Unpopular Ventures: Annual Report 2022

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Unpopular VC

19 min readAug 9, 2022

To the Unpopular Ventures Community,

Welcome to our fourth annual update. In past years, this update has been on the longer side. But given that our last two posts were long and detailed (Why Invest With UV, Q2 Update), this one is going to be shorter than usual. Here’s what you will find:

GRATITUDE
PORTFOLIO UPDATE
GENERAL THOUGHTS
RECENT CONTENT
APPENDIX

Thank you to everyone in the UV community for your continued partnership.

Sincerely,

The Unpopular Ventures Team

Reminder: you can invest in our Rolling Fund for broad access to our portfolio, which co-invests in every new company we invest in, and invests in more companies than you see in the syndicate. Rolling Fund LPs also receive preferential access to limited-allocation deals.

1. GRATITUDE

We have a lot to be thankful for, so we’d like to start with a bit of gratitude. Thank you to:

OUR PORTFOLIO FOUNDERS. Thank you to all 240+ of our incredible portfolio Founders and CEOs who allowed us to invest in their companies, and have worked like crazy to build their dreams into realities. Great Founders have endless choices of investors to take money from. Thank you for choosing us, and for allowing us to ride along as a small part of your journeys.
OUR LPS. Thank you to all of our 3,347 syndicate LPs and 132 rolling fund LPs who have entrusted us with your capital. There are endless places to invest your money: dozens of asset classes, thousands of VC firms, and hundreds of syndicates and funds just on AngelList to choose from. Thank you for choosing us.
OUR SCOUTS AND GUEST LEADS. As you know, we share carry with our LPs, Portfolio Founders, and friends — for their assistance in identifying, assessing, and negotiating one or more of our investments. Thank you to our extended family of contributors who have helped us to do more than we would have been able to on our own, in the *last 12 months:* Alex Galvez, Alexis Patjane, Ali Jamal, Andres González-Olaechea, Anton Borzov, Arnau Porto, Ashley Flucas, Blake Cutler, Brad Flora, Charlie Kubal, Chinua Iloabachie, Chris Murphy, Daniel Gould, Daniel Vasquez, Darren Vincent, Dec Kelly, Dilraj Ghumman, MD, Eric Bruckner, Jordan Fliegel, Gaingels, Gary Little, Matt Patterson, Helen Chen, Heshan Fernando, Ivan Montoya, James Graham, Jonathan Hirsch, Jose Vielma, Julian Herzog, Julie Zhu, Lauren Kaplan, Linus Liang, Logan Allin, Matt Hafemeister, Nathan Lustig, Rajeev Jotwani, Rohit Taneja, Roy Rodenstein, Ryan Li, Safee Shah, Samy Kabbara, Snigdha Sur, Sundeep Ahuja, Vitor Asseituno, and Zak Holdsworth (note that some contributors did not accept carry when it might have presented a conflict of interest — particularly VCs who are compensated via their own firms).
OUR TEAM. Since our last annual update a year ago, we’ve adjusted our team a bit and are currently operating as 4 core team members: Thibault Reichelt, Sergii Zhuk, Gian Scozzaro, and Peter Livingston. Thank you to all of our team members — both past and present — for their extraordinary contributions in helping to build UV into something bigger, better, and more impactful than Peter would be able to on his own.
THE ANGELLIST TEAM, who make the magic happen behind the scenes. Special thanks in particular to Sam O’Driscoll and Bobby Costanzo, our direct managers within AngelList over the last year, who have been absolutely amazing.

2. PORTFOLIO UPDATE

TLDR: Continued strong mark-to-market performance. $49M of capital invested over the last 3.5 years has grown into $148M of AUM. AngelList’s performance calculator currently places our numbers in the top 5% of VCs.

As we do every year, we’ll start with a few DISCLAIMERS:

This leans positive. These reports go out to a lot of people (>3,300 LPs), and it’s not appropriate to share negative information about our companies so publicly. Furthermore, VC is a game where only the extreme positive outcomes have a meaningful impact on portfolio performance. So let’s focus on those.
There may be errors here. All of the portfolio tracking is done by Peter and checked by the team with a spreadsheet. It’s very possible we got something wrong. If you notice an error, please let us know. We strive to make this as accurate as possible.
Startup valuation is tricky and complex. Different people do it in different ways. We explain our methodology in the appendix. You may disagree with it. You are welcome to run your own analysis and arrive at your own conclusions, using the raw data (linked below).
The only thing that actually matters is cash on cash returns. But in startup investing, those take a long time to materialize. The intent of this analysis is to estimate how we are doing in the short term, to evaluate if we are on the right track. You can’t take any of these numbers to the bank.

