Today on the show, I am so excited to be joined by Jeff Clavier. Jeff is the founding partner of Uncork Capital, the seed-stage venture firm he launched in 2004, back when it was called Soft Tech VC, and the idea of a dedicated seed fund was still a novel one. For more than two decades, he's partnered with founders from their very first days. And over that time, the Uncork team has backed more than 280 startups, including Fitbit, SendGrid, Postmates, Mint, Eventbrite, and Poshmark. Today he supports companies like DroneDeploy, Front, Shippo, ClassDojo, Phil, and Carrot Fertility and sits on the boards of Locked, Orbital, Misari, Inscribe, User Gems, Overflow, Lumina, and Coups. Often the first big check a founding team takes and the longest relationship they keep. Born, raised, and educated in France, Jeff earned an MS in computer science and a degree in distributed computing from the University Paris Dauphine. He began his career as a developer at the fintech startup EIX, rising to CTO before the company was acquired by Reuters, which brought him to Silicon Valley as a general partner at Reuters' venture arm and eventually out on his own to build Uncork. Let's welcome Jeff.
Thanks for being here.
Thank you so much for the very long welcome, Erica. Sorry, you have a long career.
I love it. You've been doing this for quite some time. You deserve it. You know, you deserve to like relish in it. All those companies, 280.
We haven't announced the most recent ones, but we just clocked 300 just a couple of days ago.
Wow. How do you log them internally? Do you say like 300, 3001, 300?
So we have a running list of all the companies we've invested in and then each one gets a numeral number. And when we get the companies together at our summits or different sort of meetings we organize, we give them sort of the ordinal number on their, you know, badge and everyone looks always for the lowest number. And every now and then we have number one that shows up, which is awesome.
Wow. Who's number one? Who's the first deal ever?
It's a company called Truveo. T-R-U-V-E-O, which was a video search engine pre-YouTube that I invested in in early 2005.
Wow. Pre-YouTube. That's wild.
And yes, so at the time you had to sort of search for, you know, the code that was playing the videos. Got that, you know, on that website you could search. And the company was acquired after 10 months and 3 weeks by AOL after a bidding war with Fox Interactive.
Not bad for your IRR. 10 months.
10 months, 17x in less than a year. Yes.
Those were the good days.
Yeah, I know. Things have changed, which we'll get into.
And the company, you know, had an incredible valuation of 2.5 million pre.
It was expensive at the time.
But we are going to get all into valuations because now it's just painful hearing some of these stories. I mean, I had Ann on at Floodgate who I'm sure you know, one of the other, you know, OG Silicon Valley folks, and we were talking about her Lyft investment and it's just like, it's just painful, like just seeing how much it's grown. I mean, so happy for her, but painful, can't really happen again or at least it's harder to.
All right, so I want to ask you a little bit of an icebreaker question. We ask all our guests this at the start. So I obviously read an incredible bio, 26 plus years in venture and even more in tech broadly. What has been the hardest part of your journey so far? When you reflect back on that whole time, what's the part that almost broke you?
I think the hardest was when I tried to raise fund three, which was in 2010. I had, you know, the first fund was my own capital. So we call that Soft Tech VC1. Soft Tech VC2, which was one of the first kind of seed funds in history that I raised in 2007, was 15 million. And I raised my first fund like from institutionals in eight weeks, which never happens, right? You talk to everyone. I was on a call with a new manager this morning and I told her, 'Be ready for two years of hell to raise your first fund.' And I just did it in eight weeks. And so I was like, well, you know, I'm good at this. And then I tried to sort of raise a much larger fund, 50 million. I mean, now it's nothing, but back then it was something. And it took me almost two years to actually raise it. And I made all the stupid mistakes that emerging managers sort of typically make when they raise their first fund, except that it was my third.
So basically what happened is I lost my anchor LP the day we were supposed to do the first close, like 10 million disappeared. And literally it was December 21st, right? So it's like a bad, bad time to sort of lose your anchor LP. And thanks to my other remaining amazing LPs, we did actually close on 15 million as opposed to 25 for that first close on December 22nd. So didn't sleep. Our lawyers at Gunderson Dettmer did an amazing job, you know, sort of getting the documents ready and we closed. And what's interesting is that I had a call option to buy 1% of Fitbit for $270,000 that was expiring on December 31st. So we did an emergency, you know, capital call. I actually bought the Fitbit shares on December 30th or something. And many years later, that deal returned the entire fund.
Wow. That 1% of Fitbit. Yep.
Because it got acquired by Google, obviously.
It was acquired. Oh, well it went public.
What happened with Google in 2015?
Google sort of bought them much later after like many years as a public company. Yeah.
Oh, so funny. I think of them as like having an earn out of Google. I didn't realize that they got public.
They went public. That was my first IPO in 2015.
