IVP's Eric Liaw discusses the Klarna controversy, complicated successors and why the great valuation reset doesn't really matter


When IVP recently announced the closing of its 18th fund, I called Eric Liaw, a longtime general partner with the growth-stage firm, to ask a few questions. For starters, drawing down $1.6 billion of capital commitments from its investors now would seem much more challenging than meeting commitments during early 2021, when IVP announced a $1.8 billion vehicle .

I also wondered about succession at IVP, whose many bets include Figma and Robinhood, and whose founders and earlier investors still hold large stakes in the firm — both figuratively and literally. A recent Fortune story said that photos of the firm's founder Reed Dennis were scattered “in all kinds of places in IVP's San Francisco office.” Meanwhile, photos of Todd Chafee, Norm Fogelsong and Sandy Miller — former general partners who are now “advising partners” — are mixed in with the firm's general partners on the firm's website, which, at least, makes less room for the current generation. Makes. ,

Finally, I wanted to talk with Liaw about Klarna, a portfolio company that made headlines last month when behind-the-scenes disagreements over who should sit on its board came to public attention . Below are excerpts from our conversation, edited for length and clarity. You can listen to the longer conversation as a podcast here.

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

It's really been ups and downs the whole time. If you actually rewind the clock, in 2018 when we raised our sixteenth fund, it was a “normal” environment. We raised a little bit bigger in 2021, which was not a normal environment. One thing we're glad we didn't do was raise an excessive amount of capital relative to our strategy and then deploy it very quickly, which others in our industry did. so [we’ve been] Quite consistent.

Did you take any money from Saudi Arabia? It has become more acceptable, more widespread, to do so. I'm wondering what [Public Investment Fund] Is a new or existing LP.

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

Speaking of areas, you were in the Bay Area for years. You have two degrees from Stanford. Now you are in London. When and why did you take this step?

We moved in about eight months ago. I've actually been in the Bay Area since I was 18, when I came to Stanford for undergrad. At this point it was more years ago than I'd like to admit. But for us, expansion to Europe was a natural extension of the strategy we are pursuing. We made our first investment in Europe in 2006 in a company called MySQL in Helsinki, Finland, which was later acquired by Sun. [Microsystems] For a billion dollars when it was not run of the mill. 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 consists of around 20 companies; This represents approximately 20% of our active portfolio, which is spread across 10 different countries. We felt like getting some feet on the ground was the right move.

There has been a lot of drama regarding Klarna. What did you draw from The Information's reports? [former Sequoia investor] michael moritz vs. [Matt Miller]The Sequoia partner who most recently represented the firm and has since been replaced by Andrew Reed, another Sequoia partner?

We are minority investors in Klarna. We are not active in board discussions. We are encouraged by their business performance. In many ways, he has experienced the worst of both worlds. They file publicly. They are under a lot of scrutiny. Everyone sees their numbers, but they have no currency [i.e. that a publicly traded company enjoys], I think [CEO and co-founder] Sebastian [Siemiatkowski] Now there is more open about the fact that they will be a public entity at some point in the near future, which we are excited about. I guess if the reporting is accurate, I can't trace the motivations. I don't know exactly what happened. I'm just glad he put it behind him and can focus on business.

You and I have talked about different countries and some of their strengths. We've talked about consumer startups. This brings to mind social network BeReal in France, which is reportedly looking for Series C funding right now otherwise it may sell. Has IVP put pressure on that company?

We have researched and talked to them in the past and we are not currently investors, so I don't know much about what their current strategy is. I think socializing is hard; The prize is huge, but the road to get there is tough. I think every few years companies are able to gain a foothold even with the power of Facebook-slash-meta. SNAP continues to exert force; We invested in Snap very early on. Discord has made some space for itself in the market. Obviously, TikTok has done a lot of transformational work around the world. So the prize is big but getting there is hard. That's part of the challenge of the fund, to invest in consumer apps, which is what we've done, [figuring out] Which of these rocket ships has enough fuel to break the atmosphere and which one will return to Earth,

Regarding your new fund, the Fortune story notes that the firm is not named after founder Reed Dennis, a testament to the fact that it was created for his survival. Yet it was also noted that there are photos of Dennis everywhere, and photos of the firm's other former partners and now consultants are displayed very prominently on IVP's site. IVP talks about making room for younger partners; I wonder if that's really happening.

I will say without question, it is happening. We have a strong culture and tradition of providing people with the opportunity to progress throughout their careers to the highest levels of general partnership in the organisation. I am fortunate to be an example of this. I also have many friends. This is not exclusively the firm's path, but it is a real opportunity for people.

We don't have a managing partner and we don't have a CEO. We have people who enter the firm, serve the firm and our LPs, and also as they reach a different point in their lives and careers, take a step back and try different things. Move forward, which by definition creates more space and it's the responsibility for people who are young and now reaching the peak of their careers to help take the organization forward.

May I ask: Do those advisors still get carry-ons?

You may ask, but I don't want to get into economics or things related to that dimension. then I will quietly refuse [that question], But we value his input and advice and his contribution to the firm over many years.

There's obviously a valuation reset going on for every company that appears to be not a big language model company, which a lot of companies are. My guess is that it gives you easy access to top companies, but also disadvantages some of your existing portfolio companies. How is the company dealing with all this?

I think in terms of companies raising money, the ones that are most promising will always have an option, and there will always be competition for those rounds and thus those rounds and the valuations associated with them will always look expensive. I don't think anyone has ever reached the conclusion of any great enterprise feeling, 'Man, I got a steal in that deal.' You always feel a little uncomfortable. But confidence in what the company can become outweighs that feeling of discomfort. It's part of the fun of the job.