Peter Livingston, Unpopular Ventures - The Best VC’s Actually Have A Lower Batting Average But A High Slugging Percentage | #379

Episode Summary

Executive Summary: Peter Livingston of Unpopular Ventures discusses how his firm has evolved from a solo angel/syndicate model into a global rolling fund with multiple partners, while staying focused on backing early-stage, often non-consensus startups worldwide. He argues that breadth, speed, and investing before deals become “popular” drive venture outperformance, and that global startup ecosystems and valuations are changing fast.

Main Topics: Unpopular Ventures' evolution and team expansion (Priority: 5/5): Peter explains how the firm moved from personal angel investing to syndicates and now a rolling fund, adding partners across Europe, Dubai, Palo Alto, and the U.S. to increase sourcing and decision speed. Investing in unpopular, non-consensus deals (Priority: 5/5): A central thesis is that the best venture outcomes often come from deals others ignore or undervalue, and that the firm seeks every 'credible deal' rather than waiting for broad consensus. Portfolio breadth, batting average, and mega-winner economics (Priority: 5/5): Peter and Meb emphasize that venture returns are driven by a few huge winners, so investors should prioritize breadth and slugging percentage over high batting average. Global venture opportunities outside the Bay Area (Priority: 5/5): The conversation highlights investment opportunities in Latin America, Africa, India, Pakistan, Southeast Asia, and Europe, with Peter arguing that valuable companies are increasingly built outside the U.S. Valuations and froth in private markets (Priority: 4/5): Peter believes valuations are elevated globally and may reset in the next 2-3 years, though some high-priced companies can still grow into their valuations if they become massive outcomes. Case studies: Jeeves, SMBX, Yummy, Yes We (Africa) (Priority: 4/5): The hosts discuss specific portfolio companies that illustrate the thesis: global fintech, small-business bond marketplaces, super-apps in emerging markets, and high-growth regional platforms. VC ecosystem shifts: Tiger Global, Sequoia, AngelList (Priority: 4/5): Peter suggests venture is becoming more index-like and faster-moving, with Tiger-like strategies and AngelList’s distributed model potentially reshaping how capital is deployed.

Key Arguments: Early-stage venture returns are dominated by outliers, so investors should maximize the number of credible shots rather than concentrate heavily. Many of Peter’s best investments were initially unpopular, overlooked, or hard for others to get into, which is why autonomy and speed matter. Global startup opportunity is increasingly decentralized; high-quality founders and large markets exist far beyond the Bay Area. Non-U.S. markets can offer better pricing and less competition, but they require credible founders, referenceability, and some local or relational edge. High valuations can be justified only if companies have a plausible path to enormous outcomes; otherwise a reset may be coming. A high batting average is not the goal in venture; a high slugging percentage is, because a few multi-bagger or 100x+ winners can define the entire portfolio. Distributed syndicate/fund structures can compete with traditional VC by making decisions faster and backing founders before deals become crowded.

Data Points: Unpopular Ventures investments: ~160 - Total number of investments Peter says the firm has made so far. Target portfolio size for venture breadth: ~100 investments - Peter argues about 100 shots is a good portfolio size to increase odds of catching a mega-winner. One-in-100 outcome assumption: ~1 in 100 may return 100x+ - Peter’s rough estimate for high-quality deal flow and expected outlier frequency. Peter's first personal angel fund: ~8x tracking fund - He says his first personal angel fund is currently tracking around an 8x return. Jeeves initial valuation: $10M - The first investment round mentioned for Jeeves. Jeeves follow-on valuation: $13M - A subsequent investment round in Jeeves. Jeeves capital invested: $200K + $300K - Peter describes two early checks into Jeeves. Jeeves later raise: $500M - Peter says the company most recently raised on a $500 million valuation (as stated in the conversation). Current geographic mix: ~40% U.S. / ~60% outside U.S. - Peter estimates the portfolio is about 40% U.S. and the rest international. Latin America allocation: ~15% - Peter estimates Latin America as roughly 15% of total investments. 2019 portfolio mark: 2.5x - Aggregate mark on the 2019 portfolio. 2020 portfolio mark: 2.8x-2.9x - Aggregate mark on the 2020 portfolio. 2021 portfolio mark: 1.2x-1.3x - Aggregate mark on the 2021 portfolio while still investing. Hoppin outcome: 100x+ in ~2 years - Peter says partner Chris Murphy’s seed investment in Hoppin is up more than 100x in about two years. Prodigy outcome: 5x-6x - Peter says Prodigy was acquired by Upstart and the deal returned roughly 5x-6x. SMBX minimum investment: $10-$100 - Crowd investors can lend small amounts into SMBX offerings. SMBX expected yield: 6%-8% - Peter describes the interest return to lenders on SMBX. Yummy valuation discussed: $2M-$2.5M (missed), later $7M (follow-on), now ~$150M+ - Peter and Meb discuss a missed early opportunity and a later re-entry. Airbnb valuation example: ~200x revenue - Peter cites Airbnb as an example of a company that grew into a very high revenue multiple. Valuation reset horizon: 2-3 years - Peter’s expectation for a possible venture valuation reset. Cropland loss: ~4.8 acres per minute - Intro ad for farmland investing with AcreTrader.

Pivotal Quotes: "In angel investing, it pays to be promiscuous." — Peter Livingston (quoting Brad Feld): Used to argue for broader portfolios and more shots on goal in early-stage investing. "Every credible deal is the way we frame it. I like that." — Peter Livingston: Describing Unpopular Ventures’ investment bar: if a deal is credible, they tend to do it without overthinking. "The best VCs actually have a lower batting average, but a high slugging percentage." — Peter Livingston: Explaining that venture success comes from massive winners rather than frequent small wins.

Implications: The episode suggests venture is becoming faster, more global, and more portfolio-driven. Investors should seek breadth, ignore hype when warranted, and expect competition to intensify while valuations stay elevated or reset.