If you are a major LP of Unpopular Ventures, have invested at least $250k to date, and are willing to sign an NDA, we will share the complete portfolio data with you. Please submit a request via this form: link

For everyone else, you can access the de-identified data here: link

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With that out of the way, we’ll break this into 2 sections:

A. Statistics about how our portfolio is performing.

B. Highlight a few investments that are doing particularly well.

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A. PORTFOLIO STATISTICS

Here are the aggregate portfolio numbers, which include both investments from our syndicate and our rolling fund:

And here are the latest numbers from our Rolling Fund:

Notes on the RF numbers:

The exact dollars invested and # of investments in each quarter have shifted a little bit from the last update. This is because there were a few investments that we had accounted for being made from one quarter’s fund, but AngelList accounted for them in a different quarter’s fund. We adjusted our accounting to match AngelList’s.
Although our Q2 fund raised >$1.5M, we opted to roll a significant portion of that fund’s capital over into Q3, only investing $1.156M in Q2. As the market is resetting and valuations appear to be coming down, we decided to be a little more conservative and save part of that capital for when we expect valuations to be more attractive.
Our Q3 fund also raised >$1.5M, and it’s TBD whether we will deploy that full amount in the quarter (in addition to the funds we rolled over). We will likely continue to be a little more conservative until the market stabilizes.

More color on the aggregate portfolio numbers:

Our TVPI is self-calculated, and you can find our methodology in the appendix.
IRR: although we don’t like to focus on IRR as a core metric (IRR tends to be artificially high during the initial years), some of our LPs still like to know the number and know how we are tracking relative to others. Here are the numbers that our AngelList syndicate dashboard currently provides:

Which, when plugged into AngelList’s portfolio calculator, generates this result:

AngelList does not currently compute an IRR for the rolling fund, but it appears to be tracking comparably.
You might notice that the returns for 2021 in aggregate are currently a little bit higher than the returns from our fund. This is primarily driven by a couple follow-on investments that, although we didn’t invest from our fund, the syndicate was exclusively offered to fund LPs — such as the Jeeves Series A (already a 16x). In 2021 when our fund was still small, we opted to only do first investments from the fund and only follow on from the syndicate. Now that our fund is bigger, we are doing small follow-on checks from our fund too.

Note that AngelList’s data differs from ours, for a few reasons:

They don’t give us credit for deals that we co-led but were hosted in another syndicate (but we do count them as part of our self-reported TVPI numbers).
They don’t mark to SAFE/note caps. We explain how we do this accurately in the appendix — and the intent is to have more-granular performance tracking. We have a lot of investments that have raised on higher note caps — but AngelList does not give us credit for them until they eventually do priced rounds.
They don’t update the numbers until the round is fully closed and wired (whereas we update when the term sheet is signed). As a result — AngelList lags us by a month or two for deals that are in closing. AngelList also takes a month or two to record new investments after they have closed.

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B. PORTFOLIO HIGHLIGHTS

Next, we’ll highlight a few of our companies that we think have recently made particularly good progress. Please note that we have *tons* of companies that are doing great, including well over 100 that have raised more money at a higher price than our investment point. The ones we are mentioning here are just a few of our outliers that have had something exceptional happen over the last 12 months:

Jeeves makes an expense management platform for global startups. We were their first investor besides YC on a $10M cap, were the largest investor in their first 2 rounds, and they recently raised a $180M Series C from Tencent, A16Z, and CRV at a $2.1B valuation.

Yassir is a “Super App’’ for Francophone Africa’s 430M population across 29 countries. We were the biggest check into their seed round in mid 2019, were the first check into them during YC in 2020, and they have some very big news coming out soon. Thanks to our Partner Thibault for leading this investment.

Zepto (prev. KiranaKart) is building “Instacart for India.” We were able to get a small $25k check from our rolling fund into their seed round right after YC (our syndicate was unfortunately canceled because the round was too competitive) in Feb 2021. They recently announced a $200M Series C on $900M post money led by YC Continuity. Thanks to our Partner Thibault for leading this investment.

99 Minutos is building “FedEx for LatAm.” We were one of the biggest investors in their seed round, followed on in the subsequent round, and were recently followed by Oak HC/FT, Kaszek, and Prosus in their $82M Series C. Thanks to Anish Acharya for the original tip to check out this company and to Ed Roman for co-leading the syndicate.

