Unlocking Venture Capital with Provo Ventures: How Individual Investors Can Access VC

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  Speaker 1:
  Welcome everyone. We really appreciate you taking time out of your Tuesday to join us. I’m Matt Caspari and I’m the managing partner of Provo Ventures. Before we move into the presentation, I’m just going to start out by reading a few legal disclosures. So we’re speaking today about Provo Ventures, our parent company, Alumni Ventures, and our views of the venture capital landscape. This presentation is for informational purposes only and is not an offer to buy or sell securities, which are only made pursuant to the formal offering documents for the fund. Please review important disclosures in the materials provided for the webinar, which you can access at avfunds.com/disclosures.

  And a few quick housekeeping items: You will not be on camera, and you will be muted throughout the entire presentation. Within a few days, you’ll receive a recording of the webinar, and in that email from us there will be a link to our data room, which includes additional detail on the fund, and there will also be a link in that email where you can book time with our team if you’d like to speak with us directly. We’ll also drop that information into the chat here so you can see those links and click through to learn more.

  Just to set the agenda for today, we’ll start out with an overview of Provo Ventures. We’ll then go into the case for venture capital. We’ll talk a bit about our parent organization, Alumni Ventures, and then finally we’ll move into next steps. For those of you who are interested in Provo Ventures and would like to learn more about potentially investing with us, we should have time for Q&A at the end. Thank you. I know some people sent in questions ahead of time, which we appreciate, and feel free to put questions into the chat as we go through the presentation. I’ll look at those at the end of the webinar. If it’s a very specific question, we’ll probably circle back with you directly afterwards, but if it’s relevant to most of the audience, we’ll answer it here on the webinar.

  So, Provo Ventures is a venture capital fund organized around the BYU alumni community. This fund is part of a larger organization, Alumni Ventures, which has raised well over a billion dollars from individual accredited investors across its different networks of funds. We seek to build wealth for BYU alums by creating diversified portfolios of 20 to 30 venture-backed companies. That’s the core of what the fund does, and we’ll get into more detail on our strategy and how we go about doing that as we move through the presentation.

  We have over 3,000 alumni who are part of the Provo Ventures community and receive information from us if we send out an email or something like that—that’s the size of our scale and reach within this community at this point. We’re excited to have an experienced team and an investment committee with strong BYU ties and decades of business experience.

  We’ll talk a bit more about the investment committee as we go through the presentation. We’re able to tap into the network that we’ve built across Alumni Ventures as a way to support our portfolio companies—the companies that we invest in. It’s a really important part of the value that we bring: the full scale and network of Alumni Ventures. I’ll highlight that in a bit more detail as we go through the presentation today.

  Moving over to the team side, and I think I’m going to have Boyd join me here shortly. I’ll tell you a little bit about myself. I’ve been in the venture capital startup ecosystem for about 20 years now. While I was in business school at UC Berkeley, I started a venture-backed company called Aurora Biofuels that was based on technology we licensed from the school. We won the business plan competition the year I graduated and went on to build that company to well over a hundred employees, raising over a hundred million dollars in venture capital.

  Eventually, we sold that business to Reliance Industries, a Fortune 100 conglomerate out of India. Over the years I’ve worked with and supported a lot of entrepreneurs, started angel investing, and then moved to Alumni Ventures about four years ago. I started as an investing partner at Spike Ventures, and while I was part of that team, we made over 20 investments from the early seed stage all the way through Series D, later-stage investing.

  I come to my investing with a lot of operating experience, having been a venture-backed CEO, which is a really useful perspective and connection I’m able to have with the entrepreneurs that we work with. I also bring investing experience from my own personal investing and from investing with Alumni Ventures. We’re really excited to have a great investment committee that we’ve built out, and I’ve got one of our investment committee members on the screen with me.

  Thank you Boyd for co-hosting this call and joining me today. I’d love to hear a little bit about your background, your experience with Alumni Ventures, and why you’re excited about Provo.

