Episode summary
The Investment Office E10: Investing in Venture is Hard!
The Investment Office
· · Hosts: Matt, Wendy
Summary
Capital One’s acquisition of Brex for just over $5 billion is used as a case study in how venture outcomes depend heavily on entry point and vintage. The hosts note that Brex’s first round was in 2017 and its last financing in 2022 at a valuation north of $12 billion, so the deal looks very different for early investors than for late-stage investors who paid peak prices.
The discussion argues that “venture” is not one uniform asset class. Early-stage venture is about finding outlier winners, accepting many zeros, and underwriting for a handful of massive hits that can make a fund. Later-stage venture, by contrast, demands real valuation discipline because returns are more bounded, liquidity is expected sooner, and there is less room for frothy pricing to be rescued by time.
The hosts also stress vintage-year diversification. They argue that investors who leaned into 2020–2022 vintages without continuing to invest across newer cohorts may find their venture programs disappointing, even if they picked decent managers. Building a venture program is hard because manager access is limited, the best-performing managers are not always the best known, and investing programmatically matters more than chasing hype.
Key takeaways
- Brex’s $5 billion sale looks like a strong outcome overall, but late-stage investors who entered at $7.4 billion and $12.3 billion valuations likely saw much weaker returns.
- The host argues early-stage venture is a hit-driven business where many investments can go to zero, but one outlier can return the fund.
- The guest says later-stage venture requires tighter valuation discipline because liquidity is expected sooner and upside is more bounded.
- Both hosts say vintage-year diversification is essential, since 2020–2022 could be strong exit years for some funds but poor entry years for new LPs.
- The guest warns that building a venture program is difficult because the best-performing managers are not always the best-known managers, and access becomes a scaling problem.
Notable quotes
“to the extent that there are ways to diversify the portfolio, ways to make sure that you're creating a long-term program, you're investing programmatically versus simply cherrypicking and hoping for the best”
“venture capital might just be a catch-all umbrella, but it actually has enormously varied parts of the ecosystem”
“At the earliest stages, early stage venture, you're really looking VC firms and LPs investing in those early stage VC firms are really looking for outlier winners, right”
“venture in particular is a difficult asset class to scale, a difficult program to scale within these investment portfolios”
How the episode opens
To the extent that there are ways to diversify the portfolio, ways to make sure that you're creating a long-term program, you're investing programmatically versus simply cherrypicking and hoping for the best. Um, there are no there's no average inventure. Well, there is average. You don't want average.
You do not want average inventure. — Average adventure is terrible.
Hi, this is Matt Paler with Wendy Lee. We're co-founders at Ivy Invest and welcome to this week's episode of the investment office. We took uh a brief hiatus over the holidays, but excited to be back at it here in 2026.
Uh as always in the investment office, we're here to discuss the latest in institutional investing, alternative assets, and private markets. Uh this week, I thought we would start by talking a bit about uh probably the biggest news in private markets over the last week, which was uh the acquisition of Brex by Capital 1 for just north of $5 billion. Uh as a little background, uh Brex is a fintech platform.
Uh probably best known for their credit card product for startups. They were one of the earliest uh companies to start offering uh credit cards to companies that traditionally uh wouldn't have qualified for more uh more classic credit card options like American Express. Uh there are now a number of players, but Brex was was really probably one of the first here.
Then they beyond that product diversified into a broader range of fintech offerings uh including banking uh and uh and accounting. The the acquisition was certainly interesting because of the topline number $5 billion is a lot of money. Um but it was also interesting because the financing history of Brex uh has taken it on quite a journey.
Uh Brexit's first round, their series A uh was back in 2017 and their most recent round of financing was in 2022.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- venture capital
- venture fund strategies
- vintage year diversification
- programmatic investing
- acquisitions
Companies and tickers mentioned
- COF
- Capital One
- Brex
Watch the episode
Watch “The Investment Office E10: Investing in Venture is Hard!” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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The Investment Office, this episode and its artwork belong to Ivy Invest. Octagon is not affiliated with the show; this page is an independent summary.
