Alan Patricof is a founding father of venture capital, co-founder of Greycroft Partners and an early investor in Apple, AOL and Audible. Alan had super timely advice on how to make decisions right now on slowing the burn rate, i.e. “keeping the corpus alive,” closing your rounds now, even if it means taking a discount – “certainly is worth the discount, talking openly and honestly with your LPs…and much more. As it relates to the dip in the public equities market, Alan said he got advice long ago that "if you love a stock, you love it twice as much when it goes down 50%.”
Alan Patricof (@alanjpatricof) is the founder and managing director of Greycroft. A longtime innovator and advocate for venture capital, Alan entered the industry in its formative days with the creation of Patricof & Co. Ventures Inc., a predecessor to Apax Partners – today, one of the world’s leading private equity firms with $41 billion under management. In 2006, he founded Greycroft Partners, a venture capital firm, to invest in leading early and expansion stage investments in digital media. With offices in New York and Los Angeles, Greycroft is currently investing from its fifth Fund as well as its second Growth Fund and has $1B+ under management.
With a 40-plus year career in venture capital, Alan has been instrumental in growing the venture capital field from a base of high net-worth individuals to its position today with broad institutional backing, as well as playing a key role in the essential legislative initiatives that have guided its evolution. He has helped build and foster the growth of numerous major global companies, including America Online, Office Depot, Cadence Systems, Cellular Communications, Inc., Apple Computer, FORE Systems, NTL, IntraLinks, and Audible. He was also a founder and chairman of the board of New York magazine, which later acquired the Village Voice and New West magazine.
Alan is active in the New York and Washington communities. He is currently a board member of the Finance Committee of Northside Center for Child Development in Harlem and the Board of Overseers of Columbia School of Business. He is also a member of the Council on Foreign Relations.
Alan holds a BS in Finance from Ohio State University and an MS from Columbia University Graduate School of Business. He is married to his wife Susan for 48 years and has three children and seven grandchildren.
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Minute Marker 3:29
Stewardship and risk management of your VC fund
Be honest with yourself about what’s happening to the value of your portfolio and acknowledge fiduciary relationship to LPs
Be open and honest with your investors
Portfolio company metric to look at re-forecasting budget and what expenses you cna control
Added benefit of Congressional stimulus package
Implications of putting people on furlough
Coming out of COVID intact; watchful eye on expenses
Keep the corpus of your startup in place
Talk today, not tomorrow, to the advisor who can guide you through the stimulus package options
Sectors that are doing well during COVID
Education, Boxed, Thrive Market, Scopely
Don’t neglect customers who have gone away; service them and show interest in them; don’t just disappear
Turn this negative into a positive outcome for your company
Unrelated to current moment, should alway be sizing up your portfolio companies
Support those startups that size up well
Learn to say no to startups that don’t deserve support, COVID or no COVID
On valuations, founders shouldn’t get caught in the stubbornness of what was versus what is
Accept a realistic valuation to get a round closed now, assuming changing the price is a meaningful factor for investors
Get the deal done; don’t hesitate but don’t chase yourself downhill if lowering valuation won’t mater
Certainty is worth the discount
Will certainly affect the transaction?
What things will look like when it gets turned back on
Will look like a “U" cycle not a “V" cycle
This is a chance to re-examine strategy and pivot, if needed
Wouldn’t bet on an overnight recovery
Presence of Federal Reserve and stimulus package has helped public markets to remain steady over the past couple of weeks post-dip
We’re all doing well with conference calls from home; might have a long-term effect on commercial real estate and office space leasing
Wash out your losses
If a company you love goes down in valuation, you love it twice as much
Perhaps put money in at different points in the coming months