  Speaker 3:
  Yeah, thank you Matt. I just have to put a plug in for Matt—Matt’s awesome. He has been great to work with. Hello everyone. Pleased to be with you. Excited about today. I hope everyone’s enjoying the BYU football season as much as me—eight and oh this year and big games to come.

  Speaker 1:
  How do you guys rank now, Boyd?

  Speaker 3:
  We’re ranked ninth, and hopefully this ages well. I know you’re recording this, so hopefully we continue to climb up the charts. But Matt, you need to know that we play our rival here on a couple of Saturdays, and that is always the big game.

  Speaker 1:
  Okay, exciting.

  Speaker 3:
  Excited about that. And one more quick plug—excited about the BYU basketball team this year. It’s going to be a fun season. A little bit about me: I’ve been involved with Alumni Ventures for four or five years now. Back in 2020, I placed my first investment with Alumni Ventures. I was very excited about the concept of having venture investing available to the average Joe like me. That concept played well in my mind as I learned about Alumni Ventures and the ecosystem a little bit.

  One of my first questions was, “Well gosh, these other colleges have different funds. What about BYU? When’s that coming?” So this is really kind of a cool full-circle moment for me to be able to be on this investment committee and to be on the call today. I love the ecosystem and the experience I’ve had with Alumni Ventures, so I was thrilled when they asked me to be part of the investment committee.

  A little bit about my professional background: I’ve been with Franklin Covey for about 16 years, and before that I was with Deloitte for about five years. The most recent nine years I’ve been in the M&A landscape, leading the M&A efforts here at Franklin Covey.

  Real quick—Mike and Steve are not presenting today, but I just want to give a quick shout-out to both of them. When Matt asked me to join the investment committee, one of my key questions was, “Who else is going to be part of the investment committee?” He allowed me the opportunity to reach out to a couple of people and see if they would be interested. These were the first two people that came to my mind.

  Mike Andres has been a good friend for many years. We were classmates at BYU in the accounting program. He’s gone on to have a very successful career, and I’m so pleased to be working with him. Steve Young is a mentor and a good friend of mine. I’m excited to continue to work with him in this new opportunity on the investment committee.

  So Matt, anything else you’d like me to touch on, or no?

  Speaker 1:
  That was great. Yeah, I really appreciate the support, and it’s been a lot of fun starting to work with this investment committee. It’s a great group that Boyd’s brought together. So yeah, we really do appreciate the support from everyone who’s been involved. Thank you.

  Speaker 3:
  Alright, thank you.

  Speaker 1:
  Great. So for those who maybe aren’t as familiar with the venture asset class, I’ll start at a pretty high level and then we’ll get into a little more detail. I’ll start by painting that overall picture. Venture has historically shown very strong performance, often outperforming public markets over different periods of time, but it’s been hard to access. Most average Joe investors, even if they’re accredited, didn’t have access to this asset class. That really is a core part of what we’re doing here at Alumni Ventures—democratizing access.

  We also see that what’s interesting is that venture, when you add it to your portfolio, is very uncorrelated to the public market. So it actually is a really good, effective tool for diversification, in addition to offering the potential for strong returns.

  The other trends that we’ve seen, which I think are really important to be aware of, is that a substantial amount of value creation is happening in the private markets. There’s been a really large shift over, call it, the last couple of decades. When I last looked, there were something like half the number of publicly traded companies today as there were 25 years ago. So just the pool of companies that you can invest in in public markets is much smaller.

  We’re also seeing, especially for venture-backed technology companies, that they’re able and choosing to stay private much longer. That’s a huge shift. If you look back at Amazon as an example, they went public in 1997, just three years after the company was founded. I think the market cap at the time of IPO was something like $400 million. So all of that value creation that’s happened has happened in the public markets, and anyone could have participated.

  By contrast, if you look at a more recent example like Uber, it took them about a decade to go public. At the time of the IPO, they were in the ballpark of a $100 billion valuation. Last time I looked it up, I think the value of the company had doubled or something in the public market. So the value creation happened with a really small group of insiders—founders, employees, early investors—and the rest of us weren’t able to get access to that growth.