Dash is a unified payments app serving multiple countries in Africa. We invested in them 3 times on valuations of $15M and below. The company subsequently raised a $32.8M “seed” round from tier 1 VC Insight Partners at a dramatically higher valuation. Thank you to our Partner Sergii for leading this investment.

Kyte is a rental car delivery company that is re-inventing the car rental experience to be as easy as ordering an Uber. We’ve invested in every round to date, starting at $8M and most recently at $225M. Their growth has been extraordinary, well into a mid-multi-$10M revenue run rate, and still growing rapidly. Thanks to Gilbert Gong for originally sourcing this investment.

Outer makes outdoor furniture, sold DTC, and has innovated across every element of the business: product, marketing, manufacturing, and supply chain. We invested in their Series A and again in their Series B at a dramatically higher valuation, which was a $50M led round by Kathy Xu at Capital Today (Forbes Midas List). Thanks to Richard Lin for sourcing this investment.

BillPocket is a mobile payments company in LatAm. We invested in their Series A in 2020, and the company has executed very well since then. There is some non-public, very positive news about them that will be coming out in the next few weeks. Thanks to Nathan Lustig for guest leading this investment with us.

Albedo Space designs and operates satellites that capture imagery at a higher resolution. We invested in their seed round in 2021 and they recently raised a huge Series A at a much higher valuation. Thanks to Thibault for leading this investment from UV, and to Tommy Leep for collaborating with us on the syndicate.

Nelo is a buy now pay later platform in LatAm. We invested in their seed round in 2020, and the company raised a $20M Series A from Two Sigma Ventures late last year at a much higher valuation. Thanks to Chad Byers for sharing this investment with us.

Wyvern Space is a hyperspectral satellite imagery company. We invested in their pre-seed before YC on a $5M cap, followed on, and the company subsequently raised a lot more money at a valuation as high as $30M. Thanks to Thibault for leading this investment.

Houm is a LatAm real estate marketplace that helps property owners rent/sell faster. We invested in their seed round during YC on a $38.5M cap, and they subsequently raised a $30M Series A from Fifth Wall at a much higher valuation. Thanks to Nathan Lustig for guest leading this investment with us.

Pallet (fka Cardea) makes infrastructure for modern hiring. We were one of their first investors at a $5M valuation, and shortly after they raised at a dramatically higher valuation. Thanks to our Partner Thibault for leading this investment.

PayO is an all-in-one billing and stock management platform for Indian SMEs. We led their seed round before YC on a $5M cap, followed on at a higher cap, and again alongside numerous investors during YC at a $20M cap. Thanks to Rohit Taneja for sourcing this investment.

Yummy began as a Venezuelan food delivery company, and has since expanded to become a LatAm super app. We originally considered their first round on a $2.5M cap and regretfully passed. Hat tip to Ali Jamal for leading it instead. We corrected our mistake and later invested from our fund on a $7M cap, but decided to forego the syndicate since Ali had already led multiple syndicates. We are glad to have at least invested from our fund, since the company has excelled and most recently raised on a $180M valuation. Thanks to Steven Coulis for sourcing this investment.

One last thing we’d like to mention is the contributions from a few partners that have come and gone from our core team. Although these team members are no longer with us in a core capacity, we think the world of them and we are tremendously grateful for their contributions. All of them have sourced some very high performing investments, including:

Chris Murphy led our investments in Breyta, Fullview, and &Open:

Breyta is a collaborative CRM for SaaS, and just raised a new round at 5x the valuation we invested on.
Fullview makes scalable customer support software, and just raised a new round from Lightspeed at a dramatically higher valuation.
&Open is a corporate gifting platform, which just raised a big Series A from Molten Ventures at a much higher valuation than we originally invested on.

Declan Kelly led our investments in Umba and Localyze:

Umba is a neobank in Africa, that is growing rapidly and just raised a series A from Costanoa Ventures at a much higher valuation.
Localyze is a global mobility platform, and just raised a Series B from a tier 1 VC at a dramatically higher valuation.

Alex Correia led our investment in Zuma (fka Resident Boost), which is a property tech platform that helps convert leads into leases, and was recently followed by A16Z at a higher valuation.

Thank you to all of our core team members, both past and present, for their contributions to UV.

