Welcome to see to scale. We're for investors with backgrounds as Founders who met at the engineering school at the University of Pennsylvania. Tim. Young a hall Martha had Lee Harris fixing we study in the act in 2009 with more than 80 years of combined experience building our own companies. We now lead seed rounds and bold Founders who use code to create transformational companies starting a company from the ground up is really hard in this podcast will be having conversations with some of the most interesting Founders investors and influencers about the ins and outs of building an early stage company. We talk about it all funding growth and everything. It takes to build a lasting business. Hey, everybody, its nahal founding General partner at edx ventures back on see to scale today. I have the honor of speaking with these are-- Clarkson and I don't think it's different for LPS any more so than it is for GPS. And that what are you going to bring to the table? These are is sapphire Partners in San Francisco in the valley. She leaves investments in Venture funds all over the world. She began her career at Morgan Stanley and The course of 20 years has held many many roles that will get into a little bit a couple of years ago. These are led the launch of open LP and effort to help Foster a greater understanding and the entrepreneur to LP Tech ecosystem, and we're really honored and privileged to have her on the show. So welcome to seize the scale. So first off where where did these are come from Elizabeth's your real name and then work them into your background as well? Okay, so it started with my aunt who's British and she used to call me elizabe when I was very small, you know, two or three and my older sister. I mean, I was three she was 5 so somehow she shortened elizabe down to be and then made it bees are and honestly, I don't remember but by the time I hit kindergarten these are was it legitimately when I graduated from College and the dean of course calls your full legal name. I had friends who honestly thought I didn't graduate and we're trying to like commiserate with me be like, it's okay. It's really hard to get your degree. You'll do it next year because they had no idea that my real name was Elizabeth. Tell us about where did your passion for finance for investing come from? I guess what led you to Morgan Stanley and then and then just have fire, you know as I've gotten older. I've become more and more envious of people who seem to have known what they wanted to do from the get-go. I've definitely remember interviewing For this group that I was in which was called project Finance, which literally was a financing of like oil and gas pipelines and power plants and airplanes and satellite systems in you like super infrastructure stuff and I was a poli-sci liberal arts undergrad so not really well connected, but I thought was just fascinating to see how the world moved and how these different activities happened and money was the conduit in but once I was living in San Francisco in the late 90s and wants Tech became a sort of harder. Consciousness that just took over as what I thought was the most fascinating and it just hasn't changed. So everything since then has been different ways of looking at technology and finance and how did the two interplay and that led me to being an Opie awesome as have fire. What kind of things are you interested in investing in? You know, what are you kind of passionate about and maybe a little bit about the strategy. Well, we've been pretty steady Eddie about are investing strategy for the lp side of the sapphire business. And we think that's a good thing. We think when should be super reliable and consistent and persistent on the lp side. So we are completely fine. Sometimes I joke around and say boring is a okay when you're in a hole because you know, you want to know that we're here right GPS don't want to worry about where is the lp world gone and have you changed strategies mid-cycle because all that's very disruptive to the folks that we invested. So ever since we launched our our work, which was some seven years ago at Sapphire. I joined we focus predominantly on the series a focused funds we've focused predominantly us and then within the u.s. Predominantly Bay Area. We do 20% in Europe 10% in Israel. Occasionally we do seed and we've been just consistent around that ever since the beginning and we which isn't meeting to say we don't always look and spend a lot of time understanding what's going on in the ecosystem to see if perhaps we do need to flex a bit. Maybe more seed maybe a bit later. You know, we're We're always sort of asking ourselves. What's happening? And how does that impact what we're doing? But today we have not changed and the focus on Venture would never change and sapphires main investor is sap is any of the strategy dictated by you know, by by the corporate or is it all on you guys? No, it's all on us the way I think about it as I have a fantastic Global enterprise software firm is my LP and they're wonderful and I give them so much credit for having the Ford vision for many years ago saying, yes, we're going to help stand up this business and it's it's independent. We own our own management company, you know, all of the same attributes as anything else and we own all of those engagements right