Super epic. Wow. That's awesome.
So that almost broke me. But there were many instances where, you know, as a VC you have every night and day, you know, every now and then a good day and you have a good outcome, sell a company, you know, like you mentioned DroneDeploy, we actually announced during their acquisition by Procore for 845 million just a few weeks ago, so that was a good day, right? But otherwise it's just hard. You just are, you know, working with founders who just live the lives of founders and it's really, really hard. And you know, sometime they text you at 10 p.m. on a Sunday night saying, 'Hey, do you have a minute?' It's never ever to tell you good news ever. So, you just deal with a bunch on a daily basis and then every now and then you have like a good day.
Yeah. What's the ratio would you say between like the good days where there's a sale or there's a markup or there's something to the like hard, sloggy days? Because I think this is what people misunderstand about being a founder. They think it's like half good, half bad.
It is. It is 3% good. It's 97% bad.
Like yes, a markup is kind of a good news. Like we're happy that the company gets, you know, like a bit of capital and we get a new mark or whatever, but it means nothing, right? The only time when you can actually sort of crystallize for real like a profit is when either you sell part of the company or you sell the company.
Absolutely. Yeah. I mean, selling part of the company has also become more of like a recent thing, right? Secondaries are crazy these days. One thing I've learned talking to GPs on the show, and in my own experience as a GP, your back office is a signal. How fast you close deals, how clean the LP experience is, how your K-1s land, investors notice all of it. The more buttoned up you are, the more likely they are to give you more money in the future. That's why I want to talk about Sidecar. Sidecar is the SPV platform built for fund managers who want institutional quality execution without hiring a full back office team. They'll review your deal within hours, handle full secondary transaction support, and give you transparent pricing up front. No platform carry. Also, your LP relationships stay private, which is super important. It is not a marketplace. If you're running a professional fund, your infrastructure should look like it. Sidecar makes that possible without the overhead. Check them out at sidecar.io/partners/trailblazers.
I want to talk a little bit about that very first fund, which you said was your own capital. How big was that? And what made you decide to start a fund? I mean, people, it's probably so hard for people to comprehend, but like in 2004 that was not a thing. Like venture was so nascent and especially seed, like there was capital, and I would love to hear your thoughts, there was capital later on, but seed capital was so unique. Tell me more about that.
So yes, back in 2004, and 2003 is when I started sort of mulling over it. Essentially what happened is we saw the emergence of Web 2, Web 2.0 as we called it. And what was interesting is that those companies were actually very capital efficient. The issue why seed wasn't possible in Web 1.0 is that you had to spend a million bucks on Sun hardware, a million bucks on Oracle licenses, a million bucks on whatever other sort of piece of software, and so you needed like millions of dollars to just get going, right? Next generation starts, you know, leveraging some of the advances in like, okay, well you don't need to, you can actually run servers, you don't need to run your own, you know, sort of OS or whatever. And so the capital requirements of those companies were much lower. And at the end of the day, what was happening is that I saw entrepreneurs who were looking for like a few hundred thousand and a lot of help. And there was nothing in venture that did that. You had angels that were writing small checks and doing pretty much nothing except, you know, a few like Ron Conway. And you had VC funds that were writing, you know, Series A checks at the time that were like 2 to 3 million. And so if you were just looking for say 250k, there was nothing, right? There was a clear sort of need in the market and there was a hole. And so after four years as a GP at Reuters Greenhouse Fund, I thought this is kind of interesting, I maybe should do that. And I was very grateful to my partners at the fund because they basically taught me what being a VC meant because literally I had never met a VC in my life until I decided to become one. And I basically said, look, no one is ever going to back me as a GP because I don't have a track record and I don't even know whether it works. And so I went to my number one LP, you know, which was my wife, and I said, 'Hey, how about I stop this job and so I stop making money and I actually tap into our hard-earned savings. We had made a little bit of cash, you know, when we sold EIX to Reuters and, you know, I'm going to take 250k of our savings and I'm going to invest us in startups and we'll see whether it works.' And she looked at me and she was like, 'Okay, whatever, just don't bankrupt us.' And so the first kind of budget was 250k. We extended that to double that. What was interesting is, I mean, we talked about Truveo, because of that, you know, conversion from Web 1.0 to Web 2.0, a lot of Web 2.0 companies sort of got acquired very, very quickly, like within months.
Kind of like now, actually, it's happening.
Like now, it's actually back, yeah. And it was kind of interesting, people were almost telling us that we're building those companies to flip them, right? The term 'built to flip' was used at the time. And that allowed me to build a track record incredibly quickly where within three years I was 5x DPI, which means that I had returned my original investment overall five times, right? Which never happens. And that's that track record that allowed me then to raise an institutional fund because I could point to not only the strategy working but the financials actually working, right? Obviously I never got to 5x DPI in three years ever again because when you're an investor these days, it takes a long time. But I just thought that this was too good an opportunity to pass on. And you know, Mike Maples and Josh Kopelman and all the OGs sort of saw the same and we kind of started around the same time, 2004, 5, 6. And then in 2007, I became sort of an institutional kind of GP, raising fund two, 15 million.