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CONCLUSION

At 3.5 years in, we are starting to reach the middle years for our earliest vintages, relative to the 10 years we generally expect to hold most of our investments for. Although we’ve had some lemons ripen already, we also appear to have some oranges that are maturing, and in aggregate we are happy to see that our portfolio is developing quite well.

For those unfamiliar with the reference, there’s a saying in VC that “your lemons ripen before your oranges” — meaning that the failures fail early, and the great investments take longer to fully develop. This effect is also responsible for the oft-mentioned “J curve.” We’ve been fortunate to not have seen a J-curve in our portfolio so far (there was never a dip), perhaps in part because of the bull market we’ve had in recent years.

Depending on the length and severity of this bear market, the J curve may return for new investments we are making now. For our earlier vintages, we may also get a bit of a zig zag in the curve — starting with up and to the right, a flattening out or a dip (blue or red in the image below), before it heads up and to the right again. Time will tell. We’ve been fortunate to see our aggregate portfolio continue to appreciate over the last quarter, but the rate of appreciation has recently slowed down.

3. GENERAL THOUGHTS

As mentioned at the top, we recently published two long and detailed posts (Why Invest With UV, Q2 Update), so there is less that’s new to write about at this time. We’ll just share a few general thoughts that are top of mind.

Unfortunately, our January forecast about a looming startup/VC winter continues to play out. Although we’ve been fortunate to see our portfolio actually appreciate over the last 3 and 6 months thanks to some high performing companies receiving markups, we are also seeing more write offs in recent months than we’ve had historically. It’s a bummer, and we feel particularly bad for the founders and team members who devoted years of their lives to their ventures. For us, yes, it’s never fun to lose money, but this is Venture Capital. We believe we’ve taken a responsible approach to investing in startups, built a large and diversified portfolio of high risk/high reward bets, and enough of them are trending to the (extreme) positive side that our aggregate portfolio is producing great results.

And yes, the carnage is likely to continue to roll through. We’ll probably see a meaningful share of the portfolio shut down over the next 1–2 years. But we also believe that the companies that merely survive this bear market, are more likely than ever to be extremely successful on the other side. We agree with this sage advice:

(video link, h/t to Sheel Mohnot)

Winter has clearly arrived on AngelList too — where the amount of money that syndicates raise has dropped off. Based on what we are seeing, as well as what we’ve heard from other syndicate leads, the average syndicate now raises somewhere around ¼ to ⅓ of what it did a year ago.

It’s not surprising, given what we postulated in January. Most investors’ public market investments are way down, so they are both 1) feeling less wealthy than they did a year ago, and 2) are now over-allocated to startups/VC. If an investor had intended to allocate 10% of their portfolio to startups, and those investments have gone up 3x while the rest of their portfolio is down 50%, their portfolio might now be 40% startups. A lot of investors have stepped away from startups/VC to rebalance their portfolios.

And with that, we’ve noticed that a lot of syndicate leads have stepped back too — are doing fewer investments, and/or have stopped leading syndicates altogether. Which makes sense: if the economics are a fraction of what they were, some leads have probably determined that this is no longer the most financially attractive use of their time.

Something funny we’ve come to realize though is: we don’t care. Sure, it’s always nice to make money, but the primary reason we do this is because we love it. We are just happy to work with amazing founders, help them get the money they need to build their dreams into realities; while simultaneously helping others invest in companies they personally care about while earning great financial returns. If fewer people want to contribute fewer dollars at this point in time — that’s fine. We’ll be here, doing this thing we enjoy, rain or shine.

We do have one new prediction though: now, in this time when most angels have pulled back, there are going to be a couple investments that come through AngelList that absolutely rip. A “next Uber” or “next Stripe.” The best opportunities have a tendency to come out when most people have given up.

One story we love on this topic (heard many years ago, don’t recall the source) is about how when AngelList was just getting started, it was literally just an email list that Naval and Babak created to email angel deals out to people. One of the deals they sent out was Uber’s $5M cap round, and there was zero interest. One recipient even wrote back something like “stop sending me this crap.” Whoops : )

We are quite certain that in the next 2 years, there is going to be another Uber that goes out on AngelList. Our Jeeves investment from 2020 is certainly on a comparable trajectory (although it’s still early). We’ll be working hard here at UV to invest in at least one more of those.

