20VC: The Pro-Rata Battle: Valar Atomics Sues Day One Ventures | Meta Returns to the AI Frontier With Muse Wonder | NVIDIA Eyes $30B Reflection Deal & Jev Raises $870M at a $7.5B Valuation

Jason Lemkin (0:00)

I think Zuck's had a lonely stretch. There's a material chance Meta has just a monster AI product on its hands.

Rory O'Driscoll (0:06)

We roughly generated 20 plus or minus dekakorns per decade for the last five decades. And we generated, what did you say? 42 dekakorns in less than a full year of this decade.

Jason Lemkin (0:20)

I think everyone without massive scale is living a worse cesspocalypse than in March or April. I don't think we should be breathing any sighs of relief.

Harry Stebbings (0:27)

This is 20VC with me, Harry Stebbings. Jason Lemkin, Rorio Driscoll. The biggest news in tech. What is on the agenda today? My word, the salaciousness. We have Valar Atomics sues its own pre-seed investor Day One and the pro-rata debate that ensued on Twitter. Then we have Meta, Zuck and Alex Wang. The bromance is real. They're crushing it with Muse Wonder, their new model, just shy of Opus. And then Big Tech, they go shopping. Amazon Intox to buy Descartes and Nvidia, circling around Reflection for a whopping $30 billion.

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Rory O'Driscoll (3:43)

You have now arrived at your destination.

Harry Stebbings (3:46)

Boys, it is my favorite 90 minutes of the week. We have some big stories. I love the like salaciousness of this market. I remember when it was quite boring. I look back. And so we're going to start off with the news of the day.

Valar Atomics sues its seed investor over Pro Rotter. And so the backdrop here is that day one ventures put about a million dollars into the seed and 15 million dollars into the A. They hold about 5%.

And the fight is over August's billion-dollar series B. It's six billion led by Sequoia. Basically, the CEO asks every major investor to take zero series B allocation. But there's a spring back clause which basically meant that day one wouldn't relinquish this and basically put up a bit of a fuss when everyone else didn't. How did we think about this? And is Pro Rotter outdated in modern venture?

Rory O'Driscoll (4:42)

And just to remind everyone, Pro Rotter simply means if you own 5% of the company, you can get 5% of any round. So you can quote, protect your ownership. Typically all major investors get that. It's typical also that a majority of the investors can waive it for everyone. So someone can say, hey, you know, if most of us don't want to do this because you want to do a different thing for the company, that's right for the company. Normally you should just be able to waive it and then those rights go away for everyone. So it cancels the problem entirely. But then you mentioned that the second thing is you have these weird springback rights, which it's something like if we waive our pro-rata rights and then one of the investors who had pro-rata rights gets to put some money in, then you can say, hey, you waived, but then you took care of yourself specially. That's kind of unfair. It's not really a fair vote. So I get my springback rights too. And that's what I think they want is it was asserting at one point in time. And there's actually another level of app. But those are the two big rights.