 372 00:20:48,440 --> 00:20:50,840 Speaker 6: usually we're investing post series A, sometimes that Series A, 373 00:20:50,880 --> 00:20:55,159 Speaker 6: but typically BCD plus and pre IPO, et cetera. So 374 00:20:55,200 --> 00:20:57,280 Speaker 6: that's the first thing to note. So we have enough 375 00:20:58,320 --> 00:21:00,520 Speaker 6: grist for the mill of researchers where and we have 376 00:21:00,600 --> 00:21:03,000 Speaker 6: something we can study. Typically we have some level of 377 00:21:03,040 --> 00:21:06,080 Speaker 6: traction metrics, we can begin to look at the the 378 00:21:06,160 --> 00:21:09,080 Speaker 6: growth and the traction and things like this that matter, 379 00:21:09,200 --> 00:21:11,800 Speaker 6: and and and very often we're also looking at talent 380 00:21:11,920 --> 00:21:14,280 Speaker 6: and talent flows in our app that's very a big, 381 00:21:14,320 --> 00:21:16,199 Speaker 6: big factor for it, as as it is on the 382 00:21:16,320 --> 00:21:18,080 Speaker 6: on the public side or a big market for us. 383 00:21:18,960 --> 00:21:21,840 Speaker 6: So so so that's the first thing to know. The 384 00:21:21,880 --> 00:21:25,159 Speaker 6: next thing maybe to say, is on top of the 385 00:21:25,640 --> 00:21:28,199 Speaker 6: then the research and the firm view and quite a 386 00:21:28,200 --> 00:21:31,240 Speaker 6: lot of you know, deep research based conviction or not. 387 00:21:31,960 --> 00:21:34,119 Speaker 6: We then asset in what is the best if we 388 00:21:34,119 --> 00:21:36,000 Speaker 6: want to have a conversation with this company, So we've 389 00:21:36,040 --> 00:21:38,199 Speaker 6: prediscerned out quite a lot of companies. But if we 390 00:21:38,200 --> 00:21:40,320 Speaker 6: want to then have a conversation to try and understand 391 00:21:40,600 --> 00:21:43,560 Speaker 6: support what we believe or refute it, we will then 392 00:21:43,600 --> 00:21:45,679 Speaker 6: reach out to the company. Now, either we'll go direct. 393 00:21:46,000 --> 00:21:50,960 Speaker 6: We often have good founder and leadership relationships. Increasingly so 394 00:21:51,200 --> 00:21:54,159 Speaker 6: we're also going via co investors. And this kind of 395 00:21:54,160 --> 00:21:57,000 Speaker 6: comes to your question about why would co investors want 396 00:21:57,080 --> 00:21:59,440 Speaker 6: us in. I think there's a really important point here. 397 00:21:59,480 --> 00:22:01,879 Speaker 6: We we've thought a lot about this because we're not 398 00:22:02,000 --> 00:22:04,640 Speaker 6: leading rounds and taking board seats, which is often how 399 00:22:04,800 --> 00:22:08,840 Speaker 6: vcs add value or occasionally destroy value. 400 00:22:08,880 --> 00:22:12,600 Speaker 1: We have Yeah, we. 401 00:22:14,200 --> 00:22:17,600 Speaker 6: Definitely have decided well, as a predominantly passive investor, we 402 00:22:17,640 --> 00:22:19,080 Speaker 6: want to be supportive in other ways. 403 00:22:19,119 --> 00:22:19,359 Speaker 1: Now. 404 00:22:19,640 --> 00:22:21,680 Speaker 6: The other ways can be follow on funding, for sure, 405 00:22:21,720 --> 00:22:23,640 Speaker 6: and you know whether we're doing that ourselves or also 406 00:22:23,720 --> 00:22:26,320 Speaker 6: helping companies get follow on funding. So there's lots of 407 00:22:26,400 --> 00:22:29,479 Speaker 6: examples where we maintain a rich, broad and deep network 408 00:22:29,520 --> 00:22:31,439 Speaker 6: of follow and investors so we can call on for 409 00:22:31,560 --> 00:22:33,320 Speaker 6: our companies when they need to raise again. So that's 410 00:22:33,440 --> 00:22:35,240 Speaker 6: one kind of obvious one, but a lot of people do, 411 00:22:35,320 --> 00:22:37,960 Speaker 6: but we hope that's becoming a superpower or is a 412 00:22:37,960 --> 00:22:42,040 Speaker 6: superpower of it, and our own check sizes are going 413 00:22:42,119 --> 00:22:44,200 Speaker 6: up through time as the fund grows. So as you said, 414 00:22:44,240 --> 00:22:46,240 Speaker 6: at the start, we're around five hundred million a UM, 415 00:22:46,280 --> 00:22:48,600 Speaker 6: but already that's out of date because the fund's growing 416 00:22:48,600 --> 00:22:50,639 Speaker 6: so fast. We're now five twenty one as of today, 417 00:22:51,000 --> 00:22:54,159 Speaker 6: and actually we've been adding. Flows are around ten to 418 00:22:54,200 --> 00:22:57,800 Speaker 6: twenty million a week at the moment, so the fund 419 00:22:57,840 --> 00:23:01,600 Speaker 6: is growing fast and we're looking at soon unlocking lots 420 00:23:01,600 --> 00:23:04,119 Speaker 6: of the folks like the wirehouses and others who have 421 00:23:04,240 --> 00:23:09,080 Speaker 6: aarm and length of time track record thresholds, so a 422 00:23:09,080 --> 00:23:11,480 Speaker 6: lot of those are kicking in. So we add value 423 00:23:11,520 --> 00:23:14,520 Speaker 6: also ourselves through doing pro rut and super pro utter rounds, 424 00:23:14,520 --> 00:23:16,880 Speaker 6: and typically if we have conviction, we build into these 425 00:23:16,920 --> 00:23:19,320 Speaker 6: companies and obviously found doesn't leaders love that because it's 426 00:23:19,320 --> 00:23:22,280 Speaker 6: a good signal, but it's also more capital. We also 427 00:23:22,320 --> 00:23:26,080 Speaker 6: help in other ways. So other ones I can sort 428 00:23:26,080 --> 00:23:29,080 Speaker 6: of quickly highlight are things like enterprise intros, where we 429 00:23:29,119 --> 00:23:32,040 Speaker 6: have a fair superpower because we have obviously a lot 430 00:23:32,640 --> 00:23:35,920 Speaker 6: a network obviously from over ten years of public investing, 431 00:23:36,320 --> 00:23:38,199 Speaker 6: So there are many cases where we've been able to 432 00:23:38,240 --> 00:23:41,879 Speaker 6: bring about an introduction between a twenty five person Series 433 00:23:41,920 --> 00:23:44,800 Speaker 6: A startup and the C suite of one hundred billion 434 00:23:44,800 --> 00:23:48,840 Speaker 6: plus dollar enterprise company. And obviously that's you know, pretty 435 00:23:48,840 --> 00:23:51,639 Speaker 6: asymmetric and can be very useful, and in many cases 436 00:23:51,640 --> 00:23:55,399 Speaker 6: that's led to revenue making collaborations and deal relationships