Episode Summary
Executive Summary: Sheil Monad of Better Tomorrow Ventures argues venture is in a reset: fund sizes should shrink, returns discipline matters more than AUM, and seed investors must focus on the best founders rather than spraying capital. He discusses BTV’s fintech-only strategy, lessons from fundraises, portfolio management, secondary sales, and why fintech and emerging markets still have opportunities but at better prices and with more selectivity.
Main Topics: Venture capital should get smaller and more disciplined (Priority: 5/5): Sheil argues the industry is stuck in a prisoner’s dilemma where rising fund sizes force higher-return expectations and worse pricing. He believes smaller funds would improve returns and reduce agnostic pricing behavior. BTV’s fund structure and capital strategy (Priority: 5/5): He explains BTV’s $150M seed fund and $75M opportunity fund, why they increased fund size, and why they keep LP concentration low and take less than full management fees to stay return-focused. Fintech is not dead, just reset (Priority: 5/5): Sheil pushes back on the idea that fintech is over, saying the 2020-2021 period was overhyped and that the sector is now healthier with less competition and more rational valuations. Emerging markets require caution and pricing discipline (Priority: 4/5): He says emerging markets remain investable, but far-flung geographies became overfunded in 2021 without sufficient liquidity pathways or valuation discounts, especially in places like Pakistan, Bangladesh, and parts of Africa. Seed investing is about founders, not perfect prediction (Priority: 4/5): He emphasizes that early-stage investors cannot reliably predict winners, so the job is to identify great founders, avoid obvious losers, and support pivots when markets shift. Fundraising, LP dynamics, and speed to close (Priority: 4/5): Sheil recounts BTV’s fundraising through COVID, the value of early closes and credible LPs, and why managers should close quickly rather than over-optimize for timing. Secondary sales, boards, and venture behavior (Priority: 4/5): He argues founders can and should take some secondary at later stages, boards are often overrated versus direct founder interaction, and many VCs become too prescriptive or too ego-driven.
Key Arguments: Smaller funds improve incentives: if everyone reduced fund size, pricing would likely improve and returns would be healthier. Great venture firms are not all-knowing, but top investors still have real edge through discipline, debate, and experience. BTV’s return focus is reflected in taking less than full management fees and keeping the team lean rather than building a large platform. Follow-on strategy is hard because true winners often aren’t obvious early; you can more reliably identify losers than winners. Fintech’s 2020-2021 boom was overextended; current conditions are more rational and better for investing. Emerging markets still have good companies, but investors overpaid and many markets lack clear liquidity paths, so pricing must reflect that. Multi-stage funds entering seed often hurt founders because they may back the wrong competitor and then be blocked from the winner later. Founders raising too much capital can lose urgency and attract the wrong employees; capital efficiency matters. Secondary is acceptable at series B and beyond if the business is real, but excessive founder cash-outs correlate with weak fund returns. VCs should support rather than over-prescribe; good investors help founders think, but boards are often less useful than ongoing direct conversations.
Data Points: BTV fund size: $150 million - BTV seed fund size discussed during the conversation BTV opportunity fund size: $75 million - BTV’s separate follow-on/opportunity vehicle BTV AUM: $300 million - Referenced when discussing management fees and firm scale Potential management fee at 2%: $6 million - What BTV could take on $300M AUM, per the discussion Initial BTV fund zero: $15 million - Sheil’s earlier smaller fund before BTV’s main seed vehicle First close of fund one: $18 million - Early close during BTV fundraising before COVID disrupted markets Original target for fund one: $60 million - BTV initially aimed to raise $60M before revising expectations during COVID Final fund one size: $75 million - BTV ultimately closed above target after market recovery Fund two close time: 1 month - Sheil says fund two was raised very quickly in December 2021 BTV LP concentration limit: 10% or less per LP - BTV keeps any single LP below 10% of the fund Accelerator cohort performance: 5 companies above 70x - Sheil’s accelerator from 2016-2018 produced several top performers Accelerator total cohorts: 5 cohorts - Used to explain BTV’s rationale for launching a new accelerator Accelerator total companies: ~40 companies - Approximate total across five cohorts of 6-10 companies each Yield on 26-week T-bills: 5.5% - Mentioned in ad read about treasury bill yields Public treasury yield promo: 5.4% - Reiterated yield in the sponsorship copy Navan demo incentive: $250 travel credit - Reward for taking a quick demo Taco Bell wedding reward: $500 in Taco Bell credits and $25K honeymoon - Sheil describes the metaverse wedding prize package
Pivotal Quotes: "We are operating in a crazy prisoner's dilemma situation where there's a bunch of capital that wants to go into venture still." — Sheil Monad: Explaining why fund sizes keep rising even though it may hurt industry returns "I think we are operating in a crazy prisoner's dilemma situation... if everybody reduced fund sizes, then we would probably be operating at a different level." — Sheil Monad: His core argument for smaller VC funds and better pricing discipline "I don't think fintech's dead. I think we're just back to where we were a few years ago." — Sheil Monad: His view that fintech has normalized after the 2020-2021 hype cycle
Implications: Listeners should expect a more selective, return-driven VC market where smaller funds, sharper pricing, and founder quality matter more. Fintech and emerging markets remain viable, but only for disciplined investors willing to avoid hype and overfunding.