Overview of 20VC with Harry Stebbings — Oren Zeev episode
This episode features investor Oren Zeev (solo GP, ~$1bn AUM) discussing how venture investing must adapt post-AI, why current growth expectations are often misleading, his unusual economics (no net management fee; 30% carry; he’s the largest LP in his funds), and why many funds—especially middle-of-the-road managers—are at real risk of failing to raise future vintages. The conversation blends practical portfolio lessons, concrete anecdotes (Navan, Audible, proptech losses), and prescriptive advice for LPs, GPs and founders.
Key takeaways
- AI is the biggest transformation in tech history: massive opportunity and disruption, but incumbents often hold advantages (data, distribution, regulation).
- Growth math hasn’t changed: sustainable doubling still compounds (2^5 = 32x) — focus on healthy, sustainable growth and unit economics, not vanity growth.
- Avoid crowded categories: Oren prefers contrarian or low-competition opportunities where a company can become market leader.
- Fund bifurcation is real: large platform funds vs. boutique/solo GPs—middle-of-the-road funds will struggle to compete and many may fail to raise.
- Valuations and reported paper gains are noisy: LPs must assess GP motivation and character to judge reported marks.
- Secondaries and selling positions pre-IPO often require steep discounts; Oren generally avoids them unless necessary.
- Radical alignment: Oren reinvests management fees back into funds and doesn’t personally receive fees until LPs are returned — designed to align incentives.
- Concentration and conviction: Oren’s internal concentration limit is ~20% of a fund in a single company; he intentionally runs concentrated books.
Topics discussed
- AI: beneficiaries vs victims; why many incumbents can be net beneficiaries (data + integration).
- Competition dynamics: more competitors per idea than before; importance of building a moat beyond code.
- Growth expectations: why “growth-at-all-costs” is dangerous; prefer healthy growth with good economics over pure top-line growth.
- Fund sizing & vintage risk: over-deployment in 2021 (paying 3–4x rich) is a cautionary tale; vintage diversification matters across funds.
- GP/LP alignment and reporting: how incentives distort reporting and behavior (DPI obsession, selling to show returns).
- Portfolio construction: when/why to be concentrated; ownership flexibility depending on situation.
- Series A pricing and preemptive rounds: focus on actual risk reduction/product-market fit, not round name; advise founders to preserve discipline even after taking large preemptive checks.
- Missteps and stress-testing: example of proptech investment that failed under rapid rate hikes — the limits of stress models and luck’s role.
- Industry structure: prediction that ~50%+ of funds will face acute fundraising difficulty going forward.
Notable quotes
- “We humans are not truth seekers. We are self-validation machines.”
- “I only have one rule. And that rule is that I have no rules.”
- “AI is the biggest change ever in the history of humanity.”
- “If you have a company that can double every year for the next five years it’s going to be 32x what it is today.”
- “At least 50% of the funds today... either cannot raise or at least are not sure that they can raise.”
Concrete examples & anecdotes
- Navan: Oren sees Navan as a clear AI beneficiary — gross margin improvements (support automation) and material customer experience upside make it hard to disrupt.
- Proptech investment: rapid interest-rate rise caused the worst-case scenario to be worse than his model; the company failed despite prior impressive growth.
- Audible: early home run; later opportunity to take private was blocked by partnership — a missed path to even larger return.
- Descartes (AI startup): Oren invested small early, ended up with ~5% after later rounds because founders became profitable and selective; demonstrates flexible ownership approach.
- 2021 vintage: invested quickly and often paid outsized prices—some funds from that vintage will be “okay” but not outstanding.
Actionable advice (by audience)
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For investors/GPs:
- Prioritize sustainable unit economics over pure top-line vanity metrics.
- Avoid crowded categories unless you have a clear, unique advantage.
- Be transparent and conservative in reporting; LPs will judge you by motivation as much as methodology.
- Consider firm differentiation: be very large platform OR very niche/boutique—don’t sit in the middle.
- Revisit fund sizing: bigger is not always better; over-deployment at market peaks hurts IRRs.
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For LPs:
- Assess GP character and motivation (are they dependent on inflated paper values to raise their next fund?).
- Don’t accept TVPI at face value—ask about DPI and how marks are derived.
- Expect vintage dispersion; diversify across multiple GPs/vintages to mitigate one bad fund.
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For founders:
- If you take a preemptive check, act as if you didn’t—avoid spend-driven loss of focus.
- Choose investors who add the type of support you actually want (speed, conviction, network).
- Be receptive to advice from investors who aren’t trying to control or constantly second-guess you.
Risk areas and predictions
- Structural risk: many funds without a strong differentiator will fail to raise; Oren estimates ~50%+ in jeopardy.
- Valuation inflation and reporting risk: opaque mark practices can hide true portfolio risk and delay LP wake-up calls.
- Societal risk: broad labor displacement concerns from AI — simultaneously an extraordinary investment opportunity and a potential social/political flashpoint.
Final perspective
Oren is bullish on AI-era opportunities and on his portfolio, but cautions investors to balance excitement with discipline: seek durable moats (data, integration, regulation, distribution), stress-test macro dependencies, avoid herd investments, and design incentives that align GPs with LP outcomes. He emphasizes intellectual honesty, the necessity of being willing to change one’s mind, and the importance of running a differentiated strategy rather than trying to occupy the “messy middle.”