and 437 00:23:55,440 --> 00:24:02,320 Speaker 6: other things. So follower investors, enterprise introductions, other introductions, and 438 00:24:02,359 --> 00:24:04,160 Speaker 6: then it also comes back to where it begins, which 439 00:24:04,200 --> 00:24:06,800 Speaker 6: is with research and the open research ecosystem. So we 440 00:24:06,920 --> 00:24:10,240 Speaker 6: love to tell companies to help companies tell their story 441 00:24:11,320 --> 00:24:15,480 Speaker 6: and help with them think what is the best means 442 00:24:15,800 --> 00:24:18,720 Speaker 6: of both make clarifying the story and then also telling it. 443 00:24:18,800 --> 00:24:20,960 Speaker 6: So we've done that in a very tactical sense with 444 00:24:21,000 --> 00:24:24,080 Speaker 6: webinars and blogs and things we focus a lot. And 445 00:24:24,119 --> 00:24:25,639 Speaker 6: maybe it's a good time I can hand the MC 446 00:24:25,680 --> 00:24:28,720 Speaker 6: back to Brett on market sizing, both top down and 447 00:24:28,760 --> 00:24:32,160 Speaker 6: bottom up research. And one thing that we've consistently seen 448 00:24:32,760 --> 00:24:35,760 Speaker 6: when we do go for these introductions, often via these 449 00:24:35,760 --> 00:24:39,240 Speaker 6: top desk rvcs, we tend to co invest with. Honestly, 450 00:24:39,320 --> 00:24:41,600 Speaker 6: very often we see that like a Series A or 451 00:24:41,680 --> 00:24:46,320 Speaker 6: B company or whatever has used our market sizing or 452 00:24:46,359 --> 00:24:49,760 Speaker 6: other slides from our research in their own decks, so 453 00:24:49,760 --> 00:24:51,560 Speaker 6: we're getting to see those sort of played back to 454 00:24:51,640 --> 00:24:54,879 Speaker 6: us as it were. So anyway, maybe that's a good 455 00:24:54,920 --> 00:24:57,000 Speaker 6: time to hand back to Brett on the research driven 456 00:24:57,119 --> 00:24:58,840 Speaker 6: side and where we get there in the first place. 457 00:24:58,840 --> 00:25:02,040 Speaker 6: But to summarize, we add value in various different ways. 458 00:25:02,040 --> 00:25:02,240 Speaker 1: Sorry. 459 00:25:02,280 --> 00:25:04,000 Speaker 6: The final thing I'll say before handing the mic is 460 00:25:04,680 --> 00:25:10,800 Speaker 6: increasingly we're also looking at magnifying and benefiting companies from 461 00:25:10,920 --> 00:25:14,439 Speaker 6: our large You can think about this fun directionally, we 462 00:25:14,560 --> 00:25:16,520 Speaker 6: hope and believe. I mean, it's already got many, many 463 00:25:16,520 --> 00:25:19,320 Speaker 6: tens of thousands of small LPs essentially through the apps, 464 00:25:19,359 --> 00:25:21,840 Speaker 6: in some cases some with tiny account sizes like five 465 00:25:21,920 --> 00:25:23,960 Speaker 6: hundred dollars like ath you said, some with five million, 466 00:25:24,000 --> 00:25:26,639 Speaker 6: and you know, increasingly we're seeing more institutional and RIA 467 00:25:26,720 --> 00:25:30,280 Speaker 6: is coming as well. But directionally, maybe we have a 468 00:25:30,320 --> 00:25:34,840 Speaker 6: million plus LPs essentially, and that's an audience of allies 469 00:25:35,320 --> 00:25:37,920 Speaker 6: akin to what Elon, for instance, is seen with Tesla, 470 00:25:37,920 --> 00:25:40,119 Speaker 6: where you have people who own a model hy and 471 00:25:40,160 --> 00:25:42,280 Speaker 6: they also have TEESL stock, and you know, you get 472 00:25:42,280 --> 00:25:46,000 Speaker 6: this feedback loop between the product and the ally and 473 00:25:46,040 --> 00:25:48,359 Speaker 6: the stock. And so I think we're beginning to already 474 00:25:48,359 --> 00:25:50,040 Speaker 6: see the first green shoots of that kind of thing, 475 00:25:50,080 --> 00:25:52,879 Speaker 6: and we're beginning to industrialize that with things like talent 476 00:25:52,960 --> 00:25:55,879 Speaker 6: marketplaces where we can repost the jobs to our pretty 477 00:25:55,960 --> 00:25:58,400 Speaker 6: large audience that the firm has in Kathias. 478 00:26:00,440 --> 00:26:03,440 Speaker 4: And just on the research side, one thing, you covered 479 00:26:03,480 --> 00:26:06,160 Speaker 4: it very well, Charlie, in terms of the whole suite 480 00:26:06,200 --> 00:26:08,720 Speaker 4: of things that we offer. And I'll circle back to 481 00:26:08,760 --> 00:26:11,600 Speaker 4: the SPV point. If somebody, you know, we have the 482 00:26:11,640 --> 00:26:15,399 Speaker 4: top down research and the analysts do really good underwriting 483 00:26:15,480 --> 00:26:18,680 Speaker 4: of the underlying asset. When we started ARC, I expected 484 00:26:18,680 --> 00:26:20,480 Speaker 4: that the work we would do would be very similar 485 00:26:20,520 --> 00:26:24,560 Speaker 4: to venture capitalists. But as it turns out, many venture 486 00:26:24,600 --> 00:26:28,359 Speaker 4: capitalists never open a spreadsheet, whereas our analysts, you know, 487 00:26:28,400 --> 00:26:31,280 Speaker 4: spend all of their time forecasting and modeling. And if 488 00:26:31,280 --> 00:26:35,000 Speaker 4: somebody invests in an SPV, that's a big blinking signal 489 00:26:35,880 --> 00:26:39,680 Speaker 4: that they actually haven't had access to the underlying information 490 00:26:39,720 --> 00:26:42,199 Speaker 4: of what's going on in the company to typically the 491 00:26:42,240 --> 00:26:44,360 Speaker 4: SPV sponsor of saying, hey, this is what we hear 492 00:26:44,440 --> 00:26:46,879 Speaker 4: is happening, and they're receiving it like a game of telephone. 