Bloomberg Beta closes $75M Fund 5, staying focused on day-zero future-of-work investing

despite how many months if not years of content generation has happened since. Yeah.

It shows you like the taste still stands out and that's why you know people are like oh my gosh content is commoditized like everyone can do everything now uh oh my gosh this is horrible for Hollywood my view is the opposite like in historically when anything becomes commoditized whether it's shoes handbags liquor whatever case like that's LVMH like LVMH is in all those businesses but they're doing the higherend meaning infused more scarce version of that thing that's available to anyone Yeah, you're now content is commoditized given all these new tools and I think as consumers of content we are going to seek more scarce meaning infused human you know brand signaled versions of content to fill our attention and time and so I think that's great example you know it doesn't matter how it was made it matters you know whether there's meaning in it I even knew how the tools I I I knew the tools that were used to make the Harry Potter Balenciaga thing but I couldn't come up with a unique idea that would go viral and so I went to CHPD and I said, "Here's why this worked.

It worked because it was inspired and it combined two things that were so desperate. Think of another thing that could be iconic like that. " And it couldn't do it at all. It came back. Yeah. Yeah. Exactly. Exactly. It wasn't there. I you know that that inspiration still needs to strike.

Uh speaking of Hollywood, did you see Mountain Head? Uh the new Jesse Armstrong film. Have you seen it yet? I haven't seen Mountain Head yet. No. Okay. You should you I mean you I if if you don't enjoy it uh they're they're really cooked. But um it's Jesse Armstrong from Succession making this film.

The the high level concept is you know some podcast. Yeah. Yeah. You could you could say that.

But uh the thing that the thing that I wanted to get to is that basically the overarch part of the overarching narrative is that deep fakes have gotten so good that they're causing global chaos because people don't know what's real and then they're seeing video and and sort of acting on that video.

Uh I wanted to ask you in that context or or or just generally about the progression of video models and how you're thinking about you know if if V3 uh you know what do you expect from from things like V4 and you know new runway models and any you know I'm assuming you're looking at everything internally at at Yeah.

Let me let me just well two comments like one on video models and then deep fakes real quickly on video models. I mean this is like a consistent slap a hand game, right? where oh my god this is the best model and then V2 comes out and then Sora and then runway and then the V3 and it just it just keeps piling up.

This is great for anyone who makes stories because these models are becoming better and increasingly commoditized. However, um you know it's would I want to be the model you know that's competing in that increasingly commoditized and not as great you know quality sort of vector probably not.

So that's comment number one on the deep on the deep fake situation. You know, it's interesting like these new these new websites that are coming out where um where uh you have these like anyone can make a deep fake with Trump saying whatever.

You know, I actually think they're playing a secret value to society by inoculating all of us. Totally. We all get a fake Trump said something crazy video tomorrow and we're inoculated from the fact that we should no longer trust what we see.

That we should instead of going from a world where we would trust but verify, go from a world, you know, to a world where we verify then trust. Like that would be good for humanity.

So, I'm like I'm actually, you know, for that inoculation because I think I think that uh I think that we need it and we're gonna want to know where where stuff came from. In a weird wayn it didn't happen.

No, in a weird in a weird way it it it might save legacy media because if legacy media orients around uh it orients around like if CNN were to say we are you know there's a bunch of the you know you have uh usernames like autism capital that are sort of de facto news on X right these are accounts that get billions of impressions and they act as as you know news content but if CNB you know CNBC and CNN and other services can really orient around we did the you know we were late to the punch on this but we did the work to you know verify that it was real it actually might save totally and there's credentials now there's metadata through things like content credentials that go into assets that are made on certain cameras and edited in certain software and you know and whether it's TBPN or CNN or anyone else can surface that information in the reporting and say we verify this is you know done by the so- and so and was edited by so and so and I think that adds to uh a layer of what people are going to need and want in future.

So, thanks so much. Yeah. Uh I wish we had a I wish we had 90 minutes. This was super fun. We have to come back soon. Yeah. To be continued. Have a great rest of your day. We'll talk to you. Bye. Cheers. Uh really quickly, let me tell you about Bezel. Go to getb bezel. com. Your bezel concierge.

