GV CEO David Krane on what it takes to manage 800 investments in five years at StrictlyVC SF

GV Overview

• GV is a 15-year-old unit with around 35 people, four managing directors, and invests $1 billion annually across sectors and funding stages, managing over $10 billion in total. (30s)
• The firm is digitally focused, with about half of its investments in digital and the other half in Healthcare. (47s)
• GV has a US focus, with two California offices and one in London, but is increasing its international investments, having invested $500 million in Europe over the past 10 years. (1m16s)
• GV is not like a traditional Venture firm, as it celebrates its uniqueness and has a single source of funding from Google, but is structured to be return-driven like firms on Sand Hill. (1m49s)
• GV has a broad mandate, investing in life sciences, Healthcare, biotech, and digital, with Google being a supportive and patient single investor, allowing GV to take big and bold bets. (2m37s)
• GV assesses deals by looking for opportunities to come in early, but can also write growth checks or invest in between, occasionally doing special deals. (3m13s)
• GV has made 800 investments in the last five years, with 500 of them being within the portfolio, backing companies that need capital to continue their journey, and they are committed capital partners at all stages of a company's life cycle (3m38s).

GV's Investment Strategy and Focus

• GV uses machine learning and data to help in the discovery side, particularly in finding remarkable, bold, and inspired entrepreneurs that can create top-tier returns (4m29s).
• GV's average check size is typically around $8-10 million, with a range of hundreds of thousands to hundreds of millions, and they like to go in early and stay with the company for a long time (4m55s).
• GV and CapitalG, Alphabet's expansion stage growth stage firm, work together productively, with CapitalG focusing on late-stage investments, and GV focusing on early-stage investments, but often overlapping in their investments (5m30s).
• GV and CapitalG have collaborated on deals, such as the digital bank Monzo, where CapitalG led the round, and the Enterprise data company Cribble, where GV led the round with a $140 million check and CapitalG participated significantly (5m50s).
• There is no specific threshold beyond which GV would pass on an investment, and they consider each opportunity on a case-by-case basis, as seen in their investment in Stripe, where both GV and CapitalG invested in different rounds (6m24s).

GV's Investment Process and Team

• GV's largest check to date was a $250 million investment, which was successful (6m50s).
• GV's biggest check written was for Uber's Series C round, but concentration is becoming increasingly important to their strategy, with a growing list of companies where they have nine figures worth of exposure, including Cribble, Treeline Biosciences, and Stripe (6m52s).
• There is no specific size of check that requires approval from the top, as GV is structured to allow independent operating teams to make their own investment decisions, with four managing directors, including David Krane, Dave Munello, Tom Hulme, and Krishna Yeshwant, overseeing investments (7m49s).
• The approval process involves the four managing directors, who make investment decisions and oversee investments, with the digital and life sciences teams having fairly common but somewhat parallel practices (8m11s).
• If the CEO hates a deal, it's not necessarily doomed, as there will be feedback and conversation, but the CEO's incentive is to approve and support everything the team brings forward (8m59s).
• GV invests over a billion dollars a year, with 42 new investments announced publicly this year, and 150 total investments, including follow-ons, with a focus on empowering the team and supporting their investment decisions (9m13s).

GV's Investment Types and Portfolio

• Most of GV's deals are primary deals, with occasional secondary market investments, but not as a primary strategy, and they focus on straight equity investing into companies they love (9m53s).
• Alphabet being ruled a monopolist does not change how GV operates, as GV is independent and runs a different business, and anti-trust scrutiny does not impact GV's operations (10m12s).
• GV is hopeful and optimistic that M&A activity will pick up again in the coming years, leading to more transaction volume in their portfolio (10m45s).
• GV focuses on when M&A activity will turn around and when they will see an increase in transaction volume in their portfolio, rather than on the actions of specific individuals like Lena Khan (10m52s).

GV's Perspective on Market Trends and Regulatory Matters

• Lena Khan reported that only about 2% of the 3,000 or so merger actions reported to the FTC every year receive a second look from the agency, which is a surprising percentage (11m12s).
• It is impossible to predict how the Trump Administration will impact Alphabet, as it has not yet officially started (11m52s).
• Elon Musk is considered one of the most ambitious and transformational entrepreneurs, and GV is grateful to be an investor in Neuralink, but it is too early to say how he will shape AI policy and strategy (12m6s).

