UV Quarterly Update: Q2 2025
UV LPs,
Welcome to our April 2025 Quarterly LP Update. As a reminder, at Unpopular Ventures we focus on “the best companies, off the beaten path.” We invest in exceptional founders who are building high potential businesses, that are non-consensus in some way.
To help us find great opportunities around the world, we leverage a “Scout Program,” through which we share significant portions of our carried interest with anyone who helps us to identify, evaluate, and diligence companies that we invest in. If you would like to refer an opportunity, please check out our Scout Program Guidelines.
This is our quarterly update, which will be shorter than the annual update we write once a year. If you’d like to read about some of our most promising portfolio companies, how we do our portfolio tracking (along with relevant disclaimers), or navigate to some of the past updates/content we’ve written, you can find our last Annual Update here.
This update includes two big milestones that we are proud of: 1) a meaningful liquidity event, and 2) we surpassed 500 portfolio companies. As usual, see further down for our latest portfolio metrics.
Thank you all for your continued partnership!
Sincerely,
Peter Livingston and Thibault Reichelt
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 many more companies than you see in the syndicate. Rolling Fund LPs also receive preferential access to limited-allocation deals.
DPI! (for LPs who wanted it)
One of our strongest portfolio companies from 2019 finally completed its tender offer, using cash from accrued profits to buy shares back from any investors who wished to sell. The company remains in stealth, so we can’t share the name publicly here. We remain bullish on the company, so didn’t want to sell shares ourselves, but we recognized that some of our LPs might — so we found a way to pass through the option — allowing LPs to sell their shares if they wanted to, at the same price. We had 8 LPs choose to sell.
If an LP invested an equal amount in every investment we did in 2019, and opted to sell 100% of their 2019 position in this one company, they now have 2.65x their money back for the entire vintage. This is net of all fees, carry, dilution, etc. I.e. if they invested $100k with us in all of 2019, spread evenly across every deal, and sold, they now have $265k in their pocket.
The net multiple on the specific investment is 63.7x. Of course, most LPs didn’t invest in every deal we did, nor the same amount in every deal — so some LPs did better than 2.65x, while some got less. One LP in particular has only invested in 2 deals with us ever, was lucky enough to invest in this one and sold, and now has 21.3x his money back across all the money he ever invested with us.
Because we did not choose to sell ourselves, this will not actually be reflected in our performance metrics as DPI (distributions to paid in capital — i.e. multiple of cash returned relative to cash invested). But we are proud that we were able to provide the option of early DPI to LPs who wanted it, especially in this unusually illiquid time in the venture market. We will strive to continue to find similar opportunities for our LPs in the future.
Why didn’t we sell? We remain bullish on the company, and as you’ve heard from us before — we are long term investors. We are strong believers in the power of compound interest (or technically compound growth in this case) over a long time. That’s how you make the big money as an investor: buying great companies, and holding on to them for as long as possible.
Last year there were articles about how two Sequoia partners that had led Nvidia’s seed round, still hold most of their personal shares today, 30+ years later. When I (Peter) read that, I thought “that is going to be me.” When our top portfolio companies eventually go public, we will of course distribute the shares to our LPs — who will have the choice of what to do with them. But the shares I receive personally, from my personal investments as well as my carry — I intend to hang on to for a long time. You never know which companies are going to grow another 100x+, even after going public. It’s that long term conviction that leads to generational wealth.
But of course, not everyone shares that same long term approach. And some people encounter unforeseen life events that lead them to prioritize liquidity — which is completely understandable. We are happy that we were able to give some LPs an off ramp.
How did we do it? I.e. how did we provide the option to individual LPs, without having to sell all or part of the aggregate SPV?
We’ve been trying to invest more in this company for a while, but have not been able to, because the company literally doesn’t need the money. They are producing so much cash, more than they think they can responsibly re-invest, that they opted to do a share buyback. So it became clear that the only way to buy more shares in the company would be via secondary transactions from other existing shareholders. With this in mind, we allocated 20% of our Q4 2024 Rolling Fund to go out and try to buy secondary shares. We approached a lot of people, including former employees, but frustratingly, we couldn’t find anyone willing to sell. To make it harder, we were competing with the company, who was also trying to buy shares.
We were about to give up, and roll the uninvested funds into the current quarter to invest into other startups, when we asked AngelList if we would be allowed to offer to buy shares from LPs in our past SPVs. We thought it was a long shot, given the potential conflict of interest. We were pleasantly surprised that AngelList gave us the green light. We think this was for a two reasons: 1) we didn’t set the price, the company did (determined by an independent valuation firm) — and we merely passed through the same price, and 2) it was optional, up to the LPs to decide to sell — not us. No one was forced to sell, we were transparent that we are bullish on the company and wanted to buy more ownership, but that LPs could choose to sell to us if they wanted the liquidity. To minimize the conflict of interest further, we opted to receive no cash from our carry in the LPs’ SPV positions that were sold, and instead let our carry roll over. In the end, we were able to buy out every LP who wanted to sell, for 100% of their desired amounts.
So it was a win/win outcome. We were able to make the investment we wanted to in one of our strongest companies; although it has appreciated significantly from our original investment, we believe it could grow another 100x+ from here. And we were simultaneously able to provide liquidity to the LPs who wanted it.
