Where VCs are Quietly Investing

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  Speaker 1:

  Hi, I’m Mike Collins, the founder and CEO of Alumni Ventures. Today we’re going to talk a little bit about where VCs are investing in early 2025. We tend to talk a lot in the public sector about things where VCs invested five, ten years ago because those companies are maturing and getting critical mass and dinging the universe. But just wanted to share, as one of the top most active venture capital firms, I think we have some perspective on what’s happening right now. So we’re going to share that today.

  Before we get going, I’ll do the disclosures. We’re speaking today about Alumni Ventures and our views of the investing landscape. This isn’t a solicitation to buy or sell securities, which are only made pursuant to formal offering documents.

  So just very briefly setting this up—I’ve been in the entrepreneurial venture capital innovation space since 1986. I started Alumni Ventures because I felt that high-quality venture capital deals were very inaccessible for individuals, and we’ve been working on that problem for a decade now.

  Yes, and we’ve built some scale. We’re 100 employees, about half venture capitalists, with 10 teams located in the venture capital hubs. We’ve raised over $1.4 billion, coming up on 11,000 investors. We typically invest in 300–350 deals per year—a big chunk of those first-time investments—and we exclusively co-invest alongside brand name VCs. We are exclusively a co-investor.

  And we’ve built a good reputation. So again, we’ll move through this quickly, but we have a pretty good trophy case. We put together—and you can see this on our website—our portfolio, our Apex 50 companies. We try to spotlight and show the depth and breadth of our portfolio. We love all of our children—some of them are earlier, some of them are later, some of them are more visible than others—but very, very proud of our portfolio. And we’re actually developing sub-lists in some of our areas like health tech and blockchain and AI, robotics, etc.

  Yes, and we’re in very good company as a co-investor. So good rankings on that. And these are among the firms we co-invest with most frequently. It’s an impressive list, and these are deals typically that individuals acting on their own don’t even know about, let alone have access to.

  Okay, so hopping right into it. We’re seeing a lot of action right now, and I’m doing this in the first part of 2025. We’re seeing what I’m calling Crypto 2.0, energy, vertical AI, and a lot of activity in defense and strategic tech. These are the areas that I’ve probably seen the biggest delta in over the last couple of years. And again, just trying to—our role, I think, is to share these observations. By doing so many deals as a co-investor, we by definition invest where the industry is investing. So I think these things are of note.

  So Bitcoin is clearly the granddaddy of the blockchain, but I think we’re starting to see next-generation stuff starting to solve real business problems. So again, I think there’s this public perception that all crypto is Bitcoin or meme stocks or tokens—and that is really not digging in. We’re talking about a very horizontal technology of distributed ledger, and we’re starting—I think Crypto 2.0 is where humans are finding real, practical problems to solve.

  So we’re seeing a lot of things that are really trying to address jobs to be done, where there is an old, bureaucratic, but lucrative market, and this kind of technology approach is a better way. So betting markets, micropayments, stablecoins, custody—we’re starting to see a lot of stuff in authentication, regulatory stuff.

  Again, getting into the specifics of specific business plans is really beyond the purview of today, but just letting folks know that we’re starting to see disruptive technologies go in waves. They can take decades. We saw that with the internet, smartphone, etc. I think we’re clearly in the second wave. While Bitcoin is well on its way to disrupting gold as a digital repository of value, I think we’re starting to see kind of the second wave get some traction, and we’ll see that more in the next five to ten years. So this is where VCs are looking.

  Again, these are just a few of our crypto companies from our portfolio. We have a list of 20 that we spotlight, and I won’t spend a lot of time on them, but this is available. Folks can dig in. Folks can check out these companies and others in our portfolio.

  The second area in early 2025 is energy. So fusion, fission, grid—I think it is well understood that more energy is required. The U.S. is behind China in some of its energy plans. We have a fairly old, centralized, bureaucratic, slow technology adoption energy system. So we’re seeing lots of really interesting business ideas in this space.

  Again, here’s just a few examples from our portfolio investments we’ve made. Pacific Fusion—you can Google it—just announced a huge round of financing. Again, these are deals that are anywhere along the spectrum. We’re doing startups, we’re doing pre-seed, doing A, doing later-stage growth rounds. But energy is a theme.

  Third one—vertical AI. So what do I mean by vertical AI? I mean, these aren’t broad tools like ChatGPT or Gemini or Perplexity. We’re talking about somebody who has a business problem, or a job is two ways to think about it, which is: okay, which company, solving which problem, am I going to disrupt because I have these tools, because I have data, because I have customer relationships that can solve it?

  So again, very practical—not just kind of science fiction AI stuff—but literally: how can I create a business that replaces associates at law firms, for example? How can I create a business that is going to take on large, established CRM companies? Can I do that cheaper, faster, order of magnitude better?

