David Rosenthal: evaluation

Transcript context

…You guys know more about this than we do. We did spend a lot of time searching you guys. Okay, one more thing I want to say because I kind of think only we can say this, you can't really say this, on the strategy before we move on. I think one of the most persuasive things that we heard in our research for part one about maintaining the model is we definitely talked to entrepreneurs in the current Benchmark portfolio who believe that aggregate in the long run, they took less dilution by having Benchmark invest, and you guys not having your growth fund and having to put more money into them than they would have had you or whatever early stage firm they had taken money from, been wanting to put more money in in subsequent rounds. Just to connect the dots, if that had been the case, then you would have a conflict as that investor, when things are going well, to put more money in at a better advantaged valuation for yourself, and you don't have that conflict. And what you actually have is quite the opposite, because this happens all the time, where someone is an investor and they're like, ooh, this company's doing well, I'm going to preempt their round, and I'm going to see if I can get a slightly lower basis than if they went to market. That's Firm A. Firm B is not a Benchmark firm who also doesn't have a growth fund. They go out and they raise at market rates, but then there is a Benchmark brand, so option C is taking Benchmark's money. I think, and you guys probably are sure of this, your companies tend to raise better series Bs at higher valuations with more certainty than your average series A funded startup. Is that the picture?…

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