🤝Building the Palantir Pack - Luba Lesiva, Founding Partner of Palumni Ventures

Who are the leading VC Fund/Syndicate GP’s and how do they think about allocating capital via Funds, SPV’s and the like?

Today, we’re extremely excited to interview Luba Lesiva, the Founding Partner at Palumni Ventures, which invests in Palantir alumni founded startups from pre-seed to pre-IPO. Luba has previously held a number of unique roles across the investing and technology landscape, including serving as a Principal on Goldman Sachs’s Growth Equity Team, an Investor at the Abu Dhabi Investment Authority, and most recently working as the Head of Investor Relations at defense tech startup Palantir, where she helped the company raise >$1B across multiple financings round.

Today she leads one of the most exciting alumni syndicates helping fund and build the next stage of ex-Palantir founded companies. We’re incredibly excited to share her story!

Our interview with Luba below:

How did you end up in Venture Capital? How did you start your career?

I studied Actuarial Studies at university in Australia, and like all ambitious STEM grads in those years, I ended up investment banking. Because formatting PowerPoints is the best use of time for someone with a statistics background, obviously. I started at Merril Lynch (now that’s dating myself!), covering Energy, Mining, and Utilities.

On a more serious note, I very quickly decided I wanted to be on the buyside - i.e. actually putting capital behind my recommendations, rather than advising. I’ve basically been investing in private markets since then - over 15 years at this point.

I first invested in energy and mining (although that’s been rebranded to Climate Tech these days), then went to work for Goldman Sachs, managing a leveraged international portfolio of diversified growth assets, just as Greece was defaulting. That was an intense course in risk management, investment restructuring, negotiation, and LP communications - all with fiduciary responsibilities and serious capital at risk. Those are all skills I use every day today, and they’re more relevant than ever in the current economic environment.

After Goldman Sachs, I went to work for ADIA, investing in both VC funds and launching our direct investing strategy into tech startups, branded externally as the Innovation Alliance. When it was time to leave the UAE, I decided that I wanted to go to the global maxima for tech, so I moved to Silicon Valley and worked for Palantir, helping the company raise $1.2bn across the Series J and Series K rounds.

Once I left Palantir, due to my prior role at the company, current and former employees started reaching out, asking for help with all sorts of equity matters - how to sell their equity in what was then a privately held company, how to value a job offer with an equity component, how much to raise for their new startup, or how to review a potential investment in a friend’s startup. This built me a reputation in the ecosystem for giving honest and actionable advice.

During COVID, what had previously been a few coffee chats a week accelerated into multiple Zooms a day, especially as the company geared up to go public. I quickly realized that I was in the middle of a marketplace of investors looking to make angel investments, and founders raising money, and decided to operationalize the marketplace with a formal AngelList syndicate. That’s how Palumni VC was born.

What is Palumni VC?

Palumni VC invests exclusively in startups founded or led by Palantir alumni.

We often start our relationship with founders before they’ve even incorporated the company, or chosen a name, and aim to invest from pre-seed to pre-IPO in exceptional startups all around the world.

Why did you decide to start Palumni with SPVs as a syndicate versus starting as a traditional fund? Was that a good decision?

Starting as a syndicate was a great way to resolve the cold start problem. You can’t make investments until you have funds, but no one will give you funds to invest unless you have a track record, for which you need funds…. This is a well known Gordian knot in venture capital, and starting your fund manager journey with a syndicate is a savvy way to resolve the issue.

Now that we’ve made 16 investments, I can point to our portfolio and have an intelligent conversation with a potential Limited Partner about our past decisions, how our thesis plays out in practice, and how we win allocation, using real investments rather than speculated hypotheticals.

You have a lot of experience in traditional finance at larger firms including Goldman Sachs and Merrill Lynch, among others – how have those experiences shaped your investing Framework?

One of the main impacts of my prior career journey is that I am always thinking about what it takes to be an institutional investor.

While I am the solo GP, there’s a reason my name is not on the door.

I’m always thinking about making the right decisions for the long term and sometimes that takes a little more care to document a decision. We always remember that we, at Palumni VC, are stewards of the hard-earned capital of our limited partners. As just a small example of that, we do not celebrate new closed investments or new LPs - we save the champagne for when our LPs make money. Plus, it will taste better once it’s aged a little, too ;)

Palantir is one of the most prolific companies of the last two decades – what were the highlights of that experience. Do you think working at a high growth startup made you a better investor?

I had a pretty unique role at Palantir - or maybe Palantir is just a unique company. It was my job to go everywhere and learn about everything - about product, about engineering, about customers, about real estate - because in the end, everything relates to figuring out how much money you need to raise, and to keeping investors updated on how you’re spending it.

