About the last episode of the Financial Samurai Podcast, I sat down with Ben Miller, co -founder and CEO of Fundrise, for a deep dive in artificial intelligence, risk capital and what is really needed to achieve the best private business agreements.
Ben was in San Francisco this summer to visit different portfolio companies and make new investments. We also overtaken during lunch in Cole Valley.
If someone with more than $ 350,000 invested Fundrise EnterpriseI am very happy to talk to Ben about what he sees in the space of AI and private company. Because Fundrise has long been a sponsor of Financial Samurai, I am lucky to regularly get one-on-one time with him. When you invest a considerable amount of capital, it is always wise to perform the necessary diligence directly with the responsible person.
I am convinced that AI is the next big trend in the long term. Because I will not participate in a fast-growing AI-startup, I want to assume as much exposure to the space as I can take comfortably. My private AI investments include from serial sake to late stage (series e and beyond), and I also have individual positions in all beautiful 7 companies.
As always, do your own due diligence and assign assets in the right way because of the risk involved. Investing in private companies is often more risky than investing in older, listed companies. I currently have around 15%of my total investments in risk capital and daring debt, with a target range of 10%-20%.
Here is a brief summary of our discussion, but the entire episode has all the nuance you don’t want to miss.
The state of AI: Multiple winners accelerate
We started with the growth process of AI. The biggest players – such as anthropic – do not expand alone, they accelerate their revenue growth.
I driven the idea that AI could eventually be made. Ben did not agree with that and argued that the leaders continue to distinguish themselves and move forward with better products, stronger talent and deeper canals.
It seems that with all the enormous editions of AI Capex the market is large enough for several winners.
Duref fund concentration and the power of large bets
We have discussed how much concentration is both healthy and required in a venture fund. The rules state that 50% of the fund must be distributed over at least two companies, and the other 50% must be invested in at least 10 companies for a total of 12 companies.
Currently, about half of the Fundrise Innovation Fund has been invested in only three companies: OpenAi, Anthropic and Databricks. This type of focus is a higher risk, but when you choose the right horses in a transforming sector such as AI, the rewards can be enormous.
As the Great Hedge Fund -Investor Stanley Drukenmiller said: “If you look at all the big investors who are just as different as Warren Buffett, Carl Icahn, Ken Lagoon, they tend to take all, very, very, concentrated bets, they see it in a bunch. And if you really see, it is in a bunch of playing, and if you really see it in the ranch.
We talked about the planned evolution of the innovation provision of the innovation fund in the future, the detention periods of these companies and strategies for finding the following winners. The Innovation Fund is also owned by Canva, Vanta, DBT Labs, Ramp, Any Scale, Inspective and more.
Reconsideration of appreciation: growth-corrected statistics
Appreciation came afterwards. Ben introduced the Growth-corrected income several As a better lens for assessing fast-growing companies comparable with the price/profit growth (PEG) ratio for public shares.
If we are still in the early innings of AI, it is more logical to appreciate companies based on both their revenue growth and the scale, instead of traditional multiples alone.
It seems that investors may underestimate how fast AI is actually growing, based on a discussion that Ben had with an investment banker at Goldman SACS that instead suggested modeling a growth rate of 30%.
We also have the Baumol effect-How rising labor costs in sectors with low productivity can be accepted. In other words, when wages rise faster than productivity, companies have more stimulus to accept AI to close that gap.
Compete for the best private growth -deals
From there we moved to one of the most difficult challenges when investing: access. In my opinion it is trying to secure a meaningful IPO allocation in a hot deal an exercise in uselessness. I would rather invest in promising companies before they become public.
With the help of Figma’s IPO as an example, Ben illustrated how difficult it is to get a substantial allocation-even for well-connected investors. Figma was not a name Fundrise invested, even though it was a customer.
The ability of the innovation fund to invest in the top six of the top 50 Disruptor companies from CNBC is no coincidence. It is the result of the deliberate reverse engineering of the process to identify winners early and then find a way.
Fundris’s important value proposition for private companies
A unique competitive advantage Fundrise has the ability to mobilize more than a million of its users to spread the consciousness over the product of a portfolio company. In addition to visibility, Fundrise can actively stimulate growth – such as Promotion of the slopeA company card company that is recently appreciated at $ 22 billion. This creates a powerful loop of adoption, growth and valuation wins that go much further than just writing a check or making introductions.
Of course it is still important to have top business capitalists on the CAP table. Their connections and expertise are valuable. But I especially love that Fundrise is a private company itself, often with the help of the products in which it invests (disaster, inspectify, Anthropic, DBT Labs, etc.). This hands-on involvement can lead to a deeper due diligence than traditional VCs usually perform. And if Federdrise can also help bring things to those portfolio companies, that is an enormous value that every private company would like to add that CEO.
For these reasons, I am Bullish about the ability of Federdrise to continue to support some of the most promising companies in the coming years.
The Global Ai Race: China versus the US
We packed by discussing the difference in global attitudes in relation to AI. China is making aggressive and optimistic forward, while the US often uses a more careful, regulatory heavy approach.
For me this only strengthens the need to maintain exposure. I don’t want to look back in 20 years and wonder why I was on the sidelines during the greatest technological shift of our lives.
If you want to hear the full conversation – including deeper diving in valuation statistics, strategies for Venture Fund and the practical reality of competing for elite deals – you can listen to the episode below.
You can also listen by subscribing to my Apple or Spotify podcast channels. If you are an investor in venture capital, I would like to hear from you. What do you see and what are some of your favorite investments?
Invest in private growth companies
Companies stay private longer, which means that more profit goes to early private investors instead of the public. As a result, it is only logical to assign a larger part of your investment capital to private companies. If you don’t want to fight in the IPO “Hunger Games” for leftovers, consider Fundrise Enterprise.
Approximately 80% of the Fundrise Durf portfolio is in artificial intelligence, an area that I am extremely bullish about. In 20 years I don’t want my children to ask why I ignored Ai when it was still early.
The investment minimum is only $ 10, compared to $ 100,000+ for most traditional venture funds (if you can even come in). You can also see exactly what the fund entails before you invest, and you don’t have to be accredited investor.
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