493 00:26:46,920 --> 00:26:50,679 Speaker 4: So there's no real effective way to do actually an 494 00:26:50,760 --> 00:26:54,479 Speaker 4: underwrite of a position. And you know from I remember 495 00:26:54,520 --> 00:26:58,080 Speaker 4: when Uber had its late stage private round and it 496 00:26:58,160 --> 00:27:02,879 Speaker 4: basically priced at saturation, you know, it pr you know, 497 00:27:02,960 --> 00:27:05,320 Speaker 4: it was given out to Morgan Stanley Advisors who didn't 498 00:27:05,359 --> 00:27:08,720 Speaker 4: have information rights and iPod and I think it was 499 00:27:08,800 --> 00:27:11,919 Speaker 4: dead money for three years on that round. And so 500 00:27:13,040 --> 00:27:16,320 Speaker 4: you know, we pride ourselves on actually, you know, holding 501 00:27:16,320 --> 00:27:19,440 Speaker 4: ourselves to an underwriting standard that delivers what we think 502 00:27:19,560 --> 00:27:23,240 Speaker 4: is a great return for end clients and so and 503 00:27:23,480 --> 00:27:26,320 Speaker 4: that can be helpful for companies as well, to say, listen, 504 00:27:26,560 --> 00:27:28,879 Speaker 4: we're we're also the person that needs to hold your 505 00:27:28,920 --> 00:27:31,760 Speaker 4: hand into the public markets, and this is how we're 506 00:27:31,760 --> 00:27:34,680 Speaker 4: going to underwrite the position. So you know you should 507 00:27:34,760 --> 00:27:37,240 Speaker 4: not you can do. A company can do damage to 508 00:27:37,320 --> 00:27:40,359 Speaker 4: itself by raising it too high of evaluation at the 509 00:27:40,400 --> 00:27:43,119 Speaker 4: wrong time, because it then doesn't set them up to 510 00:27:43,320 --> 00:27:46,000 Speaker 4: kind of like bring more people onto the boat over time. 511 00:27:46,040 --> 00:27:47,840 Speaker 4: And so that guidance can be important as well. 512 00:27:56,240 --> 00:28:00,439 Speaker 2: So let me ask about the private nature this. So 513 00:28:01,119 --> 00:28:03,240 Speaker 2: this fund is up I think one hundred and fifty 514 00:28:03,240 --> 00:28:05,639 Speaker 2: percent since it came out. Obviously that's based on a 515 00:28:05,760 --> 00:28:09,520 Speaker 2: nav that you give us. You calculate the NAV You 516 00:28:09,520 --> 00:28:11,720 Speaker 2: obviously need the pricing of the holdings to do that. 517 00:28:12,119 --> 00:28:14,440 Speaker 2: How do you price this stuff because like there was 518 00:28:14,480 --> 00:28:17,399 Speaker 2: some controversy on XOVR, which is the ETF that holds it, 519 00:28:18,119 --> 00:28:21,720 Speaker 2: which is he never marked to market the SPV that 520 00:28:21,880 --> 00:28:25,359 Speaker 2: held SpaceX, but everybody knows it's worth like four x 521 00:28:25,400 --> 00:28:27,480 Speaker 2: what he bought it for, but it's still marked at 522 00:28:27,520 --> 00:28:29,160 Speaker 2: the old price, which is why I think he had 523 00:28:29,200 --> 00:28:31,600 Speaker 2: some people coming in almost like buying something in a discount. 524 00:28:32,119 --> 00:28:35,679 Speaker 2: How do you price the privates as time goes on 525 00:28:36,560 --> 00:28:39,520 Speaker 2: and can you make a profit without them going public? 526 00:28:41,440 --> 00:28:47,760 Speaker 5: I'll start and hand it off. So as I mentioned before, 527 00:28:47,960 --> 00:28:54,120 Speaker 5: we have a pricing committee and it is monitoring constantly 528 00:28:54,200 --> 00:28:58,760 Speaker 5: every day secondary markets to see what pricing is is 529 00:28:58,920 --> 00:29:02,320 Speaker 5: like on the secondary markets, often selling at a discount 530 00:29:02,320 --> 00:29:06,080 Speaker 5: if it's an employee stock and so forth. As I 531 00:29:06,160 --> 00:29:11,160 Speaker 5: mentioned other companies we respect, like the Fidelities and the 532 00:29:11,200 --> 00:29:14,720 Speaker 5: t Rows who have private arms, and our marketing we 533 00:29:14,800 --> 00:29:18,160 Speaker 5: can see those on a quarterly basis. We also are 534 00:29:18,160 --> 00:29:22,360 Speaker 5: looking at public markets and you know, if the market's 535 00:29:22,400 --> 00:29:26,160 Speaker 5: going through a severe down round, we're probably going to 536 00:29:26,240 --> 00:29:34,640 Speaker 5: be marking down many of our holdings because other competitors 537 00:29:34,960 --> 00:29:40,760 Speaker 5: or counterparts are are being priced down in the public markets, 538 00:29:41,280 --> 00:29:46,840 Speaker 5: so I think. And of course our audit committee and 539 00:29:46,920 --> 00:29:50,640 Speaker 5: our trust board, they've been with us from day one 540 00:29:50,720 --> 00:29:54,760 Speaker 5: with the ETFs. They they probably focus on this question 541 00:29:54,840 --> 00:29:57,440 Speaker 5: more than any other when it comes to this fund. 542 00:29:57,520 --> 00:30:00,719 Speaker 5: It is such an important question because we want to 543 00:30:00,760 --> 00:30:05,600 Speaker 5: get nav right. When people are redeeming at the end 544 00:30:05,640 --> 00:30:08,760 Speaker 5: of the quarter, we want to make sure that we're 545 00:30:08,760 --> 00:30:12,000 Speaker 5: as close to the mark as we possibly can be, 546 00:30:12,120 --> 00:30:15,240 Speaker 5: and we think we are because we don't want to 547 00:30:15,280 --> 00:30:18,960 Speaker 5: be either giving it away or you know, or or 548 00:30:19,400 --> 00:30:23,960 Speaker 5: selling it or don't want the person who's redeeming to receive, 549 00:30:24,560 --> 00:30:27,840 Speaker 5: you know, the equivalent of a discount when there shouldn't 550 00:30:27,880 --> 00:30:32,040 Speaker 5: be one. So we are maniacal. We have a committee 551 00:30:32,120 --> 00:30:35,920 Speaker 5: away from this team. This team is not involved in 552 00:30:36,040 --> 00:30:42,120 Speaker 5: pricing at all. It's completely separate and distinct and highly 553 00:30:42,760 --> 00:30:46,320 Speaker 5: disciplined and highly audited. I would say as well. 554 00:30:47,000 --> 00:30:51,440 Speaker 4: Yeah, And mechanically, how it works is a company raises 555 00:30:51,480 --> 00:30:54,560 Speaker 4: a primary round, Well, that's raising x amount of dollars 556 00:30:54,600 --> 00:30:57,160 Speaker 4: at this valuation. That's a strong signal that that's the 557 00:30:57,280 --> 00:31:01,520 Speaker 4: valuation and kind of so that sets a mark and 558 00:31:01,560 --> 00:31:04,880 Speaker 4: then over time as the company does not come back, 559 00:31:05,120 --> 00:31:09,800 Speaker 4: then it calibrates over to secondary market activity or calibration 560 00:31:10,000 --> 00:31:14,960 Speaker 4: with public companies whose price to sales ratio is or 561 00:31:15,200 --> 00:31:19,960 Speaker 4: is it's Mark two that are drifting or pricing down 562 00:31:20,680 --> 00:31:24,160 Speaker 4: and so, and you know that's essentially the full suite. 