That’s been helpful because I now have a running start on many aspects of running a startup. So when a founder asks me a question, I may not know the answer, but I know who does, and I can connect the founder to them. Chances are, that person is also an LP in our syndicate, so is extra incentivized to help!

What have been the best sources of deal flow for you? Is it through ex-Palantir employees?

At this point in time, most founders come to us directly - I’m pretty easy to find online or within the ecosystem. It’s great to have your reputation drive investment flow for you.

We also get referrals from both founders in our portfolio and from our LPs, although there’s a lot of overlap between those groups!

However, we still go out and actively find founders to make sure we don’t miss anything. I actually devote time to seeking out founders who are likely to start a company in the next year or two and start a conversation with them, even before they’ve left their day jobs or narrowed down what they’re going to build.

Any surprised or unforseen rewards?

One of the interesting things for me personally was to encounter such rapid product-market fit.

Coming from Palantir, Goldman Sachs, and a sovereign wealth fund, you’re always working on large, confidential, and very slow moving transactions. Wins take months, if not years.

And here I was, with Palumni VC, doubling our LP count every single day, when we launched at Thanksgiving 2020. It was addictive.

What is the thesis?

I fundamentally believe that I’m sampling from a better distribution.

Palantir hired very technical, hard working, and very entrepreneurial people, because they had to - if you’re working on a military customer deployment in an air-gapped environment, with a tiny team, you can’t just be asking others (or Stack Overflow) all day long, or say this or that is not your job. Palantirians built product at the customer site, listening to the customer’s pain points, and building what customers would actually pay for. These are core skills in building a startup.

Because Palantirians are so entrepreneurial, once they leave, they are more likely to launch a startup. In fact, there are over 200 startups founded or led by a Palantir alum today, with an additional 25-35 born every year.

As the alumni are so technical, it means they’re able to build more of the product themselves, allowing them more reps on getting to product market fit for less dilution. You end up with these very technical businesses with good capital efficiency, solving very difficult (and therefore, in the long term, very valuable) problems. This increases the probability of success.

There’s now been 9 unicorns founded by a Palantir alum, 2 of them public, so that means that both my founders and the pool they’re going to recruit from also has experience not just going from 0 to 1, but from 1 to 100. This increases the size of the win in a successful company.

What’s one of the most promising investments in the Palumni alumni portfolio – how did you meet them, and was it obvious early on they’d be successful? If so, how?

An interesting thing about early stage investing is that the portfolio winners are not obvious at the beginning. The data, from multiple fund managers, shows almost no correlation.

There’s always companies that are surprising me with how quickly they’re growing, and companies I am concerned about. But the interesting thing is that which category a company falls into is not constant, quarter to quarter. Sometimes I’ll reach out to a company, concerned about their burn or a lack of an update recently, only to find out they signed 200 new customers last month without any extra marketing spend.

One of the companies that I’m super excited about right now is Blocksfabrik, which Figma images into deployed code, making every designer into a functioning front end engineer, and Mural, which is pioneering a near instant way to pay remote employees for a fraction of the transaction cost.

What would you recommend to prospective or experienced investors who want to get involved in venture capital or syndicates?

My first recommendation would be to join a syndicate or two and read every single investment memo that comes through. Syndicates are a great way to learn how to analyze investments, how different investors think about opportunities, and what market pricing looks like right now. AngelList is a great way to do that.

What are some of the benefits of investing in an alumni network?

One is just playing VC on easy mode - a lot of my target pool of founders already knows me and the Palumni VC name. While we can’t get complacent on that, and I spend time on making sure the name propagates to younger founders who may not have overlapped with me at Palantir, it’s still great to start with a huge advantage.

The other is due diligence. At the earliest stages, there is no market validation, the product isn’t built yet - so you’re basing the bulk of your decision on the team. I’m able to get a dozen references on a founder, in writing, in 36 hours. And a lot of these come from our syndicate LPs who want us to make great investment decisions, so they’re very thoughtful when discussing both the strengths and weaknesses of any founder. Our community is very highly networked and very much values honesty so the way we can do due diligence at Palumni VC really is a super power.

Do your LPs need to be Palantir alums?

No, our LPs come from many different companies, although they’re overwhelmingly operators, which is super helpful for our founders because they can get very actionable advice very quickly when they have questions.

Obviously there’s a lot of current and former Palantirians in our LP base, though, because the thesis speaks to them.

Where can people learn more about you?

I’m terminally online - you can find me on Twitter on my personal handle, or you can follow our Palumni VC account, which is more focused on events and portfolio news.

LinkedIn is also a great place - the Palumni VC group is here.

Both will share any new podcasts, newsletters, or conferences where I’m speaking.

And I also publish a small substack with advice for founders and emerging managers at https://palumni.vc/blog

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✍️ Written by Zachary and Alex