with those that teams that someone we pay for out of our management fee. It's great. And that's and that's really how we work. On sap is super thrilled with that because that's what they want to see to how do you think the role I guess of of the LPS changed in the last few years you have this blog post reimagining our role as an LPN Venture, maybe talk about that a little bit and maybe going into the future. How do you see it changing? Sure. Well wouldn't there's there's pros and cons right of being the relative new kid on the Block the powerful part of that is that you can kind of look around and say what works in the ecosystem and it was really dear to us that GPS the folks like you that LPS invest in want to know that there are LPS permanent and and focused and smart and has their back and essentially doesn't over get overly involved. And so we just looked at all those things and he said well, what's the best stuff that endowments do and Foundations and if we were to create a structured synthetic vehicle that had the best that we could figure it out. Let's just go do that and that's that's really what we got to do which is what reimaging and LP was about and we thought they were a couple Our tenants that were really important one was permanent. So we restructured our vehicle and made it Evergreen. So we wanted to change the Paradigm completely the downside of this is we don't have a great word to explain ourselves because we're sort of neither fish nor fowl. But where a you know an asset manager that invest in Venture and we said, let's be focused because that will help our GPS know that we understand their business. Let's make sure we provide more than Capital. We do have a strong belief that right now in particular, you know, everybody has money and it's all green and it looks the same. Same so what are you going to do with your money? That's different and I don't think it's different for LPS any more so than it is for GPS. And that what are you going to bring to the table? And sometimes it's a personal relationship? Sometimes it's in sight. Sometimes it's data. Sometimes it's value-add services, but we really believe there's no difference for LPS. That was the Genesis for reimagining it like what does it mean? And how do you how do you show up in a way that says we're here to be partners, but we're also not backseat drivers because they're the point of the limited limited partners. Not wasn't an accident right mean that's that's there for a reason as a horizon change in terms of the return profile, you know, obviously we all know companies are being held private much longer this year. Obviously a string of IPOs that were in the middle of what are your thoughts. Is this a trend that's going to do you think get more and more egregious or will companies started going public even faster. Oh, it's such an interesting question. And when we debate sadly, I don't have a crystal ball that's going to give me the exact answer for that. I do think the Venture model. Model is predicated on the idea of money going in and coming back out and whatever form right? You can go and come back out through Acquisitions can come back out through IPOs. I mean secondaries, but but the whole point right like you put money into a company and it's at some point you're going to expect something back right? That's it's an equity trade. It's not a have my money forever trade. So unless that fundamental transaction at between the GP and the company changes, I don't know how that will actually ever allow for things to be. Different which is a little bit about financial, you know Meta Meta level question. But other than that, we think it'll just yeah that Bing becoming public going other companies going public this year is great. It helps remind folks that the public markets are part of the process and maybe not for everybody but for a lot of folks and at their really deep right for all the money that people talk about being able to raise privately there's trillions in the public market some of the concerns. I have honestly if companies don't go public are for the employees and companies and I'd be curious to hear from you what you see and how employees treat this idea of there not being the same kind of liquidity available and do secondaries reached out to companies because when we look at what happens in some of the IPOs in the past and just how much not not wealth in the level of just individuals but like really ecosystem building like the Bay Area wouldn't exist if these companies didn't go public in the past. So what happens if that doesn't happen the future. It's not a zillion LP question. It's a people question. A longer answer. I think you anticipated but those are the things that that I actually that I think about me has happened and I hope people do find exits at the right time for their companies and an IPO isn't really an accident some more of a transition to a different kind of financing. I think what's interesting recently is the awareness on some of the wealth creation where you know early employees at some of these companies are are not necessarily getting, you know, the returns that they expected what that's actually transforming in the ecosystem is more transparency. In options and strike price and all of the things that usually during it hire process oftentimes employees