David Hornik on Investing, Art & Philosophy - D.F.A., or Please Do, #14:
Plus, how to get LPs from Instacart and Klayviyo IPO, and Navigating the European Investment Landscape: A Guide to Government and Investment Sources
3 words: Really Freakin’ Different.
August Capital stands out in the crowded Silicon Valley VC scene through its unwavering focus on early-stage startups, coupled with investment size flexibility. The firm prioritizes long-term relationships with entrepreneurs, often backing the same founders in multiple ventures. Their partners' broad expertise across tech sectors adds another layer of versatility.
As for David Hornik, he's a standout for his pioneering "human capital" philosophy, which emphasizes the importance of investing in people as much as in companies. His active role as a thought leader and unique legal background further set him apart in a field often dominated by finance and tech experts. Beyond the VC world, Hornik is a serious and avid art collector.
Hornik’s collection, which started in college with international editions of Alice in Wonderland books, has evolved to include contemporary art by renowned artists like Chuck Close and Andy Warhol. In 2021, he and his wife Pamela played a significant role in funding the opening of the Institute of Contemporary Art San Francisco, further cementing their influence in the art community. Below are questions from a chat that I got to have with Hornik, who also sits on the GLAAD board of directors.
1. Investment Philosophy and Legal Background
David, as a former Harvard law professor and a well-known investor, how has your legal background influenced your investment philosophy? Can you share an example of how legal insights have shaped a particular investment decision?
I have taught a course on Entrepreneurship and Venture Capital at Harvard Law for more than a decade. It is incredibly fun teaching law students about the intersection of law and business. And they inevitably ask me, if I had it to do all over again, would I go back to law school. Which is, of course, a fair question to ask someone who is now a venture capitalist and no longer practices law. My answer is always yes. Not just because it worked out great, so why would I change it. But because law school teaches you a bunch of skills that are extraordinarily valuable in all of business, and certainly in venture capital. Law school teaches you how to apply logic, how to write well, and how to speak persuasively. There is not a job on this planet that wouldn’t benefit for logic, eloquence, and persuasion. So I don’t think that it is really about how my “legal insights” have allowed me to make a better decision or be a better board member or avoid some catastrophic loss. It is really more about the fact that the the law is about story telling and story telling is everything in entrepreneurship and venture capital.
2. Art as an Investment Strategy
David, your art collection features works by renowned artists like Chuck Close, Andy Warhol, Cindy Sherman, and others. How do you approach art collecting both as a personal passion and as an investment strategy? Can you share insights into how you evaluate the potential value of a piece or artist, especially for those considering art as an investment?
I actually hate the idea of art as investment. I’m not naive. I know that lots of art is very valuable. And I recognize that art bought from an emerging artist may ultimately be worth well more than what I initially paid for it. But my wife and I don’t think about art that way. In fact, whenever I buy a piece of art, I assume that the second after I’ve paid for it, it is valueless. Which it turns out is true more often than not. If I’m excited to pay a bunch of money for something that is “valueless,” then I am buying it for the right reason. My wife and I collect art because we love it. It is beautiful and inspiring and thought provoking and fun. We are not intellectuals when it comes to art. We collect art that is created by a diverse set of artists who’s art represents the diverse world we live in. Art is a passion, not an investment strategy.
3. The Intersection of Art and Business
With your extensive collection and experience in the art world, how do you see the intersection of art and business evolving, particularly in the context of investment? Are there specific trends or opportunities in art investing that you believe accredited investors should be aware of, and how does this align with broader market dynamics?
As an art fanatic, it is not surprising that I am pitched on practically all new technology businesses that address any aspect of the art world. I have not, to date, funded any of them. Nor do I suspect I will any time soon. When an entrepreneur pitches me on an art-related business, they inevitably start by telling me how massive the fine art world is. And they are, of course, directionally correct. There are billions of dollars transacted in fine art every year. The problem is that I can not dispassionately look at art businesses purely based upon their economic value. My interest with art is to have it appreciated, not to have it appreciate. So when I am pitched on a fine art investment fund that is fractionalizing a Basquiat, rather than assessing the likely economic value of such a service, I think to myself “wouldn’t it be better if that Basquiat was in a museum?” Which it would! But that is hardly a helpful lens when it comes to venture investing. So I think that my passion for art and my passion for technology will not soon intersect.
4. Diversity and Inclusion in Investment:
You've done extensive work with GLAAD and are known for your advocacy for diversity and inclusion. How do you see these values translating into the investment world, and what steps do you believe the industry should take to foster a more inclusive environment?
The brilliant people building today’s most exciting businesses do not want to work in a monoculture. They do not want to work for a company that is making the planet less clean or less safe or less fair. They do not want to work for a company that does not value diversity in the broadest possible way. And they have plenty of choices.
When I first started working as a Venture Capitalist, I would apologize for the “capitalist” part of my title. I would joke that I am a Venture Socialist. But over the last quarter century I’ve spent helping entrepreneurs build transformative businesses, I have seen what a powerful force for good capitalism can be. Is unbridled capitalism perfect? Certainly not. But I have seen market forces allow incredible technologies to be born out of nothing. I have watched amazing ideas turn into thousands of jobs. And I have watched as companies have become dramatically more inclusive, not only because it is the right thing to do, but because it is good business.
5. Reflection on Career and Impact:
Your career spans law, activism, and investment. Looking back, what are some key lessons or experiences that have shaped your approach to business and life? How do you see these intersections playing a role in the future of investment?
Everything I have done has been about people. I am a monstrous believer that people are amazing and have the capacity to change the world for the better. Artist create beauty out of whole cloth. They create work that inspires and enthralls, because it reflects their lived experiences and tells their stories. The entrepreneurs I back are the same. They create businesses that reflect their lived experience. They use technology to make the world a better place. And in so doing, they inspire investors and employees and customers alike. I am so lucky to live a life surrounded by these visionaries.
