Three Takeaways On Venture Capital From HRH Prince Khaled bin Alwaleed At Bloomberg's Venture Forward
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KBW Ventures founder and CEO HRH Prince Khaled bin Alwaleed bin Talal Al Saud spoke with Bloomberg's John Gittlesohn at Bloomberg's Venture Forward in San Francisco on August 1, 2019. The Bloomberg event, which was sponsored by Abu Dhabi’s Mubadala, brought together some of the biggest VCs and technologists to California. Prince Khaled’s interview, under the title of Beyond Tech, ran the gamut from current events in Saudi Arabia, to the interests that he has in common with his father, HRH Prince Alwaleed bin Talal, who has a long history investing in some of Silicon Valley’s biggest companies including Snap, Lyft, Apple and Twitter. Here are three takeaways on investments and venture capital from Prince Khaled's interview at Venture Forward:
1. Big VCs leverage pro rata rights Prince Khaled is a LP and investor in the US-based PROOF fund. The PROOF fund uses pro-rata investment rights to allow investors the right to participate in a subsequent round of funding to maintain their level of percentage ownership in the company. Pro rata rights are a path for investors to continue to invest in companies that they want to put more into when the next round comes up. Why is pro rata relevant? For seed investors or angel investors, pro rata rights are basically a guarantee that the investor has rights to go into the Series A round. For other investors, it allows them to maintain their percentage as a successful company scales.
2. VCs back startups based on potential long-term wins, not immediate successes Prince Khaled discussed a few of the KBW Ventures portfolio companies, noting that while they were already making huge traction, what initially sold him on these startups was their potential future application. Despite the significant successes a few of the startups had already demonstrated - including deals and partnerships with massive conglomerates- what first sparked the Prince’s interest in these investments was potential future verticals of application, not current ones.
3. The world’s biggest investors are thinking future forward Prince Khaled represents his father HRH Prince Alwaleed bin Talal in Breakthrough Energy Ventures (BEV). BEV is an investor-led fund created by the Breakthrough Energy Coalition, and focuses on startups that are addressing huge issues termed “Technical Quests” across five segments: electricity, manufacturing, transportation, building, and agriculture. Prince Alwaleed is part of the major A-list that includes Bill Gates, Jeff Bezos, Jack Ma, George Soros, and Richard Branson. All of the BEV companies have a “breakthrough” element: solving an essential problem like climate change contributors. For example, one of the startups that BEV backs is CarbonCure; it manufactures a technology for concrete producers that recycles waste carbon dioxide into fresh concrete.