gloss over and I think now there's real attention to that because we're hearing these horror stories right of these, you know, pretty decent Acquisitions where early employees are getting nothing, you know, of course, there's the debt overhang and the prep stack but even then so anyway, I think it's good. It's precipitating this awareness of where do I stand and I think it's really important for employees. Especially early employees are But is that they're adding value to to be able to really share in the upside when these companies get acquired or go public? We're seeing a ton of new fund ones all over the country. I think we've seen that in San Francisco in the Bay Area over the past four or five years, but now even in New York and Boston there's this whole new Resurgence of smaller funds, you know, 25 to 50 million dollars doing precede see it and even some series a what would your advice be to new GPS just starting out with her first client. Generally the first question I use the same language all the time because I think some consistency helps. I always kind of ask people like I you like why are you doing this? It's about a very specific. Like why are you deciding to be a venture capitalist and doing this because it's a job people are going to expect you to do for a really long time and we can argue whether or not that's the right expectation. I actually tend to think it should be not quite that way, but I think I'm an outlier there. But you know, why are you doing this? And why are you going after this particular opportunity and then why this firm and then why will the entrepreneurs pick you and implied in that as a whole bunch of understanding of backgrounds and and the competitive landscape and does the world need another fun doing this and hopefully the answer is yes, but sometimes you honestly see folks starting funds and they haven't really thought through all of this and it's well, you know, it's a really competitive time to be in the market. So if you haven't thought through all these things the learning curve on the street is a really tough It's might be easier to brights really small checks into companies maybe but it's certainly not easy to compete with established firms like yourself and your colleagues and At a folks out there mean there's there's no lack of people aware that this is an interesting opportunity now tell us a little bit about open LP, you know, we read about it and seen it across social but tell us what may be about the inspiration and the initiative sure. The inspiration came gosh is moving on. I want to say four or five years ago. I was chatting with Chris to those who is a wonderful LP that we get to I get to co-invest with on occasion. Yep. We we love him too, and he loves his diet coke. Yes. Yes, he does and I honestly don't remember where we were or where we were chatting but we were to having this kind of conversation like what's going on in the ecosystem and Chris is always very Visionary and he was like, you know what I bet folks would love to hear what LP's have to think on this and it just once that question was that statement was made it just was interesting idea and we're like, well, how does one do that? And the simplest thing is a hashtag on Twitter? Obviously, not everybody's on Twitter or looks at that but it was a simple idea and so that was an easy thing to launch and then Cuz we had some capacity here at Sapphire. We put up the open LP website, which is really just an ability to repost articles because what we wanted to do is create an ecosystem that it was invited everybody to play in and was would help be an amplifier to anyone who wanted to write from even GPS that right sort of I consider the LPS perspective if you're writing about the industry or means or Trends or if an LPS writing just finding a way to pull people together and am Fight that was the whole Genesis of it. It's super simple. It's a hashtag in a website and we have a newsletter and we've reached out to a bunch of LPS and said if you write something will retweet it will post it and folks have joined the conversation and and that's great because I really do think that the lp voice is missing or has been missing make sense. It's interesting. Now the amount of transparency across the ecosystem. We're starting to get Founders asked us who are LPS are yeah, which hasn't happened in a while. So, oh really? Ali do they have an opinion like do they do they name LPS or is it more about is the money flowing to initiatives I care about or just how does the money work because in the beginning when I started talking to folks about how the Venture industry works and I appreciate this. I worked at a start-up back in the day and I had Zippo idea that it was venture-backed. I mean it was like I knew the words read it know what that meant. And I would have zero idea how the VC fund raised and I've entrepreneur say to me like well does the money come from a bank? Does it come from an ATM and you just such a lack of? Basic education availability of information right? Because if you're an entrepreneur you're caring about your product. There's no reason why you should have a whole understanding of how the Venture ecosystem works. But it's helpful. First time. I feel like it came up was around all this stuff in Saudi Arabia and MBS, you know, obviously there's very