Episode summary
Ben Black on Why Venture Capital Is Broken, the Rise of Secondaries, and Taking VC Public
How I Invest With David Weisburd
· · 38 min · Hosts: David Weisburd · Guests: Benjamin Black
Summary
Benjamin Black argues that venture capital has outgrown the old model of a 10-year blind pool fund. As great private companies stay private longer, he says the market has created a major opportunity in secondaries and in giving founders, employees, and early investors a path to liquidity without waiting for an IPO or acquisition. He frames this as a response to both investor demand and a structural problem: public-market access to the best private companies has become too limited for too long.
He also makes the case that venture secondaries are still attractive, but harder than before because more buyers have crowded in and pricing has become tougher, especially at the largest, most popular companies. In his view, the edge now comes from information, relationships, and knowing where to look for overlooked growth companies that still offer institutional returns.
A big part of the conversation focuses on Powerlaw Corp. (Nasdaq: PWRL), his publicly traded closed-end fund vehicle. Black says it gives LPs more control, aligns with permanent capital, and can expand over time through tools like debt, ATM offerings, and private placements. He acknowledges the structure is operationally complex and heavily regulated, but says that difficulty itself becomes a moat.
Key takeaways
- Benjamin Black says the traditional 10-year venture fund is no longer fit for purpose because liquidity often takes far longer than the fund life.
- He argues secondaries remain attractive, but pricing is tougher now because too many buyers are chasing the same top private companies.
- Black says Powerlaw Corp. (Nasdaq: PWRL) lets investors access late-stage venture exposure in a public, evergreen wrapper with more liquidity control.
- He says the hardest part of taking a VC fund public is regulatory complexity, not finding deals, and that the structure required major new hires and infrastructure.
- Black argues the best competitive advantage in this market is good performance, but the firm’s in-house capabilities and first-mover status also matter.
Notable quotes
“we spent 40 years sort of protecting ordinary investors from the best performing asset class in modern history”
“the product everyone sells is a 10-year liquid fund now”
“I think that the direct secondary market for what I call traditional secondary firms has gotten really difficult because of the level of buying activity”
“That is like crack for LPs for a group of LPs that are very frustrated with venture”
“The most important competitive advantage we can have is just good performance”
How the episode opens
Venture capital has traditionally been reserved for high net worth individuals, institutional investors. But you think that's going to change? Why?
The reason why we excluded so many people was really about paperwork. In the early days of venture was all about access to very fragile, opaque, and small companies that needed to be sophisticated investors how to write them. Today, the private companies that I'm underwriting are among the largest and most consequential enterprises on earth and a global network of investors are excited and about trying to get access to these companies and for them it's just a brutal problem and all we've given them is a shadowy market of SPVS that they have to navigate because where there there is demand, structures will come up to meet that demand.
And that's where we are today. This market's like completely unregulated. Like the SEC has nothing to say about it.
And so you think about it, you know, we spent 40 years sort of protecting ordinary investors from the best performing asset class in modern history. That's not really an investor protection. In the early 2000s, you had Amazon's IPO, Google's IPO, and venture investors or private investors oftentimes had a 10 to 50x, and the public markets actually ended up doing much better if you had held that stock.
What's behind that?
The IPO market has changed massively. Back in the day when I started, you'd go public with 30 million of revenue and have a $500 million market cap. that was seen at that point as the sort of next point in the creation of the company and then public market investors who are able to participate in the incredible growth of those private companies.
And we've got a whole system of mega funds and latestage businesses and sovereign wealth that can keep these compounding amazing companies private pretty much forever.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- venture capital
- venture secondaries
- private market liquidity
- public venture funds
- pricing illiquid private shares
Companies and tickers mentioned
- PWRL
- Powerlaw Corp.
- Akkadian Ventures
Watch the episode
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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How I Invest With David Weisburd, this episode and its artwork belong to David Weisburd. Octagon is not affiliated with the show; this page is an independent summary.