GV's Focus on AI and Relationship with Google

• GV's focus is on independent companies, typically early-stage, that are doing bold and exciting things, often in AI, which makes up 40% of their deals (13m22s).
• GV does not feel that Google was caught flat-footed with AI, as their focus is outside of what Google is doing, and they have a great relationship with the teams behind Gemini and DeepMind (12m49s).
• GV has a huge focus on AI companies, with Alphabet being one of the biggest customers of Nvidia chips, but GV does not offer access to these chips to its founders (13m25s).
• Alphabet is building a new chip called Trillium, but its details and relation to Nvidia chips are not clear, and GV's focus is on startups outside of Alphabet (13m53s).
• GV knows some of the people on the Notebook LM team, which spun out of Google, and GV may potentially fund them, but it's not the norm for GV to encourage people to leave Alphabet and pursue startups (14m54s).
• GV has funded some startups founded by people who left Alphabet, such as Osmo, which was started by Alex Wilko, who spun out of Google Brain (15m7s).
• GV's goal is not to encourage people to leave Alphabet, but rather to support them if they decide to pursue startups, typically at the Series A stage or later (16m13s).

Investment in Mo: Digitizing Scent

• GV has incubated some deals, including Mo, a company that wants to digitize scent, which is an interesting and unique idea (16m26s).
• A company, founded by Alex, a former Google brain researcher, initially aimed to cure diseases by helping humans detect them more quickly through scent, but it took a detour into the fragrance industry, where it uses AI to accelerate the creation of unique fragrances and digitize scents (16m34s).
• The company works with around 2,000 unique ingredients, but about 50% of them are at risk of not being used due to environmental and climate concerns, and Alex's technology helps to identify suitable ingredients (17m14s).
• The company's technology has various applications, including healthcare, consumer products, and detecting counterfeit goods, such as sneakers, in collaboration with another GV company, StockX (17m48s).
• Alex's technology can intercept counterfeit products by analyzing the scent of glue and other materials, and it has been used to stop bad actors from passing illegitimate products through StockX (18m1s).
• The company's customers include StockX, CPG companies, and traditional fragrance companies, and it is also exploring opportunities in healthcare, where scent can be used as a diagnostic tool (18m30s).

GV's Long-Term Investment Approach

• GV's investment approach is focused on supporting founders with massive, world-changing visions, regardless of the timeline, and the company does not model its investments around specific exit timelines (19m7s).
• GV was also an investor in Nothing, a company founded by Carl Pei, which aims to disrupt the tech industry, including the development of a new operating system that could potentially compete with Android (19m30s).
• GV's partner, Tom, led the Series A investment in Nothing, and the company has continued to invest in the firm (19m56s).
• GV has invested in a company called Nothing, founded by Carl Pei, which is building a set of products including wireless earbuds and phones on Android, offering consumers an alternative to Apple products (20m2s).
• The company's products have gained significant attention, with people lining up to buy their phones, which is a rare sight beyond Apple products (20m24s).
• Nothing's approach is in line with the original intention of Android, which is to provide a platform for developers to create products that offer consumers choice (20m40s).
• The ultimate form factor for a phone or similar device is uncertain, and innovations like AI integration or new devices may shape the future of consumer electronics (20m53s).
• Nothing is known for its rapid development, strong economics, and design aesthetic, which sets it apart from other companies, and GV believes it has a huge opportunity to help answer questions about the role of AI in hardware and consumer electronics (21m14s).

Investment in Wonder: Ghost Kitchen Restaurant Concept

• GV also has a significant investment in a company called Wonder, founded by Mark Lori, which is a ghost kitchen restaurant concept that aims to introduce hundreds of locations throughout the US and take the company public in a few years, with an AI component to its business (22m0s).
• Many companies in GV's portfolio, over 400, are developing or will develop an AI strategy, as AI is becoming increasingly important across various industries, from food delivery to healthcare (22m42s).

Conclusion

• The section of the transcript starts with an expression of gratitude, with the speaker thanking everybody and K, followed by applause (23m15s).