It's incredible. Yeah, 5x DPI is unheard of. And I have this theory. I'd love to get your take that a lot of the best fund managers of this time, like let's point to like a Josh Kushner or like even like Alex Hahn is doing some cool stuff. Chris Saccia is like obviously such a legend. Founders Fund early funds, they do well because that first fund has crazy DPI. And I feel like that is something that we don't talk about enough in our business is like how do you optimize for DPI early and smaller funds early because therefore you can get more DPI. What's your take on that?
I think so. DPI is something you can wish for but you can't really engineer. Obviously now that you have all this secondary infrastructure that didn't exist at all back then. So the only way to get actual, you know, DPI was to sell the companies. The small funds, as you said, you know, Chris is a legend and his fund is one of the most, if not the most successful fund ever in terms of...
Second or third. Blockchain is second and Founders Fund is first.
I don't know if you knew that.
I didn't know about Blockchain, but one of the most successful ones.
Yeah, top three, top three. And I would say I wouldn't call it yet because we don't know how much he's going to return on Stripe because he's in Stripe.
He's in Stripe. So you haven't seen the Stripe... Yeah. So that's why I'm going to call maybe the most successful fund ever from a TVPI perspective. But you basically sort of try and show your LPs real gains. And unfortunately when you see like the ups and downs of SaaS stocks or SaaS, you know, companies that we've seen so recently, like you have a lot of markups which are just fake, right? And so these days as a GP you have to sort of trade this sort of situation between, okay, I want to provide like a successful overall outcome to my LPs in terms of how much total DPI I will return, but also you need to think about, okay, how much should I sell early on in order to sort of lock some gains and obviously trade those gains for future gains, but at least bring like hard cash to LPs who so dearly need it.
What is your take on secondaries? I mean, do you guys have a formula internally that you can share? How do you think about when to sell? And I say this because to your point it is complicated as a GP right now. Markups feel fake but they also, you know, in some ways could be quite significant if you sell. What's your strategy for secondaries these days?
So strategy, it's something which, you know, is evolving because obviously we've sold about 1.5 billion worth of companies in the last, you know, few weeks. So we're going to return, you know, pretty nice sort of capital distributions to our LPs. So that's going to sort of lower the pressure a little bit, but that's for the funds because we have many funds, right? We're investing fund eight, so we need to think about DPI in all the funds which are, you know, sort of in market. And I would say if there's an organized secondary, meaning either the company is, you know, buying back some shares during a financing or is working with a secondary player to put something in place, then we'll definitely sort of look at what we should do, right? Whether this is at a good price, because that's the issue, most are done at a substantial discount and sometimes it just doesn't make any sense to sell at those prices. So yes, we want to return capital to our LPs, but we don't want to do it at like too high sort of discount. And typical discounts would be like in the 25, 35% sort of range, but we've seen way, way, way sort of more than that. So, but we think about it. We also have two funds. We have our seed fund that essentially is the one that writes the first check and has, you know, this sort of long-term commitment to our companies, but we also have our opportunity funds that come in sort of later in the life of companies and we're pretty aggressive buyers of secondaries as well, right? So when we do a round, we're asking ourselves, okay, are we a buyer? Are we a seller? Are we a seller here and a buyer there? And you know, we sort of try and make the best decisions for the LPs and for ourselves. Very often we'll feel that the price is just not, you know, good enough and doesn't justify us sort of selling some of the early positions. I would say every time a company sort of hits a billion dollar valuation, we sort of have this active conversation as to what we should do. And obviously as the company sort of raises more capital at higher valuations, if we feel that, you know, this is sort of justified, then we'll think about selling sort of a small position. To be candid, we've done it sort of pretty rarely. We've actually done a lot of accumulation of larger positions in our growth funds or opportunity fund. It's not rare that we own almost as much from the growth fund as we own from the seed fund. It's hard for us to sort of say, okay, well now is the time to sort of start, you know, selling some.
Yeah. I mean, there's so many factors for that. There's like signal in the market. There's relationship with the founder. There's also like if this is looking like it could be one of your winners, you don't want to cut it off at the legs. And I think that's so much of it too. You know, it's painful. You're like, no, I believe in this company and I believe in these people.