563 00:31:24,240 --> 00:31:26,800 Speaker 4: But if a company says, hey, we're raising around, even 564 00:31:26,840 --> 00:31:28,800 Speaker 4: if it appears in pitchbook, we're raising around at this 565 00:31:28,920 --> 00:31:32,800 Speaker 4: valuation this amount, you know, we need to get confirmation 566 00:31:32,920 --> 00:31:35,160 Speaker 4: that actually it's really going to go through in the 567 00:31:35,160 --> 00:31:37,320 Speaker 4: way that it's going to. And so then from the 568 00:31:37,320 --> 00:31:40,320 Speaker 4: research and investing side, we also provide information to the 569 00:31:40,320 --> 00:31:42,840 Speaker 4: pricing committee. It's like, you know, they just came to 570 00:31:42,920 --> 00:31:45,000 Speaker 4: us and this is what they're raising, and this is 571 00:31:45,040 --> 00:31:45,680 Speaker 4: what they said. 572 00:31:45,800 --> 00:31:46,520 Speaker 1: Is kind of like. 573 00:31:47,040 --> 00:31:49,720 Speaker 4: How far they are through the raise, and and then 574 00:31:49,760 --> 00:31:52,960 Speaker 4: that's fed into that team, but it is totally separate 575 00:31:53,000 --> 00:31:55,680 Speaker 4: from the investing team. And we use you know, a 576 00:31:55,680 --> 00:31:58,080 Speaker 4: Big four auditor to audit the fund, as well as 577 00:31:58,160 --> 00:32:04,040 Speaker 4: third party private valuation experts that are also from one 578 00:32:04,080 --> 00:32:06,840 Speaker 4: of those big firms. When there are tricky cases where 579 00:32:06,840 --> 00:32:09,080 Speaker 4: we have to put together are they the pricing committee 580 00:32:09,080 --> 00:32:11,200 Speaker 4: puts together a full document and this is how we're 581 00:32:11,200 --> 00:32:14,240 Speaker 4: doing it, and how we're pricing it based on this information. 582 00:32:14,120 --> 00:32:19,920 Speaker 5: Eric, can I give you one example of how involved 583 00:32:19,920 --> 00:32:24,600 Speaker 5: this is. We invested in a private company when I 584 00:32:24,600 --> 00:32:28,280 Speaker 5: believe the valuation was two point seven billion dollars sometime 585 00:32:28,320 --> 00:32:35,120 Speaker 5: in twenty four. It in twenty five was basically said 586 00:32:35,120 --> 00:32:37,800 Speaker 5: we're going to do another round at thirty nine forty billion, 587 00:32:38,440 --> 00:32:43,240 Speaker 5: and our research did not support that valuation. That was 588 00:32:43,280 --> 00:32:48,600 Speaker 5: the first thing, and so we actually went to the 589 00:32:49,120 --> 00:32:51,760 Speaker 5: firm and said, look, if you can get this done 590 00:32:51,800 --> 00:32:55,040 Speaker 5: at that price, we'll sell you some because of course 591 00:32:55,040 --> 00:33:00,280 Speaker 5: this would have taken that particular equity to you know, 592 00:33:00,480 --> 00:33:04,960 Speaker 5: close to twenty percent of the portfolio, and so we 593 00:33:04,960 --> 00:33:08,200 Speaker 5: were again this is where research comes in. It turns 594 00:33:08,240 --> 00:33:12,360 Speaker 5: out they were not able to do all of the deal. 595 00:33:12,440 --> 00:33:14,560 Speaker 5: They did roughly half of it. I think I've got 596 00:33:14,560 --> 00:33:18,960 Speaker 5: that right, bred or Charlie. And we never priced it 597 00:33:19,040 --> 00:33:23,600 Speaker 5: in our portfolio at that forty billion dollar valuation. I 598 00:33:23,640 --> 00:33:26,920 Speaker 5: think we went to twenty billion because they were able 599 00:33:27,000 --> 00:33:32,920 Speaker 5: to get half of the offering placed. 600 00:33:33,640 --> 00:33:35,120 Speaker 3: One of the things I just wanted to bring it 601 00:33:35,120 --> 00:33:37,800 Speaker 3: back to in twenty twenty six is, you know you've 602 00:33:37,920 --> 00:33:40,680 Speaker 3: had the exposure to these companies for a long time, 603 00:33:40,720 --> 00:33:43,160 Speaker 3: but the goal for some of these companies is eventually 604 00:33:43,200 --> 00:33:45,360 Speaker 3: to go public. And if I think through some of 605 00:33:45,440 --> 00:33:47,680 Speaker 3: these names that you all have in the portfolio, SpaceX, 606 00:33:47,720 --> 00:33:52,360 Speaker 3: open a, AI, and Thropic, these are potential like huge 607 00:33:52,720 --> 00:33:57,400 Speaker 3: IPOs A what experience have you had with any company 608 00:33:57,400 --> 00:34:01,360 Speaker 3: I appealing from this fund and be what impact is 609 00:34:01,360 --> 00:34:04,720 Speaker 3: that going to have for your payoff? With the payoff 610 00:34:04,840 --> 00:34:07,400 Speaker 3: look like for you and investors, going. 611 00:34:07,520 --> 00:34:12,160 Speaker 5: Public is obviously a key liquidity event in a private 612 00:34:12,360 --> 00:34:16,560 Speaker 5: company's life. What's nice about our funds is they are 613 00:34:16,680 --> 00:34:21,240 Speaker 5: evergreen if we want to continue holding, unlike venture where 614 00:34:21,280 --> 00:34:25,920 Speaker 5: they basically start selling out. If we think this company 615 00:34:25,920 --> 00:34:30,640 Speaker 5: has miles to go, and with SpaceX and data centers 616 00:34:30,680 --> 00:34:35,120 Speaker 5: in space, we've done some early estimates that would suggest 617 00:34:35,360 --> 00:34:39,759 Speaker 5: that would add handsomely to its valuation, we can continue 618 00:34:39,760 --> 00:34:43,880 Speaker 5: to hold it and we will. So we don't really 619 00:34:43,960 --> 00:34:48,560 Speaker 5: think of okay, if it goes public, you know, what 620 00:34:48,600 --> 00:34:50,759 Speaker 5: do you do? Then you're on to the next thing. 