In the Room with David Yuan
Welcome to the seventh episode of Season Six of the Room Podcast. Today we sit down with David Yuan, founder of Tidemark Capital, a growth equity firm that has raised around $575 million to invest in growth stage startups.
David established his foundation as an investor as a GP at Technology Crossover Ventures (TCV) back in 2005, and has since gone on to become an entrepreneur in his own right. Due to his years of experience, David has a unique perspective on the market and how to sell yourself to investors, partners, and stakeholders. Having been on the Forbes Midas list twice, David truly is an expert.
In this episode we discuss focused investment themes such as the importance of focused themes such as Vertical and SMB SaaS, the people and processes needed to build a firm, and the future for a fund formation.
Let’s open the door.
Listen to the seventh episode of season six here.
Key Theme 1: Focused investment themes such as Vertical SaaS
In every venture firm, it is important to have a focus and level of expertise about your investing style. One of David’s key areas is “Vertical SAAS”, having invested in Toast and Legal Zoom in his past life. As a part of his core differentiation for Tidemark, David write up and invests in content to exemplify where his team and dollars are being put to work. In his recently published paper, David notes the opportunity saying, “Vertical and SMB SaaS aren’t just great businesses; they can be incredible platforms. In contrast to their horizontal peers, Vertical SaaS companies are inherently multi-product, can achieve a high market share percentage, and enjoy network effects. And as they extend forward and back through the value chain, Vertical SaaS companies can bring multiple stakeholders on the software backplane and transform industries.”
While this is one of the many area’s where David is spending his time, it is helpful for any fund founder to unpack their areas of focus and tell a clear story about their thesis and perspective both for their audience of entrepreneurs and LPs.
Key Theme 2: The power of people and process needed to build a firm
The very first person David called when starting Tidemark was his wife, who had extensive background in working as a COO and consultant at multiple companies including Bain and is now working as Tidemark’s interim COO. Moving beyond that, and into the realm of general employees, when building this close knit firm David was drawn to committed, bright and hardworking people who would foster a sense of community in the workplace.
As you think about striking out to establish your company, firm or entrepreneurial endeavor, think about who you want at your side.
Key Theme 3: The future for fund formation
David shared about the importance of verified trust in cultivating LP relationships. While this is rapidly changing, traditional LP dollars are often restricted to those with a track record and/or who have established relationships with the institutions. As Dave looks towards the future of fund formation, he predicted change through the increase in LPs who are using software, data, and automation to track individuals and funds.. He points out that as more things become digitized, they will also become more transparent, thus opening up beyond the few.
For more on fund formation, check out our episode with Cooley lawyer, Rachel Goddard.
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Thanks for checking out this episode of The Room Podcast. Stream this episode on Apple Podcasts and Spotify.
We will be back next Tuesday for a new, inspiring conversation. In the meantime, catch up on all our latest episodes, available now on all podcast streaming platforms, including Apple Podcasts and Spotify.
