513. Opening Late-Stage Venture to Everyone, Beating 10-Year Lockups, Why Logos Don't Equal Alpha, and Building Power Law as a Public VC Fund (Ben Black)

**Nick Moran** (0:00)
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Now on to the episode.

**SPEAKER_2** (0:24)
Welcome to the podcast about Venture Capital, where investors and founders alike can learn how VCs make decisions and reach conviction. Your host is Nick Moran, and this is The Full Ratchet.

**Nick Moran** (0:41)
Ben Black joins us today from San Francisco. He's the co-founder and managing director of Akkadian Ventures and chief investment officer of Powerlaw Corp, a fund investing across AI, next generation software, aerospace and defense and consumer technology. Before Powerlaw, Ben spent 16 years in institutional secondaries. He's backed companies including SpaceX, OpenAI, Stripe, Databricks and Perplexity among others. Ben, welcome to the show.

**Ben Black** (1:11)
Hey, thanks for having me, Nick. Really great to be here.

**Nick Moran** (1:14)
Good to see you again. You're doing something brand new and it's different.

**Ben Black** (1:20)
A whole new adventure.

**Nick Moran** (1:21)
A whole new adventure. It's an adventure for us because it's a shift on the traditional approach to venture.
We've been hosting the show for 12 years and love breaking down new models, new investment structures, pressure testing them, and of course, educating the audience.
Thanks for doing this. Powerlaw is new. I've been following the announcements in the recent debut. Help me and help the listeners understand the basics. What is the simplest way possible you can explain what Powerlaw is?

**Ben Black** (1:56)
Sure. Powerlaw is a publicly listed closed-end fund trading on the NASDAQ that contains a portfolio of 15 to 20 late-stage private companies. Any investor around the globe can buy through a regular brokerage account at the click of a button.
Daily liquidity, no minimums, no K1s.
So it's got a portfolio of companies like SpaceX, OpenAI, CalSheet, Deal, Stripe, Databricks and others that we just mentioned. And the idea is very simple. The whole world wants access to late-stage private companies and there needs to be more ways to give them that access. And we're trying to be the first venture capital fund to provide that access through this highly regulated public vehicle that is designed to hold long-term illiquid assets. And so we're off to a whole new venture. That's the future for Akkadian. We're all in on Powerlaw and that's what we're doing going forward.

**Nick Moran** (3:00)
Awesome. So was SpaceX in the fund when it went public?

**Ben Black** (3:05)
Yeah, SpaceX was actually a large exposition. So they got that one right there. And that's a really interesting sort of question around like, what are these public vehicles supposed to give exposure to? Because of course, once a company goes public, people can buy it directly. So the value of having it in a closed-end fund kind of goes down in a way. And so we're really focused on giving investors access to the run-up. You know, SpaceX ran up from 200 billion to 2 trillion pretty damn fast.
And the public investors all missed out on that. And so our goal is to get that exposure earlier in the company's lifecycle.

**Nick Moran** (3:44)
So does that suggest that you'll sell it down as it goes through these different tranches of liquidity on the lockup?

**Ben Black** (3:52)
Of course, you know, it's totally fine to have public equities inside of a publicly traded closed-end fund. There are many of them that just are public equities, and that's fine.
You know, and we'll face the same decisions that all investors make, all private market investors make, which is sort of like, how do we handle it once it's public and trading out? But like, we still see that our, the prime, you know, and eventually at the right time, you know, we'll sell that position and either distribute the cash or recycle it back in the fund, depending on where we're at. So, that works. I mean, really, like, if done right, the closed end fund will operate a lot like your investor in a VC fund. We face the same decisions about when to distribute, when to sell, once the company is public. But we see that the point of the vehicle is to give exposure to that price to appreciate and perhaps a lot of companies are private. So, we don't want the fund to become too much of public equities because it really kind of dilutes the purpose of the vehicle. So, we won't hold on to it forever. We'll exit at some point and we have a lot of discretion about how we do that.