Yeah. And I think the... you believe in the founder and you're there for them like all the way is something which is extremely important. DroneDeploy, for example, we participated in every single round that they raised, which is, you know, like six or seven. And it was really important to founders even though we're just, you know, the seed lead that they had, you know, worked with for 13 years, they really sort of appreciated that we're there for them all the time. It's not that the 750k check that we put in the last round sort of mattered, but it was the proof that we trusted them and we believe in them.
It's continued conviction and that's what people want to see.
And one thing that we'll never do is to sort of try and organize, you know, sort of a secondary with a secondary player that hasn't been sort of vetted by the company and force them to have like a rando on their cap table or whatever. Like we'll never do that. Ever.
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I want to ask you about fundraising. What is your advice for fundraising? You struggled, you said, with fund, well, fund two went well because you had 5x DPI, which is insane. Fund three was harder.
So fund one ended up being sort of 12x, but it was 5x in three years.
5x in three years. Wow. Okay, let's get the record straight. 12x on fund one. Not bad.
And it's, you know, it's good, but my partner Andy will do like double that on his own angel sort of portfolio. So it was pretty good for the time. Like now it's almost like, that's all. And so fund two had also sort of a great, you know, TVPI and DPI. The issue that made me sort of raise the fund in almost two years was that when you go from, let's say, fund two to fund three, right, you can change a few things, right, but you don't change everything. So I went from a solo GP, being a solo GP, to having a team. I went from, you know, let's just write a bunch of, you know, small checks, build a large portfolio and see where it goes, to, no, no, I'm going to concentrate my investments. I'm going to have a smaller portfolio. I'm going to start writing lead checks. I'm going to start taking board seats and so on and so forth. And basically, if you think about it, I changed every single element of my investment strategy. And oh, by the way, my two anchor LPs of fund two didn't come back because they were never meant to come back. And so I had to rebuild a brand new, like, LP base which is pretty much still with us today. And so like literally, I wouldn't say I screwed up because I had to do it. That was a total reset. And therefore, new LPs sort of looked at me and said, 'Okay, awesome, fund one is incredible and fund two is, you know, also sort of doing super well, but fund three has nothing to do with fund two, so what the hell?' And so that's how I sort of paid the price and spent my two years in purgatory, you know, to get that fund raised.
Yeah, sometimes you just have to do it. It's like a necessary evil. But is there any advice you have now for emerging managers that are going out trying to become more institutional, trying to build a firm that's thoughtful and differentiated? How do you do it now? I mean, it's obviously a different time. We're flashing forward 20 years later. What is your advice for them?
I mean, look, you have to answer very crisply, why the hell does the world need yet another seed fund, right? Because there's what, 2,500, 3,000, god knows, right? And you know, way back when in 2010 or whatever, when there were maybe 50 seed funds, I felt that the market was really well served. Then, you know, we were like a great community. We knew each other. We're friends with each other. And when we went from 50 to 100 to 200 to like a thousand, I was like, what the hell's going on? Like, why? And so at the end of the day, you need to sort of figure out what your unique stick is. I call that stick. So what is it that you do differently in terms of sourcing, in terms of investment strategy, in terms of, you know, what you do for your founders that will sort of give you a chance to get the deals, run with the deals and make money for your LPs. And I, you know, I welcome every single sort of wannabe GP. It's just super hard to get the LPs, especially in a world today where LPs are so busy with re-ups. They have to invest in the next, you know, $10 billion Sequoia sort of fund, and the next 15 billion, you know, a16z fund, and the next, you know, whoever massive, you know, fund, Benchmark raising billions for the first time ever, right? And so they can't miss that and therefore their attention span, their capital is extremely limited. And so unless you're super crisp in your, like, okay, this is what's going to be different about this and this is how I'm going to win the deals and this is why, you know, this is worth you sort of spending time with me, you won't get the attention.
Yeah. I think that's good advice for everyone though. Crisp storytelling is sort of the root of success.
I mean, it's true for us.
Like we have the same, like for us, okay, you guys have been here for 22 years and you're one of the, you know, established firms. Why are you still relevant?
Right. And we're going through a firm transition because I've announced that I was sort of stepping back. My friend and managing partner, Andy, is now running the firm. And you know, for LPs it's something that they have to think about, right? Because for a long, long time they've underwritten me as the head of the firm and it's no longer the case.
Yeah. Andy's pretty great though.
He's awesome. Yeah. You've compiled an amazing team. Talk to me a little about that transition. Like I really want to get into succession planning. I think this is one thing that we are seeing a lot of folks of your generation that have been building firms for, you know, let's call it 20 plus years. You know, they've done it, they've done really well, but they want it to outlast them. So, what has been your thought process around when you were going to step down? Who you were going to hire, you know, 5, 10, 15 years ahead of time? Talk to me a little bit about that and the messaging because I saw you guys just brought on a head of comms.
Who's a killer. Great background. He seems amazing. Talk to me about how you're thinking about this next phase in succession planning.