621 00:34:50,800 --> 00:34:54,600 Speaker 5: We have a wish list of private companies, and of 622 00:34:54,680 --> 00:34:58,360 Speaker 5: course we'd probably take profits as we normally do in 623 00:34:58,400 --> 00:35:03,480 Speaker 5: the public markets when there is a big valuation upgrade, 624 00:35:04,800 --> 00:35:07,200 Speaker 5: just sensible to take profits, but we don't have to 625 00:35:07,280 --> 00:35:11,920 Speaker 5: sell out. And in terms of companies going public, I 626 00:35:12,040 --> 00:35:16,080 Speaker 5: know that, well, Kodiak has just gone public. That's an 627 00:35:16,120 --> 00:35:20,680 Speaker 5: autonomous trucking company and it is still in the fund 628 00:35:20,880 --> 00:35:24,960 Speaker 5: and we've started adding it to our ETFs. So you know, 629 00:35:25,000 --> 00:35:29,400 Speaker 5: our ETFs are you know, great outlets for some of 630 00:35:29,440 --> 00:35:33,799 Speaker 5: these companies going public because they're all about innovation. That's 631 00:35:33,800 --> 00:35:34,439 Speaker 5: all we do. 632 00:35:35,400 --> 00:35:37,480 Speaker 6: Yeah, Kathy, I think Kathy said it well, So it's 633 00:35:37,520 --> 00:35:40,360 Speaker 6: CoDIAK Is and that was Q three ish last year. 634 00:35:41,080 --> 00:35:43,400 Speaker 6: We've had other so we've had some M and A. 635 00:35:43,600 --> 00:35:46,000 Speaker 6: So we've had things like Mosaic mL which was around 636 00:35:46,000 --> 00:35:48,680 Speaker 6: a five x return into data grigstock, which has since 637 00:35:48,719 --> 00:35:52,640 Speaker 6: accumulated multiple significantly, and we're excited about that company. But 638 00:35:52,680 --> 00:35:55,440 Speaker 6: I think that makes a good example of the illustrates 639 00:35:55,480 --> 00:35:58,239 Speaker 6: what Kathy said, which is it's all about conviction, and 640 00:35:58,280 --> 00:36:01,040 Speaker 6: if we have conviction at the price and continue to 641 00:36:01,040 --> 00:36:03,320 Speaker 6: win the leadership in the company prospects at the point 642 00:36:03,360 --> 00:36:06,080 Speaker 6: of going public, then we could hold or continue to 643 00:36:06,080 --> 00:36:09,400 Speaker 6: build into whether it's from this fund or the ETFs. 644 00:36:10,239 --> 00:36:12,640 Speaker 6: And of course there are many many examples, including within 645 00:36:12,680 --> 00:36:15,120 Speaker 6: the mag seven where it would have been exactly the 646 00:36:15,160 --> 00:36:17,680 Speaker 6: wrong thing to do to sell the moment your lockup 647 00:36:17,719 --> 00:36:20,160 Speaker 6: came off. Yet many vcs were forced to do that, 648 00:36:20,600 --> 00:36:23,680 Speaker 6: even knowing that the biggest part of the jacob was 649 00:36:23,760 --> 00:36:26,040 Speaker 6: yet to come. In those cases, you know, whereas in 650 00:36:26,080 --> 00:36:28,760 Speaker 6: other cases, for sure there's been you know, the biggest 651 00:36:28,840 --> 00:36:30,960 Speaker 6: multiple has definitely occurred on the private side, it would 652 00:36:30,960 --> 00:36:32,560 Speaker 6: have been exactly the right thing to do to sell 653 00:36:32,600 --> 00:36:35,480 Speaker 6: their IPO. And of course no one knows exactly. There's 654 00:36:35,520 --> 00:36:38,000 Speaker 6: no crystal balls, but it all comes down to research 655 00:36:38,040 --> 00:36:39,560 Speaker 6: and conviction at the end of the day. But the 656 00:36:39,640 --> 00:36:42,800 Speaker 6: key thing about this fund is it gives us flexibility 657 00:36:43,400 --> 00:36:46,080 Speaker 6: to do what we believe at that point, given the conviction, 658 00:36:46,239 --> 00:36:48,040 Speaker 6: is the right thing to do. And this is actually 659 00:36:48,080 --> 00:36:49,520 Speaker 6: another point that we haven't touched on. But it also 660 00:36:49,600 --> 00:36:52,640 Speaker 6: gives us flexibility to take account of public private valuation 661 00:36:52,760 --> 00:36:56,280 Speaker 6: arbitrage that often occurs in different sectors at different times, 662 00:36:56,320 --> 00:36:59,960 Speaker 6: like recently since the fund was launched, the historic number 663 00:37:00,360 --> 00:37:03,560 Speaker 6: of negative ev biotechs which occurred on the public markets 664 00:37:03,600 --> 00:37:06,440 Speaker 6: while the private valuations stayed quite robust if a company 665 00:37:06,440 --> 00:37:08,120 Speaker 6: got flundered at all, So we were able to again 666 00:37:08,640 --> 00:37:10,640 Speaker 6: make good use of that because of the flexibility in 667 00:37:10,680 --> 00:37:11,040 Speaker 6: this fund. 668 00:37:11,840 --> 00:37:14,760 Speaker 2: So you know, again, this is fascinating to me because 669 00:37:14,840 --> 00:37:18,200 Speaker 2: unlike the fidelity funds that own a little, they are 670 00:37:18,239 --> 00:37:21,279 Speaker 2: a mutual fund, and that's not the greatest rapper right now. 671 00:37:21,320 --> 00:37:24,319 Speaker 2: People just shun that they want stuff and you can 672 00:37:24,320 --> 00:37:28,399 Speaker 2: see XOVR, which again that's a ton of money that's 673 00:37:28,440 --> 00:37:30,719 Speaker 2: three times with this fund has just because it has 674 00:37:30,760 --> 00:37:33,919 Speaker 2: a tiny dose of SpaceX SPV, even it's not even 675 00:37:33,960 --> 00:37:37,279 Speaker 2: like real SpaceX. So here's my question. I'm looking at 676 00:37:37,280 --> 00:37:39,319 Speaker 2: this fund. I open it up on a screen. Let's 677 00:37:39,320 --> 00:37:42,480 Speaker 2: say it's Yahoo or Bloomberg Terminal. Okay, first thing is 678 00:37:42,520 --> 00:37:44,920 Speaker 2: that the fee is two point seventy five. That could 679 00:37:44,960 --> 00:37:48,279 Speaker 2: scare some people, it's the five letter ticker. But then 680 00:37:48,280 --> 00:37:50,160 Speaker 2: you look at the holdings and you're like, oh my god, 681 00:37:50,200 --> 00:37:52,759 Speaker 2: this has like the all the hot companies that you 682 00:37:52,840 --> 00:37:56,359 Speaker 2: read about, Like the sexy factor is high here, and 683 00:37:56,440 --> 00:37:59,640 Speaker 2: I just feel like I just can't believe it doesn't 684 00:38:00,080 --> 00:38:03,439 Speaker 2: raise more assets given that, Like what do you think 685 00:38:03,440 --> 00:38:03,799 Speaker 2: it is? 686 00:38:03,800 --> 00:38:04,239 Speaker 1: Is it just? 687 00:38:05,080 --> 00:38:08,440 Speaker 2: Is it just that ETFs are just so everybody just 688 00:38:08,520 --> 00:38:11,279 Speaker 2: trusts them at this point. They trust the fees, they 689 00:38:11,320 --> 00:38:14,600 Speaker 2: trust the performance, and like you just can't get a 690 00:38:14,640 --> 00:38:19,320 Speaker 2: five letter ticker over into somebody's portfolio anymore? Or is 691 00:38:19,400 --> 00:38:22,000 Speaker 2: it the fee? I mean, these fees are probably so eric. 692 00:38:22,200 --> 00:38:26,480 Speaker 5: You'll remember in the early days of our active equity ETFs, 693 00:38:26,600 --> 00:38:30,120 Speaker 5: people were trying to understand us right that that now 694 00:38:30,200 --> 00:38:33,319 Speaker 5: it was an ETF structure. What is happening here is 695 00:38:33,360 --> 00:38:40,280 Speaker 5: the interval fund