In this episode of Startup Project, host Nataraj sits down with Sajid Rahman, a prolific angel investor with over 1000+ investments under his belt. They delve into the evolving investment landscape, exploring the significant changes that have occurred since their last conversation a couple of years ago.
- Guest: Sajid Rahman – Top Angel Investor – GP at My Asia VC
- Host: Nataraj – Senior Product Manager, Investor at Incisive.vc & Startup Advisor
From Bull Run to Downturns:
Rahman notes a significant shift from the bull run of 2020–2021, where companies secured funding at sometimes unjustified valuations. Rising interest rates and global challenges have led to a market correction, with many startups facing down rounds or struggling to raise capital. However, this also presents opportunities for investors to enter later–stage deals at a discount.
Secondary Market Dynamics:
The conversation touches upon the impact of changing market conditions on secondary deals. Rahman suggests that many secondary deals from 2021 may not hold their value, citing examples like Robinhood and Stripe, which have seen significant valuation fluctuations. He also highlights the unique case of SpaceX and the potential spin-off of Starlink, which could offer earlier liquidity for investors.
Demystifying Dry Powder:
Rahman addresses the concept of “dry powder“ – uninvested capital committed to VC funds. He clarifies misconceptions surrounding this term, explaining that LP commitments don‘t always translate to immediate deployment of capital. The decision to call capital depends on market conditions and the fund‘s investment strategy. While the current dry powder might not reach the levels of 2020–2021, Rahman believes it will gradually return to the market as valuations stabilize and investor confidence grows.
The Web3 Evolution:
The discussion then shifts to the Web3 space, where Rahman actively invests in web infrastructure companies building on blockchain technology. He acknowledges the presence of scams and emphasizes the importance of thorough due diligence. Rahman outlines three key narratives driving the current Web3 boom: the intersection of AI and blockchain, real–world asset tokenization (RWA), and decentralized infrastructure development. He also observes a trend of Web3 companies opting for traditional equity models instead of token–based fundraising to avoid regulatory hurdles.
Sajid‘s Investment Approach and Portfolio:
Nataraj and Rahman explore Sajid‘s diverse investment portfolio, which spans angel investments, syndicates, and four different funds focusing on Web3, YC companies, general early–stage startups, and soon, AI. Rahman shares his insights on managing multiple funds and his strategy for sourcing deals, which involves both inbound inquiries and proactive outreach. He reveals that his personal investment portfolio is heavily skewed towards startups, reflecting his belief in their long–term potential.
The AI Boom and Valuation Concerns:
The conversation concludes with a deep dive into the AI space, where Rahman sees value creation in both foundational models and application–layer companies. While he acknowledges the hype surrounding AI startups and the potential for overvaluation, he believes the sector holds immense promise. Rahman is currently working on launching an AI–focused fund to capitalize on the opportunities within this rapidly evolving field.
This episode offers valuable insights into the current state of the investment world and the trends shaping the future. Rahman‘s experience and perspectives provide valuable guidance for both aspiring and seasoned investors navigating the ever–changing landscape.
Additional Resources:
- Connect with Sajid Rahman on LinkedIn
- Connect with Nataraj on LinkedIn
- Listen Startup Project podcast on Spotify
- Watch the video version by Subscribing to our YouTube channel
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