Along those lines, you are welcome to only invest via our syndicate (instead of our fund), but it’s a little bit risky. Maybe you will pick out our biggest outlier, maybe you won’t. Or maybe it will only be in our fund (as was the case with Zepto). But if you choose to invest in our Rolling Fund — you will be guaranteed to be invested in all of our very best investments. Knowing the power law of VC, where the best investments end up orders of magnitude more valuable than the others — the most important thing is to merely get exposure to the outliers, even if it’s for a small amount. For example, if we make 150 investments over the next year, and get an Uber in that mix (reportedly returning 5000x in the IPO from seed) — that’s a 33x fund. Although we can’t guarantee returns like that, we do feel great confidence that our aggregate portfolio will continue to produce excellent returns, even if some of our individual investments don’t work out.

Our Rolling Fund is the single best way to participate in our excellent portfolio returns. Let us do the work, so you can rest easy.

4. PAST CONTENT

Here are links to past content we’ve published:

Annual Reports from 2019, 2020, and 2021.

Contain more background and the story behind Unpopular Ventures.
More detail on our strategy.

Quarterly Updates from:

Why Invest With Unpopular Ventures?

Recent post, making the case for why we believe UV presents an attractive investment at this time.

Is Winter Coming?

Our January 2022 forecast for a looming VC/startup winter.
While the view is consensus today, this was one of the first (if not *the* first) predictions of the market activity we are seeing now.

Podcast: Peter Livingston with Meb Faber

5. APPENDIX

Methodology for calculating TVPI:

This is how we calculate the TVPI numbers you see above, and in the portfolio spreadsheet:

On all investments, we first incorporate the cost of the SPV or Rolling Fund admin fee — which ranges from 1% to 10%. As a result, “flat” investments are typically marked at 0.90x to 0.99x
We do not incorporate the cost of carry, because it varies between LPs.
For investments that have shut down, we mark them down to zero, or to the amount of partial cash that was returned.
For investments that are struggling, we mark them down an additional 50%.
For investments that have raised a subsequent priced round, we mark to the most recent share price.

For investments that have raised on a SAFE or convertible note most recently, we treat the most recent cap as the effective valuation, with some nuances:

Must be within reason. If a company raises on an outrageously high cap (or uncapped) or with a huge discount — we don’t count it. It only counts if the discount is zero/minimal, the cap is commensurate with the company’s progress, and reasonably close to what the valuation would be if it had been a priced round.
If it’s a post money cap, we treat it as the post money valuation. If pre, we treat it as the pre-money valuation.
We track and incorporate all of the dilution that would occur between the rounds, to the best of our ability. For example, if we invested on a $5 M post money SAFE, and the company then raises $2 M on a $12 M post money SAFE, we would mark that as a 2.0x — the delta between our post money (5) to the next pre money (10). If they then took $3 M more on an $18 M pre money cap SAFE, we would mark it up to a 3.0x → (10/5)*(18/12) = 3.
If a priced round is signed but not closed yet, we use similar math, but also add extra dilution to account for potential option pool expansion. If there has been no priced round for a long time, we add an extra 10% dilution. If there was a priced round very recently, with the option pool already refreshed, we incorporate less.
As soon as we receive a pro forma cap table or the exact share price, we revert to the official share price x number of shares we have.

Marking to Caps?

There is some debate about whether you can mark to a higher cap SAFE/note, or if you have to wait for a priced round before updating the valuation. AngelList, for example, only marks to priced rounds. However, other seed stage VCs we consulted say it’s common practice to mark to caps. In fact, the NVCA appears to believe it’s acceptable to use a cap as the effective valuation:

Historically, it made sense to only mark to priced rounds, because most rounds used to be priced rounds. And particularly for AngelList, with thousands of investments and a lean team — it’s most efficient for them to only mark to a share price. However, with the growing use of SAFEs, we are increasingly seeing early stage startups do 2–6 SAFE rounds over 2–4 years before eventually doing a priced round.

As an example, we have one portfolio company that we invested in 3 times at valuations of $15M and below, that went on to raise from one top tier VC on a $47M post money cap SAFE, and then another $25M from a separate tier 1 VC on a $200M post money cap SAFE. In our opinion, this company has clearly appreciated in value. But according to the AngelList methodology, this investment is technically still only “worth” 1x.

We certainly could wait for only priced rounds before updating our marks — but that means there will be no meaningful data to report for 2–4 years. We (and probably you too) would like to estimate our investment performance on a more granular level. We think the best way to do that is to mark to reasonable caps as rough markers of valuation, while calculating the effect as if they had been priced rounds.

If another investor is investing on a higher cap — they are legitimately investing on a higher valuation — and we think it’s reasonable to take credit for that.