June 25, 2024

E131: Photorealistic avatars; Tiktok, HeyGen, ElevenLabs | 2ndary market dislocation; Revolut, ScaleAI, Anduril, Groq, Epic Games | Tender offers good or bad; DPI for VCs, employee liquidity, structured tenders

49 minutes

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00:16 - Photorealistic avatars
- Full pod at www.youtube.com/@thisweekinpreipostocks
- Tiktok avatars for advertising announced
- HeyGen round at $500m (built on top of OpenAI/ElevenLabs, $24/month subscription fee, 40,000 customers, $35m ARR in 2023)
- Dillon uses ElevenLabs to publish research video in chinese and Spanish
- Disruption in the entertainment industry by AI-generated content and avatars

18:42 - More secondary market dislocation
- Full pod at www.youtube.com/@thisweekinpreipostocks
- Revolut at $40b, secondary at $23b … 75% higher vs secondary
- UP dislocation: Scale AI closed $13.8b valuation, secondaries at $7.4b last week
- DOWN disclocation: Anduril targeting $12.5 valuation, secondaries at $13.2b and Groq targeting $3.0b valuation, secondaries at $4.4b
- Are secondaries misjudging company valuations or are companies “managing” their valuations
- Time between primary rounds is a factor to secondary market price accuracy

24:08 - Tender offers – good for companies, good for investors?
- Full pod at www.youtube.com/@thisweekinpreipostocks
- VCs need liquidity, DPI back to LPs (distribute cash back to investors)
- Employees need liquidity; options expire, life (house, wedding, kids in college, etc)
- Structured tenders (e.g. a tender every year or every 6 months) is smart; natural price for stock, no surprises/volatility once stock is public and out of blackout window
- Secondary funds are popping up all over the place … SecondaryLink highlights a new fund every week that is raising billions to buy these assets
- No IPO for Stripe? “…tenders to happen annually going forward…”