  So we’re seeing those in healthcare, education, aerospace, retail, energy. Again, if you’re going to invest in the space, you’re looking for things where there’s a human wrapper around a really strong kind of AI kernel. You’re looking for somebody who has data, domain expertise, where they can apply this very powerful technology. The idea is: how can I use these ever-improving tools to solve a problem and disrupt the job, disrupt the business, disrupt an industry?

  Again, here’s examples—some earlier, some later-stage—from our portfolio. Let folks on their own dig into that stuff.

  Strategic tech, defense tech. This is an area where we’re starting to see critical mass. We’re early in this space, but now there’s nine military-tech-ish unicorns that were venture-backed. And I think we’re seeing a lot of energy in broadly defined defense and strategic tech. So that’s not just war stuff, but it’s information technology, it’s cybersecurity, the new dimensions of strategic interests for countries.

  Again, a lot of VCs, a lot of great business ideas, a lot of big, bureaucratic, inefficient targets to go after—which is a common theme here, which is disruption. How can we bring new technology, AI, new solutions, different approaches—do more with less—and disrupt something that needs to be disrupted?

  So again, a very prime area to be looking right now. And again, some examples of companies within our portfolio. Ghost Robotics actually just got sold, but again—a very ripe area that VCs are very aggressively going into now, that we think has huge potential for the next five to ten years.

  So just wanted to communicate where the world is right now, what things are going maybe a little less in the headlines. Informally sharing our pie chart of where we’re seeing plans, we’re seeing deals get done, we’re seeing startups coming out of incubators, accelerators, where we’re deploying capital. And hopefully that is helpful for you with managing your own portfolio.

  The job of VCs is to look over the horizon—to be not too early, but definitely not too late. So hopefully you’ll find this valuable information.

  And I’ll end with just one more thing—how are you thinking about acting about this? Some of this can be done through your public equity portfolio. Some of this can be done through the way you manage your career and where you want to lean in, lean out.

  AV addresses a variety of different needs in the area of retail VC. A lot of our customers fall into one of these five buckets. Some want to understand what’s going on in technology for their own investing, their own careers. Some—venture capital is new, maybe a little bit scary—and they want to dip their toe. Some people have done really well and are now kind of paying it forward and greatly enjoy investing in the next generation to kind of stay relevant, stay young. Trophy hunters—these people are seeking alpha and understand power law rules. And then increasingly, private equity, venture capital, different assets are part of a well-diversified portfolio. So we have asset allocators as well.

  In particular, if you tuned into this, watched it this far—here are three of our funds that might make sense for you. We encourage you to read the materials, talk to someone live for 20 minutes—it’s very easy, answer any questions you might have. But we do have a U.S. Strategic Tech Fund, a Deep Tech Fund. Our Foundation Fund we designed really as kind of your first venture portfolio—very well-diversified, kind of core, first-step kind of fund.

  And with that, we’ll just take a couple of questions.

  How do these sectors align with macroeconomic trends? What could accelerate or hinder their growth? I think these things are very much on trend. I think if you look at what I would say is a tech-friendly federal government at the moment—you look at areas like energy, you look at areas like blockchain, crypto, defense tech—I think there’s more tailwinds than headwinds.

  From a government perspective, I think we’re going to have a better M&A, IPO market. So the ability for exits for some of these investments in these areas, I think, are very good. So I think in the short/medium term it’s going to be very favorable for the companies in those spaces.

  What lessons from historical disruptive technologies can be applied to these sectors? That’s a great question. I think the typical cycle is: nobody knows about it, the smart money gets in early, people pile in late, smart money exits. There can be a hype cycle, kind of a boom-bust period, and then a stabilization—and it just becomes part of the environment.

  Again, you saw this with the internet. Folks who were early—there was a dot-com bubble, there was a crash, and by the way, the internet is now a fabric of our lives—as is Google and Uber and Airbnb and all of these venture-backed businesses that kind of rode the waves of the internet.

  So it’s just the fundamentals: diversify, back good entrepreneurs solving big problems, understand it’s a power law, be patient, don’t time markets. These principles just do apply.

  Here’s an interesting one—does AV and its investors receive coins when investing in some blockchain startups? It depends on the deal, but typically yes. Usually there’s some kind of token that early investors receive. So a lot of times we’ll receive equity in a company, and as part of our investments, we’ll also get rights to tokens. There’s a couple of ways to get liquidity and exits. That was the case, for example, in one company mentioned here—Mysten Labs with our SUI token.

  So I think that covers it. I wanted to be efficient with your time today. Again, four sectors that we’re seeing a lot of activity in—some really, really impressive teams, startups, lead investors. I think we’re in a golden age of venture investing, and hopefully you found this helpful.

  Thanks for your time today. Be well.