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On this week's episode of the L.A. Venture Podcast, hear from Justin Fishner-Wolfson, founder and managing partner at 137 Ventures — a provider of customized liquidity solutions for founders, investors and early private tech companies.
Fishner-Wolfson is so focused investing in young tech companies because he learned a valuable lesson early on as an investor at Founders Fund, the venture firm that invested in SpaceX in 2008. He was also an early investor in Spotify, alongside Sean Parker.
Today, 137 Ventures manages more than $1.5 billion in assets.
Fishner-Wolfson was a pioneer of this model of buying secondary shares to get founders liquidity and he's been very successful at it (with a portfolio that includes SpaceX, Wish, Flexport, Gusto and many others). He says that he aims to invest $10 to $20 million in funds into 10 to 15 companies a year.
Today, he says his original thesis that companies would stay private longer and that that would create more need for earlier liquidity options has very much played out.
"We have some view that over an extended period of time that the business is going to play out and people are going to recognize that there is really great long-term value there," he says.
Fishner-Wolfson also explains the differences of being a broker, as opposed to being a buyer, and how his model has a number of structural advantages, including tax advantages.
"We definitely structure transactions ... as convertible debt, which tends to be much more tax efficient for founders," he says. "It allows them to maintain voting, control the shares — things that tend to matter. You can avoid repricing the foreign aid, I think, if you do things the right way. So the structure matters."
dot.LA Audience Engagement Editor Luis Gomez contributed to this post.