It has always been my view that the best way to live a happy, successful life – personally and professionally – is to help others live happy, successful lives. I don’t pay it forward so that I can cash in later based upon some invisible favor bank. I pay it forward because I would rather live in a world of givers than takers. I do not believe that life is a zero sum game. The more I give, the bigger the pie gets, and the bigger my piece of the pie gets. I love pie. And I love that by asking “how can I help?” I’m able to create a whole lot more pie to go around.
6. I always want to know this one - what are your favorite two albums - one for when you need to get into deep focus mode, and one for when you’re cruising around in the car?
I just crossed over two million miles flown on United Airlines. That is a whole lot of hours sitting on a plane. But it is truly my favorite place to get work done. And there are two albums I listen to more than any others while working on the plane. One is Illinois by Sufjan Stevens. It is probably my favorite album on the planet. My other go to airplane music is Glenn Gould’s Goldberg Variations. Man is Bach amazing. As was Gould.
When I get off the plane and am cruising through the airport, my two favorites are Remi Wolf’s live album recorded at the Electric Lady studio, and LCD Soundsystem’s self titled album. I can’t tell you how many times I’ve listened to Daft Punk is Playing at My House on repeat. It is not healthy.
Landing New LPs from the Instacart & Klayvio IPOs
Instacart and Klayviyo announced IPOs on the afternoon of August 25, just the other day. This means perhaps as many as 1000 new LPs. If you want to reach all of them, it would take a team of 4 investors 6 weeks just to BOOK the meetings.
In moments like these, investors have a serious to make: spend 1000 hours of their own time to approach a new group of high-net-worth investors, or spend $80-90k, and allocate that time (worth about $500k-600k) to something else, like meeting with LPs or founders, rather than prospecting.
To learn more, feel free to check out Lead Zeppelin’s pricing page or book an intake call - $40M raised with clients in the last 12 months. If you need at LEAST 100-200 LP meetings, Lead Zeppelin are the folks to call.
Navigating the European Investment Landscape: A Guide to Government and Investment Sources
Sure, there are high-level articles that showcase where Europe’s most active LPs are located, and the usual suspects are exactly where you think they’d be - European Investment Bank, Industriens Pensionsforsikring, Border to Coast Pensions Partnership.
But there’s a lot more data lurking beneath the surface, and there are many ways to locate the data.
Introduction
🚀 Ready to Explore the European LP Landscape?
Ever felt like finding information on European Limited Partners (LPs) is like searching for a needle in a haystack? You're not alone! Whether you're a seasoned investor or just dipping your toes into the European investment waters, understanding the who's who of European LPs is crucial. It's not just about the numbers; it's about knowing where the action is!
🗺️ What's This Post All About?
We're going on a treasure hunt, and you're invited. No, we're not looking for hidden gold (although that would be cool); we're uncovering the real gems: government and investment sources that spill the beans on European LPs. Think of it as your personal roadmap to the investment goldmine, minus the pirates and parrots.
Grab your virtual shovel and compass, and let's dig into the world of European LPs. Trust us; this is one adventure you don't want to miss!
Section 1: Government and Regulatory Websites
European Investment Bank (EIB) and European Investment Fund (EIF)
🏦 What's the Big Deal with EIB and EIF?
Ever heard of the European Investment Bank (EIB) or the European Investment Fund (EIF)? If not, buckle up, because these two are the big kahunas of the European investment world. Think of EIB as the financial arm of the EU, lending billions to support projects all over Europe. And EIF? It's like the cool cousin, focusing on small and medium-sized enterprises (SMEs). Together, they're like the Batman and Robin of European finance, fighting for growth and innovation.
🧭 Navigating the Maze: Finding Investment Data
Feeling adventurous? Here's how to navigate the labyrinth of EIB and EIF websites to find the investment gold you're after:
1. Start at the EIB Website: Head over to EIB's homepage. Click on "Projects & Operations" to explore ongoing and completed projects.
2. Dig into EIF: Jump to EIF's website. Click on "For Investors" to find details about investment strategies, funds, and more.
3. Explore Publications: Both sites offer annual reports, financial statements, and more. It's like a treasure trove of data waiting to be explored.
4. Use the Search Bar: Got something specific in mind? Use the search bar to find projects, reports, or countries of interest.
5. Contact Them: Stuck? Reach out to their contact centers. They're friendlier than you think!
Here’s also a brief outline of how to source LPs from this group of entities:
The EIF actively engages with VC and PE firms across Europe. They provide equity funding and co-investment opportunities targeting various sectors, including life sciences, ICT, infrastructure, renewable energy, and more.
Here's how it works:
1. Investment Proposal Form: VC and PE firms can fill out an [investment proposal form] on the EIF's website, detailing their management team, investment strategy, target market, expected returns, and more.
2. Assessment and Presentation: If the investment opportunity meets EIF's criteria, the team will be invited to present the proposal at EIF's headquarters in Luxembourg. (If you’re wondering what the food’s like in Luxembourg, check out this video).
3. Co-Investment Opportunities: The EIB Group also offers [co-investment facilities] with top-ranked funds and investment partners. They have specific co-investment projects targeting areas like artificial intelligence, life sciences, and infrastructure.
1.2 National Regulatory Authorities
🌍 What's the Deal with National Regulatory Authorities?
Ever wondered who keeps an eye on the financial playground in Europe? Enter the other NRA, the National Regulatory Authorities. These are the watchdogs, the referees, the guardians of the financial galaxy in each European country. They make sure the game is played fair and square, and guess what? They've got a treasure trove of investment data just waiting to be explored.
[To check out the rest of the post, go here].