large funds SoftBank Etc that are recipients of capital from Saudi Arabia, but I think a lot of Founders kind of, you know woke up, you know, some of them if they if they could choose didn't want to take money that originated from I'm certain places. I feel like at least for me. That was the Genesis of a lot of the beginning of the questions unlike who are your lbs, but I think it also leads to the sophistication of the GP in terms of are you institutionally backs, you know by fund of funds or you know endowment or pension fund or foundations versus maybe, you know family offices or high net worth or and I think Founders are starting to understand, you know, the differences between institutional funds and otherwise, I'm impressed. I think that The more the transparency the veteran so it's a great conversation to have and I'm definitely, you know, very very impressed by Founders who asked that so Founders that are listening when you pitch your VC know ask them ask them who their investors are. I think it's time. These are for the lightning round just say the first thing that comes to your mind. Okay. What's the best part about being an LP? The people the people we invested and the people that they invest in what's the most challenging part of your day saying no saying no to an investment potential saying No, I don't have time to do everything that I'd like to do now saying those sucks. I agree. How do you maintain your work-life balance? That's a tough question. I'd like to believe I have some I think mostly I'm at a good place on work-life integration and we'll leave it there. What's one thing you're bullish on that the Mark is bearish on what I love about Ventures. I don't think it's a zero-sum as people seem to pretend or Eve that they do I just don't really believe that it is let me just say it cleanly that way. I don't maybe there are only 15 or 20 companies that matter every year but I don't see any reason why there couldn't be two hundred to Five Hundred companies every year it's and then everybody could have a 10x fund and there is no reason why your fun can't be 10x and your colleagues next to fun can't be 10x is just a matter of a lot of great companies being built. I fully believe it's possible. Otherwise, we believe that humans are limited in our capacity to build great companies and I fundamentally don't think that's true the best book you've read recently. Or Netflix show or Hulu or Amazon or Disney or apple or if you have time to do any of those things? Well, I watched silly action was on plane. So I don't think I'm going to cop to my most recent but they usually involve guns and Loud rock music and aliens and you did you cry during those movies because even like the craziest non-emotional action movies on planes for whatever reason I'm like crying I'm tearing it's like a very emotional place on Plan is that happen to you too all the time. In fact, it's so glad you said that because it's one of the biggest challenges. I have it I'm flying with people that I know like if you bump into people plane you like. I'm going to be a week Fest or watching Fast and Furious. I'm really sorry totally. Hope these are we really appreciate your time and your wisdom full disclaimer. We are Sapphire is not an LP eniac in parentheses. Yets life is long. And obviously we're just going to know each other but A highly of you and what you what you built over over at Sapphire and what you continue to do in the ecosystem, so it's an it's an honor to interview you here. Oh, thank you for having me. You know, we've always been so impressed by your work you are so in the front of understanding mobile and taking that out and moving it to the next iterations of what's coming. So, it's really an honor to be part of your ecosystem in any way. We really appreciate that. Thank you so much Cesar, and thanks everyone for listening make sure to also follow at C2 scale on Twitter and subscribe. Subscribe to anywhere you listen to podcasts, but a better be anchor one of our company's. Thanks guys.
Beezer Clarkson is the Managing Director at Sapphire Ventures, leading Sapphire Partners‘ investments in venture funds domestically and internationally. Beezer began her career in financial services over 20 years ago and has held various direct and indirect venture investment roles, including Draper Fisher Jurvetson Global Network, which then had $7 billion under management across 16 venture funds worldwide, as well as operational roles in software business development. In this episode, Beezer speaks with Eniac Partner Nihal Mehta on the genesis of OpenLP, a community effort she spearheaded to foster greater understanding in the entrepreneur-to-LP tech ecosystem, as well as the fundamental role of an LP in venture, their relationship to partners and how they want to ensure they are bringing value to the funds beyond just capital. Beezer also discusses the recent string of IPOs and her perspective on how it impacts the ecosystem, as well as how staying private longer impacts employees and how equity/liquidity is viewed. She also gives advice to funds just starting out - what she looks for, expectations and opportunities. If you liked this episode, please share and tag us on Twitter: @beezer232 @SapphireVC @nihalmehta @EniacVC @seedtoscale  Send comments or suggestions to seedtoscale@eniac.vc. 