structure requires infrastructure build out right, and 696 00:38:40,920 --> 00:38:45,600 Speaker 5: so so far was willing to build out infrastructure. Titan 697 00:38:45,760 --> 00:38:51,760 Speaker 5: our first distributor. Now other platforms are beginning to see 698 00:38:52,000 --> 00:38:57,360 Speaker 5: the merit of this interval fund structure and our starting 699 00:38:57,880 --> 00:39:03,399 Speaker 5: are starting to vet us. We do have gatekeepers all 700 00:39:03,440 --> 00:39:07,120 Speaker 5: of the wirehouses. You know they need five hundred million 701 00:39:07,160 --> 00:39:09,919 Speaker 5: plus three years. Okay, now we have that, so we're 702 00:39:10,000 --> 00:39:13,440 Speaker 5: beginning to speak with them. So we're not on any 703 00:39:13,520 --> 00:39:21,560 Speaker 5: wirehouse platform, although advisors can can buy us if they're 704 00:39:21,640 --> 00:39:26,960 Speaker 5: working through Charles Schwab or Pershing for example, But the 705 00:39:27,000 --> 00:39:30,600 Speaker 5: wirehouses have now in terms of the fund, the fund 706 00:39:30,640 --> 00:39:34,440 Speaker 5: fee that two point seventy five percent. We've been very 707 00:39:34,480 --> 00:39:38,360 Speaker 5: deliberate about this. We charge no carry. That is why 708 00:39:38,800 --> 00:39:43,239 Speaker 5: we can have unaccredited investors. That's just the SEC's way 709 00:39:43,280 --> 00:39:47,440 Speaker 5: of looking at it. So no carry and we've done 710 00:39:47,880 --> 00:39:52,000 Speaker 5: an analysis and Charlie probably can speak in more depth 711 00:39:52,040 --> 00:39:56,040 Speaker 5: to this, but of the two point seventy five versus 712 00:39:57,120 --> 00:40:00,480 Speaker 5: what you would pay if you were in you know, 713 00:40:00,840 --> 00:40:04,320 Speaker 5: some of the best venture funds over a ten year period, 714 00:40:05,160 --> 00:40:07,839 Speaker 5: and we would be at a discount to that if 715 00:40:07,840 --> 00:40:12,040 Speaker 5: you include the fact that they charge Kerry and we 716 00:40:12,120 --> 00:40:12,400 Speaker 5: do not. 717 00:40:14,080 --> 00:40:17,800 Speaker 2: Okay, just real quick, now, I get that, and I 718 00:40:18,280 --> 00:40:20,799 Speaker 2: think in my opinion, this probably will grow over time. 719 00:40:20,840 --> 00:40:23,080 Speaker 2: It just it's almost like there's an you have to 720 00:40:23,080 --> 00:40:25,359 Speaker 2: push harder. It just seems like because the ETF kind 721 00:40:25,360 --> 00:40:28,400 Speaker 2: of sells itself to a degree. Here's my question for you. 722 00:40:28,880 --> 00:40:30,840 Speaker 2: It's interesting to me that you've gone to these companies 723 00:40:30,920 --> 00:40:34,080 Speaker 2: you have relationships with good relationships with and talked about, 724 00:40:34,080 --> 00:40:35,920 Speaker 2: hey can you put a little bit this of this 725 00:40:36,040 --> 00:40:39,480 Speaker 2: in RG or RW and they are not into it. 726 00:40:40,160 --> 00:40:42,479 Speaker 2: But I feel as though now that we've got there's 727 00:40:42,480 --> 00:40:45,160 Speaker 2: three ETFs now that have a little private and I 728 00:40:45,160 --> 00:40:47,920 Speaker 2: think Ron's is a Series E, it's not a SPV. 729 00:40:48,719 --> 00:40:51,960 Speaker 2: But as we go forward, JP Morgan, there's a lot 730 00:40:52,000 --> 00:40:55,920 Speaker 2: of firms that have relationships with private companies who realize 731 00:40:55,920 --> 00:40:59,440 Speaker 2: the potential in the ETF. Do you think that you 732 00:40:59,520 --> 00:41:02,719 Speaker 2: guys ap Morgan Blackrock are going to start to lean 733 00:41:02,880 --> 00:41:06,480 Speaker 2: on the private companies, even along with Apollo, who's interested 734 00:41:06,520 --> 00:41:09,920 Speaker 2: to get some of this democratized, and we will eventually 735 00:41:09,960 --> 00:41:12,400 Speaker 2: see some of this come up in that fifteen percent 736 00:41:12,760 --> 00:41:15,480 Speaker 2: illiquidity window for ETFs in the future. 737 00:41:16,760 --> 00:41:20,040 Speaker 5: You know, we're always advocating for our ETFs, but we 738 00:41:20,160 --> 00:41:24,960 Speaker 5: also are listening to these management teams and are a 739 00:41:25,000 --> 00:41:29,480 Speaker 5: little fearful of what the impact of you know, ETFs 740 00:41:29,520 --> 00:41:32,440 Speaker 5: that can be traded every day, all day long, what 741 00:41:32,560 --> 00:41:37,000 Speaker 5: the impact of that in various market situations will be 742 00:41:37,880 --> 00:41:44,160 Speaker 5: on them and those who hold their equities. So you know, again, 743 00:41:44,200 --> 00:41:50,680 Speaker 5: as I said, we're listening, and we've just gone once 744 00:41:50,719 --> 00:41:54,160 Speaker 5: again and said, look, we really have such high conviction 745 00:41:54,880 --> 00:41:59,279 Speaker 5: in you company X that we want to put this 746 00:41:59,440 --> 00:42:02,880 Speaker 5: into our our ETFs, which are all about innovation, and 747 00:42:02,920 --> 00:42:06,080 Speaker 5: the people investing in them are investing in nothing but innovation. 748 00:42:07,160 --> 00:42:11,040 Speaker 5: And still there's that reticence. So if they open up, 749 00:42:11,760 --> 00:42:14,960 Speaker 5: we will open up, you know, but we will not 750 00:42:15,040 --> 00:42:15,840 Speaker 5: do SPVs. 751 00:42:16,880 --> 00:42:17,080 Speaker 2: Yeah. 752 00:42:17,120 --> 00:42:19,719 Speaker 4: I think that's the part of the reason people do 753 00:42:19,880 --> 00:42:21,759 Speaker 4: SPVs is because then they don't have to ask the 754 00:42:21,760 --> 00:42:24,920 Speaker 4: company's permission to do it, which then exposes them to 755 00:42:25,000 --> 00:42:28,000 Speaker 4: some liability. They're not actually buying shares in the company. 756 00:42:28,120 --> 00:42:31,720 Speaker 4: They're buying shares in an LLC that's making a claim 757 00:42:32,040 --> 00:42:35,399 Speaker 4: that it has maybe shares in another LLC that's also 758 00:42:35,480 --> 00:42:38,160 Speaker 4: making a claim that it also maybe has shares in 759 00:42:38,200 --> 00:42:41,359 Speaker 4: another LLC which is making a claim that it has 760 00:42:41,360 --> 00:42:42,680 Speaker 4: shares in the underlying company. 