1Mby1M Virtual Accelerator Investor Forum: With Taylor Greene of Collaborative Fund (Part 5)

Sramana Mitra: The next question I have for you is a slightly broader question. Are you looking for unicorns?

Taylor Greene: I think the short answer is yes. I’m always looking for unicorns. Historically, when you look at the math of venture capital, you need a unicorn in a fund in order to be a top-performing fund. The good news is we put about 35 companies into a fund.

Not every company needs to be a unicorn but we are looking for one. The short answer is we are looking for unicorns. They’re critical to the success of our model but the good news is we get plenty of opportunities to find that unicorn within a given fund. It’s not an impossible task.

Sramana Mitra: I’ll just comment a little bit on what you said. In the B2C space, I think the VC model works better with unicorns as a goal.

The B2B side of venture capital is quite different. You can make a lot of money with smaller funds that have smaller exits because the vast majority of B2B exits happen in the $50 million to $60 million space. All the strategics acquire companies all the time in the sub-$50 million exit price.

For that to work for you, you need to build these companies in a very capital-efficient manner but you could still be making a lot of money as a result. There’s a lot of funds out there that are these smaller funds that are looking at that opportunity and that are not necessarily chasing unicorns. That’s just my comment.

I think the exit opportunities in B2C are fewer unless you make it out as a bigger company. Do you agree with the comment I just summarized?

Taylor Greene: Most M&A’s happen at $50 million to $100 million. That’s where most companies are bought. When we are lucky enough to get into a company that sells for $100 million, we high-five the entrepreneur and celebrate. That’s a win for sure. It’s very difficult to grow a company from nothing and sell it for $100 million. That’s an incredible path.

I don’t really look at us as being in the business of hunting for unicorns. I do think we need one in order to be a very top-performing fund, but that’s not to say that we don’t get excited about a company that sells for $50 million to $100 million.

You need a very small fund size in order for that to be a strategy that works. We’re just focused on finding great founders that are solving big problems. The hope is that one of them goes on to be a great big company. I love when we get $100 million exits, but it’s not the focus of our strategy.

Sramana Mitra: Thank you for sharing your ideas on what you are doing at Collaborative Fund. Thank you for your time.

This segment is part 5 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Taylor Greene of Collaborative Fund
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