IVP’s Eric Liao talks about the company’s new super fund, which is dividing Klarna, and why appearances can be deceiving when it comes to corporate succession

When IVP recently announced the closing of its 18th fund, I called Eric Liao, a longtime general partner at the growth-stage firm, to ask some questions. For starters, getting $1.6 billion in capital commitments from its investors right now might seem a lot more difficult than getting commitments during the frothy days of 2021, when IVP announced a $1.8 billion vehicle.

She also wondered about succession at IVP, whose many bets include Figma and Robinhood, and whose founder and early investors still loom large over the company — figuratively and literally. newly Lucky story Photos of company founder Reed Dennis remain scattered “in all kinds of places throughout the IVP’s office in San Francisco,” he noted. Meanwhile, photos of Todd Chafee, Norm Vogelsong, and Sandy Miller — former general partners who are now “advisory partners” — are intermingled with the firm’s general partners on the firm’s website, making less room for the current generation, at least visually. .

Not lastly, I wanted to talk to Liaw about Klarna, her company It made headlines Last month when a behind-the-scenes dispute over who should sit on its board came to public view. Here’s part of our conversation, edited for length and clarity. You can listen to the longer conversation as a podcast here.

Congratulations on your new box. Now you can relax for a few months! Was the fundraising process more or less difficult this time given the market?

It was a really volatile period all the time. If you really go back the clock, back in 2018 when we raised our 16th fund, the environment was “normal”. We created a little bit more of an environment in 2021, which wasn’t a normal environment. The only thing we’re glad we didn’t do is raise an excessive amount of capital compared to our strategy and then deploy it too quickly, which is what other people in our industry have done. So [we’ve been] Very consistent.

Did you take any money from Saudi Arabia? Doing so is becoming more acceptable and more widespread. I wonder if [Public Investment Fund] Is it a new or existing LP?

We don’t typically comment on our LP base, but we don’t have capital from that area.

Speaking of areas, I’ve been in the Bay Area for years. You have two degrees from Stanford University. You are now in London. When and why did you take this step?

We moved about eight months ago. I’ve been in the Bay Area since I was 18, when I came to Stanford for college. It’s been more years than I care to admit at this point. But for us, expanding into Europe was an organic extension of the strategy we were following. We made our first investment in Europe in 2006, in Helsinki, Finland, in a company called MySQL which was later acquired by Sun. [Microsystems] For a billion dollars when that was not available. Then, in 2013, we invested in Supercell, which is also based in Finland. In 2014, we became an investor in Klarna. And [at this point]Today our European portfolio is about 20 or so companies; It represents about 20% of our active portfolio, which is spread across 10 different countries. We felt that putting some feet on the ground was the right move.

There was a lot of drama around Klarna. What did you benefit from the information reports about? [former Sequoia investor] Michael Moritz vs [Matt Miller]a Sequoia partner who had recently been representing the company and has since been replaced by another Sequoia partner, Andrew Reed?

We are small investors in Klarna. We are not active in board discussions. We are passionate about performing their work. In many ways, they have experienced the worst of both worlds. They present their files publicly. They are subject to a lot of scrutiny. Everyone sees their numbers, but they don’t have the currency [i.e. that a publicly traded company enjoys]. I suspect [CEO and co-founder] Sebastian [Siemiatkowski] Now more open about the fact that they will be a public entity at some point in the not too distant future, which we’re excited about. I think if the reports were accurate, I wouldn’t be able to stand behind the motives. I don’t know exactly what happened. I’m glad he put it behind them and can focus on work.

You and I talked about different countries and some of their strengths. We’ve talked about consumer startups. It brings to mind social media network BeReal in France, which is reportedly looking for Series C funding at the moment or else You may sell. Did the IVP kick the tires on that company?

We’ve researched and spoken to them in the past and are not currently investors, so I don’t have a lot of insight into their current strategy. I think socializing is difficult. The prize is huge, but the path to get there is very difficult. I think every few years, companies are able to establish a foothold even with the strength of Facebook-slash-Meta. Snap still has strong appeal. We invested in Snap very early. Discord has carved out some space in the market for themselves. It is clear that TikTok has brought a huge change all over the world. So the prize is big but difficult to reach. This is part of the challenge that the fund faces, which is investing in consumer applications, which is what we did, [figuring out] Which of these rocket ships will have enough fuel to penetrate the atmosphere and which will return to Earth,

Regarding your new fund, the Fortune story noted that the company did not bear the name of founder Reed Dennis as evidence that it was built to outlast him. However, I’ve also noticed that there are pictures of Dennis everywhere, and others from the firm’s former partners, and now consultants, appear very prominently on the IVP website. IVP talks about making room for younger partners; I wonder if this is actually happening.

I would say without a doubt, that it happens. We have a strong culture and tradition of providing people in their careers with the opportunity to advance the organization to the highest levels of public partnership. I’m lucky to be an example of that. Many of my partners do as well. It’s not the only path in the company, but it’s a real opportunity available to people.

We don’t have a managing partner or a CEO. We’ve had people come into the company, serve the company and our limited companies, and also when they get to a different point in their lives and careers, they take a step back and move on to different things, which by definition creates more space and responsibility towards younger people who have now reached this privileged age. in their careers to help move the organization forward.

Can I ask: Are these advisors still receiving support?

You can ask, but I don’t want to get into economics or things that far. So I will calmly refuse [that question]. But we value their input, advice and contributions to the company over many years.

There is clearly a valuation recalibration going on for each company, and it seems that it is not a large language modeling company, but rather a lot of companies. I think this gives you easier access to the best companies, but it also hurts some of the companies in your portfolio. How does the company navigate through all of this?

I think in terms of companies raising money, the most promising companies will always have a choice, there will always be competition for those rounds, and so those rounds and the valuations associated with them will always be expensive. I don’t think anyone has ever come to the end of a great project feeling like, “Man, I stole that deal.” You always feel a little uncomfortable. But faith in what the company can become makes up for this discomfort. That’s part of the fun of the job.