761 00:42:42,719 --> 00:42:46,160 Speaker 5: And they're all charging fees on thee Yeah. 762 00:42:46,040 --> 00:42:50,160 Speaker 4: Right, and so but I think over time it is likely, 763 00:42:50,280 --> 00:42:52,760 Speaker 4: just as in mutual funds, you can buy the Fidelity 764 00:42:52,840 --> 00:42:55,840 Speaker 4: mutual fund as like a little like four percent wedge 765 00:42:55,880 --> 00:42:59,080 Speaker 4: in like zero point five percent chunks of little privates 766 00:42:59,640 --> 00:43:02,520 Speaker 4: that tfs will kind of take on some of that 767 00:43:02,560 --> 00:43:06,040 Speaker 4: private exposure. There's on the order of seven trillion dollars 768 00:43:06,120 --> 00:43:10,319 Speaker 4: in market cap in unicorns at least, maybe not mark 769 00:43:10,360 --> 00:43:14,960 Speaker 4: to market, but ostensibly out there. And I think this 770 00:43:15,120 --> 00:43:18,160 Speaker 4: cycle there is going to be you know, there was 771 00:43:18,200 --> 00:43:21,160 Speaker 4: this private companies aren't going public. Private companies are going 772 00:43:21,200 --> 00:43:23,520 Speaker 4: to go public over the next couple of years. I mean, 773 00:43:23,640 --> 00:43:25,160 Speaker 4: we think we have a few of them. There's the 774 00:43:25,239 --> 00:43:28,600 Speaker 4: SpaceX rumor there, there's plenty of noise in the market 775 00:43:28,880 --> 00:43:30,840 Speaker 4: that kind of the AI companies are going to go 776 00:43:30,880 --> 00:43:35,480 Speaker 4: public because they're so cash consumptive to invest in the 777 00:43:35,560 --> 00:43:39,000 Speaker 4: AI compute, to build the next generation of models, and 778 00:43:39,239 --> 00:43:44,719 Speaker 4: because getting onto that public stage is important for kind 779 00:43:44,760 --> 00:43:50,799 Speaker 4: of the support and engenders across you know, the entire population. 780 00:43:51,080 --> 00:43:53,759 Speaker 4: We're trying to provide them with that support through the 781 00:43:53,760 --> 00:43:56,400 Speaker 4: interval fund. But like you say, it's still small. You 782 00:43:56,440 --> 00:43:58,719 Speaker 4: have to go on so far to get it if 783 00:43:58,760 --> 00:44:01,360 Speaker 4: you're the average person, and or go through Fidelity or 784 00:44:01,360 --> 00:44:04,359 Speaker 4: talk to it an advisor. I think over time, this 785 00:44:04,520 --> 00:44:08,359 Speaker 4: vehicle because it's really good for venture. You know, this 786 00:44:08,440 --> 00:44:12,400 Speaker 4: is a Tier one venture portfolio that's actually extraordinarily fee efficient, 787 00:44:13,760 --> 00:44:17,879 Speaker 4: that this vehicle will open up the interval fund market 788 00:44:17,920 --> 00:44:20,400 Speaker 4: because people are going to recognize, hey, this is actually 789 00:44:20,480 --> 00:44:22,960 Speaker 4: the right way to do this kind of exposure for 790 00:44:22,960 --> 00:44:26,239 Speaker 4: for not only the everyday investor, but for high net 791 00:44:26,239 --> 00:44:30,400 Speaker 4: worth as well. And I think that you know, the 792 00:44:30,600 --> 00:44:34,920 Speaker 4: public ETF vehicles are super important. We love our ETFs 793 00:44:34,960 --> 00:44:38,440 Speaker 4: and and of course we you know, as this is 794 00:44:38,680 --> 00:44:40,360 Speaker 4: going to be a mix of innovation, we stick in 795 00:44:41,440 --> 00:44:42,280 Speaker 4: as it's available. 796 00:44:42,360 --> 00:44:44,440 Speaker 2: Is there a point where you could feed the ETF 797 00:44:44,520 --> 00:44:47,640 Speaker 2: investors a little like let's say SpaceX does announce the IPO, 798 00:44:47,840 --> 00:44:50,719 Speaker 2: it's getting closer, Can you like move a little bit 799 00:44:50,840 --> 00:44:53,960 Speaker 2: over to one of the ETFs so that they get 800 00:44:53,960 --> 00:44:56,319 Speaker 2: a taste of it before the I pod? Could that 801 00:44:56,440 --> 00:44:59,080 Speaker 2: happen after the private company is kind of like over 802 00:44:59,120 --> 00:45:02,279 Speaker 2: the fact that Okay, like they're at that point, they're 803 00:45:02,280 --> 00:45:04,719 Speaker 2: probably not that worried about the pricing because everybody knows 804 00:45:04,719 --> 00:45:07,040 Speaker 2: they're going public. Like, is there a point the ETF 805 00:45:07,080 --> 00:45:09,120 Speaker 2: could get hooked up by ourc venture? 806 00:45:10,719 --> 00:45:13,000 Speaker 5: I think we have to be very careful in answering 807 00:45:13,040 --> 00:45:18,239 Speaker 5: that question. Uh you know if oh, yes, yes, I 808 00:45:18,239 --> 00:45:22,520 Speaker 5: mean I I I've know a lot about what happened 809 00:45:22,520 --> 00:45:28,320 Speaker 5: when hedge funds were choosing or managers who were choosing 810 00:45:28,360 --> 00:45:32,560 Speaker 5: between their hedge fund and their mutual fund chose the 811 00:45:32,640 --> 00:45:35,680 Speaker 5: higher fee. Uh, this would be the opposite of that, 812 00:45:35,920 --> 00:45:38,960 Speaker 5: I understand. But nonetheless, this is a hot topic in 813 00:45:39,040 --> 00:45:42,480 Speaker 5: the SEC. We'd have to be buy the book, and uh, 814 00:45:43,040 --> 00:45:47,160 Speaker 5: you know, even even today in our ETFs, if you know, 815 00:45:47,200 --> 00:45:50,960 Speaker 5: we have a more specialized ETF that wants to sell 816 00:45:51,000 --> 00:45:53,759 Speaker 5: a little bit of something we're buying in the let's 817 00:45:53,760 --> 00:45:58,000 Speaker 5: say broader based ETFs, we don't do that. We do 818 00:45:58,080 --> 00:46:00,319 Speaker 5: not do that because we do not want to be 819 00:46:00,320 --> 00:46:05,840 Speaker 5: anywhere near you know, this cross dealing controversy. So we 820 00:46:06,440 --> 00:46:11,200 Speaker 5: would be working very carefully with our compliance team to 821 00:46:11,280 --> 00:46:14,880 Speaker 5: do that. You know, the ETF is set up for 822 00:46:14,880 --> 00:46:17,680 Speaker 5: for public for the public. If the price, if it 823 00:46:17,719 --> 00:46:21,120 Speaker 5: was already priced at the IPO price, we'd probably wait 824 00:46:21,200 --> 00:46:21,520 Speaker 5: for it. 825 00:46:22,480 --> 00:46:25,680 Speaker 4: Yeah, And and there's you know, as Kathy describes, there 826 00:46:25,680 --> 00:46:29,920 Speaker 4: would be allocation kind of allocation procedures we need to follow. 