500 Startups
I recall reading about Dave McClure’s 500 Startups a long time ago, and thinking that was an unfathomable goal. How could someone possibly invest in that many startups? I’m proud to report that we have now done it, crossing the 500 portfolio companies mark this quarter.
Why do we invest in so many, when most VCs pursue a more concentrated approach? Simple: we think it produces better returns.
The average VC significantly outperforms the median VC. This is due to the power law nature of startup outcomes, where a small number of the companies produce the lion’s share of the returns. I.e. if you could invest in every startup, or every VC firm — you would be quite happy with the results. But if you instead invested in one at random, or the exact median one, you would probably be unhappy with the results — because you would miss the top 10% of funds, or top 1% of startups — that made the returns of the whole group amazing. Most VCs invest in 30–50 startups per fund; how likely are they to invest in a top 1% startup, or really a top 0.1% startup — the type that can return 1000x+? Not as likely as if they invested in more companies.
500 Startups understood this, and through a diversified approach of investing in every promising startup, repeatedly produced top quartile returns. Y Combinator has done even better (albeit with a different model as an accelerator). And if you compare our returns so far against the returns of the industry — you will recognize that we are way up there as well — tracking within the top decile of VC industry returns for most of the years we have existed (especially the mature vintages 2019–2021, which are more reliable; recent vintages are too early to tell):
See the next section for our complete metrics to compare. To single out 2019 alone, the vintage that we just produced meaningful (optional) DPI for — you can see that the 2.65x DPI we just produced for LPs who invested an equal amount in every deal we did, and opted to sell — is not only way higher than top decile DPI for the vintage, but is higher than 2019 top decile *TVPI* too (2.00x).
So if investing in more startups produces better returns, why doesn’t everyone do it? Two reasons: 1) most VCs don’t have consistent, abundant, high quality deal flow, and 2) the incentives of the existing LP ecosystem don’t support it.
To the first point, we do have exceptional deal flow — thanks to our vast network of “scouts” and the great deal we offer them, combined with a good reputation that we have built over a long period of time. We believe we have better deal flow — in both quantity and quality — than the vast majority of VCs.
To the second, as we’ve written in past LP updates, a key segment of the LPs that invest in emerging managers (like us) strongly prefer concentrated VC portfolios: the “funds of funds.” These funds of funds aggregate large pools of capital and invest in lots of the smaller VC funds. The large LPs, like pension funds and endowments, see firms like us as too small for them to spend time on, so they outsource their small fund/emerging manager investing to the funds of funds. A key part of the funds of funds’ strategy is to invest part of their money in the VC funds, but then reserve most of their money to invest directly into the top portfolio companies that their portfolio VCs produce — taking over their pro rata, and investing directly in the startups without fees. They do this to justify their “value add” and therefore the fees they charge (on top of the fees of the underlying VC funds). But this strategy only works if 1) the underlying startup ownership positions are significant, representing a meaty pro rata for them to take over, and 2) there are a relatively small number of portfolio companies to keep track of.
So the concentrated approach is optimal (or at least perceived as optimal) by the funds of funds, because of their own incentives. But the optimal strategy for VCs who care about the returns of the VC funds themselves, and therefore for the LPs who are passively investing in VC — is a higher quantity of investments, in our opinion. That’s what we have done for the last 6 years, and it is really working for us — so it’s what we are going to continue to do. We are proud to have surpassed 500 portfolio companies to date. Next stop: 1000.
PORTFOLIO
SUMMARY: We had a small uptick this quarter. $77.5M of capital invested to date has now grown into $194M of portfolio value. This compares to $75M/$191M last quarter, i.e. $2.5M of additional investment and $3M of portfolio value growth — reflecting $0.5M of appreciation. The tender offer we mentioned above was already priced in last quarter.
Unfortunately, the macro exuberance we saw in Q4 and early Q1 hasn’t lasted, and the public markets have dropped back into gloom and uncertainty. Consumer sentiment has also plunged to the second lowest level on record since 1952 (source). Consumers and investors alike seem to have pulled back into conservative mindsets, waiting to see just how bad the macro tumult from tariffs and other economic decisions by the administration will be.
Some positive venture rounds are still getting done, but lots of startups are continuing to shut down or raise down rounds too. On net, our markups and mark downs more or less balanced each other out this quarter, and we imagine that that movement is representative of the overall VC market right now.
We are hopeful that the market turmoil won’t last too long, but it’s impossible to know for sure. If we get a resolution on the tariffs, and/or a change in course from the Fed, everything could flip suddenly. The last time I remember the market feeling this panicked was March 2020; then the Fed turned on the printer and everything ripped through 2021.
Having said all that, we don’t spend that much time worrying about the macro. We continue to simply make investments in the best founders and startups we can find, preferably those doing something a little unpopular or off the beaten path, and hold on to them for a long time. Great startups are always being founded, rain or shine, and the market will go through multiple ups and downs over the 10+ years we expect to hold them for. The very best companies will survive and thrive, and ultimately produce great returns for us investors.
PORTFOLIO STATISTICS
Our aggregate numbers, across every investment in UV’s life:
Numbers for only the UV Syndicate:
Annualized numbers for only the UV Rolling Fund:
Statistics about our investing activity:
Quarterly breakdown for the Rolling Fund:
We rolled over $57k of uninvested capital from Q1, and raised another $1.1M in Q2.
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
Thank you for reading, and thank you for your support of Unpopular Ventures!
