When IVP not too long ago introduced the closing of its 18th fund, I referred to as Eric Liaw, a longtime basic associate with the growth-stage agency, to ask a couple of questions. For starters, wringing $1.6 billion in capital commitments from its traders proper now would appear much more difficult than garnering commitments throughout the frothier days of 2021, when IVP introduced a $1.8 billion car.

I additionally puzzled about succession at IVP, whose many bets embody Figma and Robinhood, and whose founder and earlier traders nonetheless loom massive on the agency – each figuratively and actually. A current Fortune story famous that photos of agency founder Reid Dennis stay scattered “in all kinds of locations all through IVP’s San Francisco workplace.” In the meantime, photos of Todd Chaffee, Norm Fogelsong and Sandy Miller – former basic companions who are actually “advisory companions” – are combined in with the agency’s basic companions on the agency’s web site, which, visually no less than, makes much less room for the present era.

Not final, I wished to speak with Liaw about Klarna, a portfolio firm that made headlines final month when a behind-the-scenes disagreement over who ought to sit on its board spilled into public view. Right here’s a part of our chat, edited for size and readability. You possibly can take heed to the longer dialog as a podcast right here.

Congratulations in your new fund. Now you possibly can chill out for a few months! Was the fundraising course of any roughly tough this time given the market?

It’s actually been a uneven interval all through. In case you actually rewind the clock, again in 2018 after we raised our sixteenth fund, it was a “regular” surroundings. We raised a barely larger one in 2021, which was not a standard surroundings. One factor we’re glad we didn’t do was elevate an extreme quantity of capital relative to our technique, after which deploy all of it in a short time, which people in our business did. So [we’ve been] fairly constant.

Did you are taking any cash from Saudi Arabia? Doing so has grow to be extra acceptable, extra widespread. I’m questioning if [Public Investment Fund] is a brand new or current LP. 

We don’t usually touch upon our LP base, however we don’t have capital from that area.

Talking of areas, you have been within the Bay Space for years. You’ve gotten two levels from Stanford. You’re now in London. When and why did you make that transfer?

We moved about eight months in the past. I’ve really been within the Bay Space since I used to be 18, after I got here to Stanford for undergrad. That’s extra years in the past than I care to confess at this level. However for us, growth to Europe was an natural extension of a method we’ve been pursuing. We made our first funding in Europe again in 2006, in Helsinki, Finland, in an organization referred to as MySQL that was acquired subsequently by Solar [Microsystems] for a billion {dollars} when that was not run of the mill. Then, in 2013, we invested in Supercell, which can also be primarily based in Finland. In 2014, we grew to become an investor in Klarna. And [at this point], our European portfolio at the moment is about 20 firms or so; it’s about 20% of our energetic portfolio, unfold over 10 completely different international locations. We felt like placing some ft on the bottom was the correct transfer.

There was a whole lot of drama round Klarna. What did you make of The Data’s stories about [former Sequoia investor] Michael Moritz versus [Matt Miller], the Sequoia associate who was extra not too long ago representing the agency and has since been changed by one other Sequoia associate, Andrew Reed?

We’re smaller traders in Klarna. We aren’t energetic within the board discussions. We’re enthusiastic about their enterprise efficiency. In some ways, they’ve had the worst of each worlds. They file publicly. They’re topic to a whole lot of scrutiny. Everybody sees their numbers, however they don’t have the forex [i.e. that a publicly traded company enjoys]. I feel [CEO and co-founder] Sebastian [Siemiatkowski] is now way more open about the truth that they’ll be a public entity sooner or later within the not-too-distant future, which we’re enthusiastic about. The reporting, I assume if correct, I can’t get behind the motivations. I don’t know precisely what occurred. I’m simply glad that he put it behind them and may deal with the enterprise.

You and I’ve talked about completely different international locations and a few of their respective strengths. We’ve talked about client startups. It brings to thoughts the social community BeReal in France, which is reportedly searching for Sequence C funding proper now or else it may promote. Has IVP kicked the tires on that firm?

We’ve researched them and spoken to them up to now and we aren’t presently an investor, so I don’t have a whole lot of visibility into what their present technique is. I feel social is tough; the prize is huge, however the path to get there’s fairly exhausting. I do suppose each few years, firms are capable of set up a foothold even with the power of Fb-slash-Meta. Snap continues to have a powerful pull; we invested in Snap fairly early on. Discord has carved out some house available in the market for themselves. Clearly, TikTok has accomplished one thing fairly transformational all over the world. So the prize is massive however it’s exhausting to get there. That’s a part of the problem of the fund, investing in client apps, which we’ve accomplished, [figuring out] which of those rocket ships has sufficient gas to interrupt by the environment and which can come again right down to earth,

Relating to your new fund, that Fortune story famous that the agency isn’t named after founder Reid Dennis as proof that it was constructed to survive him. But it additionally famous there are photos of Dennis in every single place, and others of the agency’s previous companions, and now advisors, are very prominently featured on IVP’s website. IVP talks about making room for youthful companions; I do surprise if that’s really taking place. 

I might say with out query, it’s taking place. We have now a powerful tradition and custom of offering folks of their careers the chance to maneuver up within the group to the best echelons of the final partnership. I’m lucky to be an instance of that. A lot of my companions are, as effectively. It’s not completely the trail on the agency, however it’s an actual alternative that folks have.

We don’t have a managing associate or we don’t have a CEO. We’ve had folks enter the agency, serve the agency and our LPs, and likewise as they get to a special level of their lives and careers, take a step again and transfer on to various things, which by definition does create extra room and accountability for people who find themselves youthful and now are reaching that prime age of their careers to assist carry the establishment ahead.

Can I ask: do these advisors nonetheless obtain carry?

You possibly can ask, however I don’t wish to get into economics or issues alongside that dimension. So I’ll quietly decline [that question]. However we do worth their inputs and recommendation and their contributions to the agency over a few years.

There’s clearly a valuation reset happening for each firm seemingly that’s not a big language mannequin firm, which is a whole lot of firms. I’d guess that offers you simpler entry to high firms, but additionally hurts a few of your current portfolio firms. How is the agency navigating by all of it?

I feel when it comes to firms which can be elevating cash, those which can be most promising will at all times have a alternative, and there’ll at all times be competitors for these rounds and thus these rounds and the valuations related to them will at all times really feel costly. I don’t suppose anybody has ever reached a terrific enterprise consequence feeling like, ‘Man, I obtained a steal on that deal.’ You at all times really feel barely uncomfortable. However the perception in what the corporate can grow to be offsets that feeling of discomfort. That’s a part of the enjoyable of the job.