He's available now to source you any watch on the planet. Seriously, any watch. And we have our next guest already in the studio. Roy from Bloomberg Beta coming in to talk about his latest fund raise. How are you doing, Roy? Great to meet you. Fresh capital in the bank or committed or something like that.

How much how much capital did you raise? Talk to us. Okay. How much you hit it 75 times for 75. You know, I'll take one customer sale over fresh capital in the bank. You know, the old capital formation is is the highest calling of man. It is. It is.

say two guys who do not intend to form their own capital unless you That's right. That's right. But we we're in the business of covering formation and celebrating it. But congratulations. Um what are you most excited about? Where are you planning to deploy this? What is uh how is the money burning a hole in your pocket?

Yeah. So we 12 years ago started this firm to say we're going to do day zero investing and startups and I'll just give the context because the answer is going to be the same thing. startups that future our future of work oriented. Our bet at the time was our personal lives have changed a lot. Our work lives have not.

Maybe that'll change. Like people were still using Lotus Notes for email and uh and now on our fifth fund we are doing basically exactly the same thing.

The craft of day zero work closely with the founder and what's burning a hole in my pocket is continuing to do that you know and I'm looking at our fund one companies and feeling like they're still midway through the journey. Replet, Flexport, Campus, you know, um, we love these companies.

Many, most of them have been on the show. Fantastic companies. Yeah. Yeah. No, I've loved watching them. That's part of what I love about the show. What, uh, what percentage of funds, venture funds make it to fund five? That's an excellent question. It's got to be like 5%.

But I always feel like that's sort of like those stats about what percentage of startups like raise their series B. It's like if the starting denominator has a lot of meh in it. Like I think to me the more interesting question is who gets there you go. Who gets to a There you go. Hot off the press.

I printed So I printed your your post because it appears that you printed your post. I don't know if you can see this, but uh you print meta. It's a print I think a LinkedIn post and you marked it up. You said today we're announcing our next fund, our fourth. And you just crossed it out and put fifth.

And I and and we respect printing out posts here. So I just wanted to The idea was inspired by this thing I stole from Congress when the Republicans blocked a Democrat Supreme Court nominee and then it went around the other way and they literally just crossed out the names and put in like Schumer. It is the same.

So I think the more interesting question is who gets to a fund five or whatever fund size without trying to gradually expand AUM? Like it seems like so many of the VC firms out there and we love working with them are just in the AUM expansion business. Yep. The big scare me personally. Uh I I looked it up here.

According to Chad GBT, there's probably a 50% chance it's hallucinating, but it's estimating at less than 5% based on pitchbook and Cambridge Associates data. I mean here here you say you're you aspire to be the most transparent investors. What does transparency mean in the context of a venture fund? Yeah.

Do you tell the founder, look, we clocked you at about a 15% chance of success. It's a bet we're willing to take. We do try to tell them how exactly we're thinking about it.

But here, look up, go to our website right now on those two laptops you got in front of you, and then you'll tell me what but which is to say when I was a founder, so before this, I started a company in games. Yeah.

And you know, you drive down to the 280, end up in an office on Sand Hill Road, and in the first three minutes of the meeting, the person be like, "Oh, but you're not a fit for us. We don't do this. " And it's like, well, why on earth do we just do that? And we are an attacker.

We were coming into an established industry. And we just asked, are there things the industry does that we can flip the bit and do the other way? And so the industry seemed very opaque at the time. It's a lot less true now. And we're just like, can we be as transparent as possible? Can we put in valuation?

Can we put in diligence questions? You can actually get our long form actual deal documents from our website. And the point of it is not transparency for transparency's sake, although that's a very Bloomberg idea about trans. It's just Founders are our customers. We want them to not waste time guessing what we do.

And so if they can disqualify out by seeing we don't do that thing, great. Better for everybody. We're big fans of Bloomberg. We read a lot of Bloomberg pieces on the show. What is the actual relationship subscription yet? No, we got to get one in.

This is This is my go-to terminal every day, a Wall Street Journal, but uh we we we do have subscription and we've had a bunch of Bloomberg folks in the show. You're like the fifth Bloomberg affiliated person. We got Joe Weisenthal, Tracy Aloway, uh we got Sharon Gafari coming on the show.

