So the big question is there's a downturn without doubt. Look at the markets whether it's equities or debt or whatever downturn
is it affecting venture capital. And if so how. Well the big macro issues that we're facing in the public
markets like inflation. Supply chain challenges and also things like the recent Supreme Court ruling that would affect EPA
regulations. All of those factors come into play for the public markets.
They also have implications in the private markets. However the private markets are very very different.
So the private markets when you think of venture investors are looking at the medium term timeframe not like short day to day
trading and immediate effects but more over a course of seven years for a series a level financing.
And so there are it's it's a medium term kind of investor mentality that's happening.
I think it's important to know that there is so much money that's been put out into venture capital over the last few years
in 2021. We had a record amount. It was 97 percent over the previous year. So you think about it we have this huge amount of
capital that's already been deployed into early stage companies. We also have about six hundred three hundred and thirty million
billion of dry powder that's already been raised and ready to deploy.
So what does that mean. That really means that these venture firms early stage companies
have a lot of fuel in the tank to keep going to weather this current market situation. Does that large amount of money even
huge runway make your job more difficult. You're looking for results for really great opportunities. Yes there are a lot of
people in there. Maybe. Maybe not as disciplined as Paul Allen is. What does it mean. Devaluations valuations. Are people
overbuilt. Do you have a tough time finding proper prices for what you invest in. Yes. So at Plum we're very very focused on
the fundamentals. And I come from Wall Street. I spent 20 years on Wall Street at Goldman and other places as do my team
members. So we come out looking at venture from a kind of fundamental point of view which means do the companies have
revenue. Do they have real customers. Do they have a real product that we need in the world. If the answer to that is yes
then you drill down and look at the numbers. And in our case the companies that we've funded have revenues. But we only look at
you know six to seven times current revenues for SAS company. And in the market that number has been about 12 times revenues.
So we have seen this situation where valuations have been way overpriced.
And I think that's a reflection of the fact there is so much capital coming into the market when there's a lot of capital in
the market it pumps up valuations. But that's also really part of why there's a lot of dry powder because if you if you're only
really go to seven times if people are spending twelve times you don't spend the money you have to sit on your money until you
find the proper valuation. Where are the opportunities that you find right now that makes
sense. Well we we've invested now 65 million in 27 companies. So we've been at this for five years.
So we have had the opportunity to see the market change over time. But we have stuck to our knitting.
We have stuck to the fundamentals which is due. What are the revenues. What does the company actually doing.
Is the company essential for our future survival. And for more productivity and industry. Does it really matter versus
companies those that are sort of optional like dog walking apps. If you're looking for transformation because it sounds like
that's what you're looking for a fundamental transformation. Basic changes in our society in our economy. Were you looking.
Is that energy transition. A lot of you are doing that. Is that biotech. What sectors do you look at. So three quarters
of our portfolio is in Frontier Technologies. So think of robotics. Think about A.I..
Think about sensors that are monitoring monitoring climate. And then 30 percent it's in health care. So Chris verging editing
therapeutics that have never been introduced in the market before. So we like that combination because we think there needs
to be innovation is happening in every sector. It's not limited to health care. It's not limited to industry. It's not limited
to human beings. It sounds like you're sort of swinging for the fences as it were. I mean you're looking for the big home run.
That means you will have more strikes almost necessarily. There's risk involved. Yeah huge reward at the same time. Yes.
How do you balance that ability to really get a homerun against what you just said. A lot of companies in. How is there a moat
around these companies. Yes there is. And the companies and I can speak to the companies we've invested.
There is a proprietary technology. They own IP. It's one of the things that we look for. And these are hard
technologies. It's like. We've invested in a company on ride that is a Thomas
and electric freight vehicles. They are bordering on one hundred million of air are they are. Musk is one of their big clients
only G.E. appliances etc. So. So these are companies that have had the fundamentals to show
growth. Who are very smart to do those fundamentals. When we invested in a series a level and many of our companies are you
know very much they are unicorns at this point and there's still more time to go. So it's never over until the money is in the
bank. I want to come back to the downturn if I can call it that. Certainly we're seeing the right now. You mentioned IPO is
before the U.S. IPO is don't look as certain today as they did two three four years ago when. Yes almost you couldn't get out
of the way of the money essentially. Is that dampening in all your ardor. So for some these companies
because the IPO exit may not be there when you get there. I think you know if you if you look at the time horizon of being
seven years four series a level early stage companies there is still some time left on the companies we've invested in.
We've invested in the last three to four years. So we know there's still some time to go before their position for IPO.
Some of our companies have accelerated in that timeframe has shortened.
But you know will the market be there in my opinion. You look at look at history when really strong companies are ready to come
to market. They will have the opportunity. It may not be every company and
it may be maybe six months or a year later. But where is the world going. I mean the world is going to these technologies to
adopting these technologies because they bring value they bring value they bring efficiency they bring more productivity. They
deal with the workforce. They deal with fixing our climate issues. So why is so much capital poured into this sector.
Because people see the future is technology and they want to have a piece of that. Is it risky. Of course it's risky. But
don't tell me the public markets aren't risky at this point. So it's risky but it's risk versus return. And what do you do to
mitigate some of the risk. You rate the companies are a little bit further along. You do your diligence.
You kick the tires. You understand if they have a competitive moat you understand if they own IP and you understand do they
have to be in the world. If you have a company that does not need to be in the world that is a risky company. Our companies
need to be in the world and we have deep conviction on that. So matter of time we'll see. But I'd like to come back and share
with you when we have those returns and exit. Please do it. I don't doubt the conviction. I can feel the conviction. But let
me.