827 00:46:30,880 --> 00:46:35,600 Speaker 4: The venture fund. Being a participant in these primary rounds 828 00:46:35,640 --> 00:46:40,680 Speaker 4: clearly opens up some optionality to discuss with the private companies. 829 00:46:40,680 --> 00:46:40,879 Speaker 1: Hey. 830 00:46:41,000 --> 00:46:43,920 Speaker 4: Actually, and there could be you know, we could split 831 00:46:43,960 --> 00:46:47,000 Speaker 4: this allocation in an appropriate way between vehicles, just like 832 00:46:47,040 --> 00:46:49,480 Speaker 4: we have we have you know, a European vehicle this 833 00:46:49,560 --> 00:46:51,480 Speaker 4: venture fund as well that we have to do allocation 834 00:46:51,560 --> 00:46:55,760 Speaker 4: decisions too. And so I do think that that's possible 835 00:46:55,760 --> 00:46:58,719 Speaker 4: over time. But as Kathy said, it's like you know, 836 00:46:58,920 --> 00:47:03,279 Speaker 4: allocated pro rata appropriate to the investment, you know, prospectus 837 00:47:03,280 --> 00:47:06,239 Speaker 4: of the underlying fund and kind of like what's appropriate 838 00:47:06,280 --> 00:47:07,800 Speaker 4: for that fund and. 839 00:47:07,600 --> 00:47:10,279 Speaker 1: Its objectives if I may as well. 840 00:47:10,920 --> 00:47:13,840 Speaker 6: Notwithstanding that the points made just now about our ETFs 841 00:47:13,880 --> 00:47:17,200 Speaker 6: and the and SpaceX, I think as you look and 842 00:47:17,239 --> 00:47:20,279 Speaker 6: compare the interval fund against various other types of products. Right, 843 00:47:20,280 --> 00:47:23,040 Speaker 6: it's kind of sitting here in the middle between venture 844 00:47:23,239 --> 00:47:24,280 Speaker 6: and ETFs. 845 00:47:24,360 --> 00:47:25,640 Speaker 1: Let's just say or I mute funds. 846 00:47:26,440 --> 00:47:30,800 Speaker 6: The the ETFs that exist and that may be built 847 00:47:31,560 --> 00:47:34,279 Speaker 6: that have some small private allocation quite aside from the 848 00:47:34,280 --> 00:47:34,600 Speaker 6: problem of. 849 00:47:34,680 --> 00:47:35,800 Speaker 1: Stvs, which you talked about. 850 00:47:35,800 --> 00:47:38,280 Speaker 6: But if you have ten or fifteen percent private allocation, 851 00:47:38,760 --> 00:47:41,239 Speaker 6: it's almost you have to sort of ask yourself what's 852 00:47:41,280 --> 00:47:43,960 Speaker 6: the real benefit of that. You've got some maybe you 853 00:47:44,000 --> 00:47:46,879 Speaker 6: get some additional alpha from that private sleeve, but it's 854 00:47:46,880 --> 00:47:50,120 Speaker 6: so diluted across the whole ETF, right, So that's an issue, 855 00:47:50,160 --> 00:47:52,520 Speaker 6: whereas in ours it's the other way around. It's to 856 00:47:52,560 --> 00:47:55,960 Speaker 6: eighty five percent private, So that's the you know, that's 857 00:47:56,000 --> 00:47:57,400 Speaker 6: the private alpha you're getting. 858 00:47:57,640 --> 00:47:58,840 Speaker 1: Yeah, and that sort. 859 00:47:58,640 --> 00:47:59,839 Speaker 5: Of Yeah, I get it. 860 00:48:00,360 --> 00:48:03,120 Speaker 2: I'm just telling you, as somebody who's been covering ETFs, 861 00:48:04,880 --> 00:48:09,480 Speaker 2: that's people want it that way, and that you know, 862 00:48:10,480 --> 00:48:13,200 Speaker 2: there's a couple like you could argue Vick's future shouldn't 863 00:48:13,200 --> 00:48:15,600 Speaker 2: be in an ETF, like they've put everything in the 864 00:48:15,640 --> 00:48:19,120 Speaker 2: ETF they possibly can, because that's just how people like it. 865 00:48:19,840 --> 00:48:22,480 Speaker 2: And it's almost like Spotify and here's sitting here trying 866 00:48:22,480 --> 00:48:24,920 Speaker 2: to sell a compact disc. But you're like, the music's 867 00:48:25,000 --> 00:48:27,600 Speaker 2: really good, and that's sort of I think the challenge. 868 00:48:27,640 --> 00:48:29,920 Speaker 2: And but it is what it is. You've you've definitely 869 00:48:30,000 --> 00:48:32,000 Speaker 2: made the case and explain why it has to be 870 00:48:32,080 --> 00:48:34,960 Speaker 2: this way. But I think that's all. That's what I 871 00:48:35,000 --> 00:48:39,000 Speaker 2: see is the ETF demand is so great that the 872 00:48:39,040 --> 00:48:42,080 Speaker 2: marketplace is now trying to deal with Well, they want 873 00:48:42,120 --> 00:48:44,600 Speaker 2: it this way, but you can't really do it. So 874 00:48:44,760 --> 00:48:46,839 Speaker 2: do we do it half assed? Or do we use 875 00:48:46,880 --> 00:48:49,960 Speaker 2: these vehicles? And this is gonna be an interesting thing 876 00:48:50,000 --> 00:48:51,880 Speaker 2: to play out for a while. And I think this 877 00:48:52,000 --> 00:48:54,200 Speaker 2: is way more interesting than private credit. I think private 878 00:48:54,239 --> 00:48:56,680 Speaker 2: credit doesn't really move the needle much. People don't care 879 00:48:56,719 --> 00:48:59,959 Speaker 2: that much. But these companies, Neurallink, these are world changing 880 00:49:00,120 --> 00:49:02,759 Speaker 2: companies and people know that you're getting in ahead of 881 00:49:02,760 --> 00:49:05,440 Speaker 2: the IPOs major they just happen to want it in 882 00:49:05,480 --> 00:49:09,160 Speaker 2: the ETF. And I think that's this is the crossroads 883 00:49:09,160 --> 00:49:10,960 Speaker 2: we're at, kind of the tension. I guess that that's 884 00:49:11,000 --> 00:49:11,480 Speaker 2: out there. 885 00:49:11,360 --> 00:49:13,440 Speaker 3: Found a way, So anyway, we're gonna leave it there. 886 00:49:13,560 --> 00:49:17,240 Speaker 3: Kathy Brett, Charlie, thanks your time, Thank you. 887 00:49:17,360 --> 00:49:18,680 Speaker 1: Thank you, thank you, all. 888 00:49:24,520 --> 00:49:27,120 Speaker 3: Thanks for listening to Trillions until next time. You can 889 00:49:27,120 --> 00:49:31,480 Speaker 3: find us on the Bloomberg Terminal, Bloomberg dot com, Apple Podcasts, Spotify, 890 00:49:32,080 --> 00:49:34,120 Speaker 3: or wherever else you'd like to listen. We'd love to 891 00:49:34,120 --> 00:49:36,239 Speaker 3: hear from you. Hit us up on social I'm at 892 00:49:36,320 --> 00:49:39,840 Speaker 3: Joel Weber Show, He's at Eric Balchina's. Trillions is produced 893 00:49:39,840 --> 00:49:40,800 Speaker 3: by Magnus Hendrickson.