Bigger brands than me, one it all. Yes. Uh but what is the relationship between the fund and Bloomberg as a whole? Obviously, uh Bloomberg does a ton of different stuff. What does that look like and how is it evolved? The company is the LP in our fund. Period. End of story. Full stop. We are not a strategic investor.

So unlike a bunch of other corporate back funds, we're not trying to find some startup that's going to be a Bloomberg partner. Bloomberg wanted to understand what was happening in the world of startups. The argument was best way to do that is give startups what they need which is just money.

Yeah, that makes a lot of sense. Cool. Um uh talk to me about deployment of the fund is is 75 million that's a lot of smaller checks. Are you holding back some for PRAA and scale up like uh you know the line about like tell me the fund size I'll tell you the strategy.

Part of the reason why we've kept our fund size where it is is we want to be as early as possible. So I can't remember the exact number but it's something like most funds their first check ends up being something like 75 basis points of fund size on average and we end up a little bit around there slightly bigger.

Um we do you know we reserve for followons but then we also have an opportunity fund because what we realized is we wrote some big checks into from our core fund into some of our winners.

We wrote a big check into Replet at one point whatever you know company newfront and it's like well if we're going to do that we might as well have the capital to do that reliably so we've got an opportunity fund. Yeah.

At the early stage uh are you are you trying to pick a winner and then not invest in competitive companies like how do you think about that? So very old school on all this stuff. My view on competition is competition is in the eye of the founder. Mhm.

Like I have a attitude on this which is if I back you I want you knowing I have your back not that I'm thinking about which of your competitors to introduce to somebody. And so any founder we invest in if they tell us that a company is competitive we won't invest in that company.

still happens like you know companies competitive and we got to work it out. But that's the principle but yeah but yeah but that's not on you. Um driving the news cycle this week you got WWDC uh Apple kind of pulling it the news cycle.

Well, it drove the news cycle kind of by necessity, but it kind of like if you had said, "But nothing happened," would we have just nodded along politely? Well, our our in our our intern Tyler spent hours in setting it up. Well, yeah, he assembled the first Americanmade iPhone yesterday.

Today, he installed arguably a harder challenge installing uh iOS 26.

But I mean there is a there is a bit of a narrative for startups there in the sense that if Apple is truly pulling back and not going to steamroll the the the startup developer community in terms of in AI based apps that could be a a potential boom for you know we could see another rise of a mobile era where AI companies are building on iOS in mo in a little bit more friendly territory than totally than it's been in the past.

Obviously, there's the Fortnite decision and discussion around the app store. Um, what are you seeing that's interesting or or just what else is driving the news cycle for you? Well, no. So, I I do think look, Apple has to be an attacker on AI.

You've pointed out the way that the privacy first philosophy makes it a lot harder for them to do AI and AI developers who go there talk about running into that internally. You know, all the big tech companies want to be the platform on which everybody else share crops. And at the moment, that's open AI and anthropic.

It's like you have all these fast revenue growth crops is such a savage but real way to describe a 30% cut. It's just 30%. Just give me 30 30 of course naturally. But the market didn't exist but for that um and and I think they're going to try to figure out can they disrupt some other part of the ecosystem.

I feel the same way about the scale AI acquisition which is Meta has to attack. They need a layer that they can control that everybody else depends on and this looks like their play at it.

The other thing I think is interesting about that that I've been thinking about is how many of these big AI companies have effectively been acquired in ways that the government doesn't get to approve. It's, you know, the big talent acquisitions.

When I saw this, I was like, that looks like an acquisition the FTC doesn't get to approve. And so, I don't know if that's the motivation. Have not spoken in any of the parties. We're not in scale AI, but my sense is you're basically seeing the Game of Thrones play out, but the government is one of the houses.

What's very interesting about that is that we are Yeah. Lena's gone and we're in a different regime, but it's the same thing. Let us let let us do some deals. Let us let us do some some M&A. Just just $28 billion acquisition. Just let us sneak it sneak it in. It's fine. Let's get it by. Just one.

Let's open Let's get the M&A window open. Master I mean the other thing I say is when was the last time you heard a big tech company buy a company for $80 million? It felt like that used to happen all the time. All the time. Yep. And now it's a lot less common for they took that from us. They took that from us.

I think I feel the grief. Yeah. I mean, there used to be there used to be a a really great outcome for a lot of folks where if