Jordan Nof, Managing Partner and Co-founder of Tusk Venture Partners, says his firm will continue to invest in early-stage tech startups with the new fund. Nof also explains down rounds and why it's so problematic.

Closing Bell

Tusk Venture Partners Closes Third Fund Worth $140 Million

Welcome back to closing bell here on cheddar news. Now, economic issues like rising inflation, the Fed raising interest rates and the recent market selloff have created lots of uncertainty. But despite these challenges, Tusk Venture partners early stage VC firm Announced that it has closed its 3rd fund with $140 million dollars in capital commitments. Joining us now is Jordan's office managing partner and co founder of tusk Venture Partners. So Jordan's great to have you on. What types of startups will you and your team be targeting with this new fund? Thanks for having me. So really, what we're gonna be doing is a lot of similar, similar, similar sectors where we've been investing this whole time. And that's really looking at startups that are operating in highly regulated markets, which is where we believe we have our edge. That's, uh, you know, we understand regulatory risk better than any other venture fund does. And we, I believe that we offer founders a platform to help execute against those risks better than any other venture capital firm can. So that looks like a lot of digital health investing and, and Fintech in addition to, um, some gaming and transportation. And, and we'll see what's next on the horizon Now, this latest $140 million 70 million you got in your first investment from. So what has investors so excited uh, you know, I think that we've been able to really deliver on, on, you know, our value proposition to the ecosystem overall, in bringing that regulatory expertise to the table. Uh, you know, we also didn't hurt that. We had some, some, some breakout company winners, um, that have gone on to, to go public via direct listings, I Pos, or stacks. Um, so some companies like coin based bird, annual, lemonade latch and so on. And also some companies that are still still private, like roman wheel Alma, um, and some other names that, that are high fliers in those spaces. Now, I'm glad you brought that up because those companies like lemonade in coin base that you invested in shares of these companies have plummeted after splashy Wall street debuts. Is this a case of you getting out at the right time or does your firm still own shares of these companies? So that's a, that's a great question. So, you know, we are, we, are we view ourselves as public market investors. So at the time, whenever our lockup period ends most of the time, we will transfer those shares to our limited partners, uh, as, as just shares and let them manage the tax liability themselves unless, you know, our lockup period expires and position we believe is very under is undervalued, in which case we will hold onto that for a period of time afterwards. But it is definitely a case by case basis tusk. Venture partners has a fully stocked portfolio sort of which one's could be going public soon's in what should we be paying close attention to? It's a, it's a great question. I mean any, you know, I think a lot of people are trying to figure out what, when the window will open back up again for, for companies to exit. Um, you know, I think that there's, there's quite a few on the horizon in terms of, of being public markets ready from a, from a revenue perspective and also from a, from a product offering perspective. Um, I think the markets just need to cooperate and, and really the, the appetite needs to be there for for new market entrants. Um, but I would say keep an eye out on companies like, like roman, um, and others in the digital health space, particularly companies like wheel companies like Alma on the behavioral health side and on the labor side, um, also on the Fintech and you know, there are a lot of great companies that are being built today that are solving really, really big problems, whether that's on, you know, payments or with regards to um working capital for, for high growth technology companies. Now, one other trend we're hearing about more and more lately is down rounds. Can you elaborate on how this works and why is it bad news for startup or is it bad news for startups? Yeah, it's not something that's a great, a great situation to be in. Um, if you are working at a startup, if you're a founder or you know, if you're an existing investor, uh, just to be, to be clear. So, um, you know, from the perspective of why this, why this is so problematic. Um, what what happens is a lot of, you know, the people that make startups valuable, the employees, um, they end up with options that are now out of the money. So the biggest incentive, the biggest alignment driver, uh, dissipates and goes away. Um, so what you can see is a situation where those most talented employees leave, um, and they go to other younger companies that have valuations that are lower, um, for that additional upside and once you lose your top performers, um, that creates a vicious cycle. All right, Jordan off managing partner and co founder of Tusk Adventure Partners, Jordan, thank you so much for taking your time and being on our show.