  What we’re here to do at Alumni Ventures is provide access to these private markets, especially high-growth venture companies.

  A little more about Alumni Ventures, the parent organization: We are America’s largest venture firm for individuals. We’re serving over 10,000 clients who are entrusting their venture investing with us. We’re the most active venture firm in the U.S. and number three globally—that’s according to PitchBook, both in 2022 and 2023. We’ve raised over $1.3 billion from investors and we’ve invested that in well over a thousand companies.

  Our team at Alumni Ventures is about 130 full-time employees across the firm, about 40 of which are on the investing team. I’m based out of our office in Menlo Park. I run the West Coast for Alumni Ventures. We also have offices in New York, Boston, Chicago, and New Hampshire. The tie back to New Hampshire is that our first fund was around the Dartmouth alumni community, where our founder had gone to undergrad. We then quickly launched a Harvard fund, where he went to business school, as another early community at Alumni Ventures.

  It’s been 10 years since that first Dartmouth fund, and we’ve had significant growth across Alumni Ventures over the years.

  The firm was recently ranked a top 20 venture firm alongside a great group of investors. We’ll get into this in more detail as we go through the presentation, but a core part of our strategy is that we co-invest alongside well-established venture firms—firms and individuals that have a lot of experience at this stage and in these sectors. We’re investing with them. We continue to do that as a strategy across everything we do at Alumni Ventures. That’s worked well for us thus far.

  The performance has been really good, and our brand position and the scale of our network have strengthened over the years. We’re in a great position moving forward.

  On this slide—maybe Alex, sorry, just go back one—yeah, these are examples of the types of firms we’ve invested with historically. We’ve done dozens and dozens of investments with these firms, well-established Silicon Valley venture firms.

  With Andreessen alone, last time I looked, I think it was over 30 investments we’ve made with them. We also invest with firms that we think highly of at certain stages or sectors that have really strong track records but maybe don’t have brand recognition here.

  The point is, as a co-investor, we’re not leading rounds. We are investing alongside these types of firms. Our due diligence process looks at all the things you’d expect: we assess the CEO, the management team, the company’s revenue, their competitive moats—all of those dynamics.

  In addition to that, as part of our diligence, we assess the lead investor. We assess both the firm and the individual who’s leading the round and taking a board seat because we’re investing alongside them. That’s a critical piece of information for us.

  We slot in, and our value add is this network that we’ve built. We really talk about being network-powered venture capital, and we’re highly synergistic with these firms. We don’t compete with them to lead rounds. We have a massive network that we can use to support the portfolio companies, so they like investing with us and they know us well at this point.

  We just wanted to talk a little bit about the current climate. This is a question I often get from prospective investors: “What are we seeing out there in the venture markets today? Is now a good time? What are the trends?”

  We’ve seen that over the last couple of years there’s been a pretty big shift—from the market being very startup- and entrepreneur-friendly, especially in late 2020 into 2021, to shifting to being much more investor-friendly. We’ve got a lot more leverage in negotiations. Valuations have generally come down, and it does feel like this is a really attractive climate to be investing.

  I think we’ll look back at 2024 and 2025 as being good vintages to be deploying into venture-backed startups.

  This slide shows how we build a portfolio. Again, we’re investing in 20 to 30 companies out of Provo Ventures, out of this vintage of the fund. Our strategy and rationale for investing in 20 to 30 companies is to create diversification. We think that helps balance risk.

  We invest across different sectors. We invest across different stages. We invest alongside different lead investors to create a diversified portfolio that helps mitigate some of the risks that can happen when you have inflated valuations in certain stages or sectors, or maybe certain zones have a downturn in a certain year.

  This strategy has served us well across all of the alumni funds that we’ve managed at Alumni Ventures. We’ve done that consistently and will continue to follow that with Provo Ventures.

  In terms of stage, historically about 50% of our investment dollars go into Series A and B companies. Roughly 25% go into growth—Series C and beyond—and about 25% go into earlier-stage seed investments.

  There are different risk-reward profiles across these stages. Later-stage companies tend to be lower risk but also lower reward potential. Generally, they tend to be a little closer to liquidity, whether that’s an acquisition or an IPO.

  At the opposite end of the spectrum, seed-stage companies have a lot higher risk and higher reward potential, and they also take longer to mature. You get some balance by creating this diversification across stages, which we think is really important.

  Speaker 1:
  Get access to great investments? I mean, this is the core of what our investing team does. This is our role—making sure that we’re able to access great companies and build these diversified portfolios. The core to this answer goes back to our network, being network-powered venture capital, and really the secret sauce to that network is the alumni connections that we have with entrepreneurs and with people on the boards of these companies. We’re really able to leverage those connections to access these great companies.

  It’s pretty intuitive to an entrepreneur to have a group invest that has such a large network and is also backed by a bunch of alums from schools that they’ve gone to. That’s the secret to how we’ve been able to grow so much over the last decade. You can see some of the stats here and the size and scale of the community.

  We have a centralized team that we call CEO Services. Right after we wire an investment, we introduce the CEO to the CEO Services team. That team is a central Alumni Ventures team, and they can tap into our network to add value for our portfolio company. It could be things like pulling together expert panels, helping to find an independent board member, or facilitating business development and customer relationships. These are all ways that we tap into this network to support the portfolio companies. That value add is another reason why we’re able to access great investment opportunities.

  We have about 40 full-time investment professionals at Alumni Ventures. These are people who have networks they’ve built over their own careers. Again, we leverage these alumni connections, and we really feel like we’ve got a strong footprint in key entrepreneurial communities across the U.S. A core reason for us expanding with the BYU community is just the quality of entrepreneurship we’re seeing there. I think on a slide coming up, there’s some really interesting data on just how strong the community is.

  Speaker 1:
  We have historically, at Alumni Ventures, invested in several companies that have BYU connections. I’ll run through these quickly just to give you a sense of the variety of companies we’ve invested in previously. Everything from Rhone, which is a premium men’s athletic wear brand, to Satellite Bio, which is a biotechnology company in the deep tech space, to Currency, which is a blockchain company, and finally, Zippity, a mobile car maintenance service.

  So there’s a huge breadth of sectors and types of companies that have BYU connections, and we’re really excited to build the network within this community. We think it’s a super interesting place for entrepreneurial talent. As we go into the next slide, I was just doing some research on the ecosystem. This came up from Bloomberg, showing BYU as the number two program for entrepreneurship. That’s super exciting.

  I know, Boyd, as we were talking about building out Provo Ventures, you were excited that I had found some of this data to support what you’ve seen on the ground.

  Speaker 3:
  Go Cougars. I’m excited by this. My daughter’s in the entrepreneurship program at BYU, so this is fun to see.

  Speaker 1:
  Yeah, I love it. I love it.

  Great, so in terms of key terms and highlights on logistics if you’re considering joining us as an investor: Again, we’ve had over 10,000 investors across the Alumni Ventures network, so we’ve worked with a lot of people to help them invest in the venture asset class. If you have questions, book time on our team’s calendar, and we can walk through the details with you.

  At a high level, the minimum investment amount in the fund is $25,000; the maximum is $3 million. I’m not a financial advisor, and I’m not going to give you advice—speak with professionals on your team. The way I think about it and encourage people to think about it is this should be part of your long-term, patient capital. Think about that bucket. It’s illiquid and can take a long time for these companies to mature.

  I think it can make a lot of sense for people to make a percentage allocation to venture. That’s maybe a good way to think about it—what’s the right percentage for you to allocate from your long-term, patient capital to venture?

  We have a number of investors—last time I checked, something like a quarter to a third—who invest through retirement accounts. If you’re interested in investing through an IRA, that’s something that we help a lot of people set up. Again, happy to get into more detail on your specific situation if you’d like to do that.

  Let’s move over to the question side. Those were the key points I had, but I’m excited to answer questions that people may have.