March ‘24 | Link to the interview is here.

Sajith: Very interesting interview of Primary’s Ben Sun by Mario Gabriele. NYC has such a lot of interesting venture funds (Thrive, USV, Firstmark etc.) and clearly Primary is one of them. All of these evolved and developed their secret sauce to compete with Bay Area funds, and hence you see some interesting differentiators with each. With Primary, it is clearly the focus on platform (they have 20 platform members in a team of 50, for a seed fund) that stands out. As a venture nerd, I do find approaches to portfolio construction, decision-making, approaches to secondaries (essentially the elements and building blocks of venture strategy) all interesting, and in this piece, you get a good look at Ben Sun and Primary’s thinking on these. Their portfolio construction approach is classic seed (2-3 investments per partner per year), decision-making around picking is mostly single-trigger pull (each partner has a veto but has never been used) and their approach to secondaries is to take it when you can (“If they are passing a plate of cookies around, take one”). A few other elements that stood out to – the scale of their New York City Summit event as well as how they make the term sheet issuance process a marketing event to sell Primary to the founder.

Notes, highlights of what I found interesting from the interview, below.

Primary – The fund

  • Founded by Ben Sun and Brad Svrluga. Started in 2015.
  • Its first fund reportedly is tracking at an 11x return, with its second at 5x. Ben Sun shared that it has distributed 2.5x in returns on its Fund 1 to LPs. 
  • Almost 50 full time people, with $1b under management (NEA – they manage $30 billion and have 120 people.) 13 investment, 20 platform (they call it ‘Impact’).
  • Present fund $425m – $275m seed and $150m follow-on.
  • One of the core values we decided on was “One team.” Everyone at the firm has economics in our funds. People don’t get different economics based on the success of the company that they work on, or whatever. This creates an atmosphere of, “Hey, let’s do what’s right for the company and the firm.” 
  • “Seed investing is like a knife fight. It’s becoming a knife and we have a dull butter knife. We’ve got to go figure out how to build a tank.” That mindset was different from just, “Let me have a sharper knife.” It’s like, “No, let’s figure out dramatic structural advantages.” 
  • Organise the New York City Summit: 2,000 people, invite-only. It’s become the go-to startup ecosystem event in the city. If we’re going to do an event, we tell ourselves, “Let’s go big, let’s own the tent poles of the market and build brand.” 

Investment Process

  • Specialized investment team, with each investor focusing on a specific sector) – Every partner is doing two to three a year, at most. Across seven partners and three years, you’re looking at roughly 40 startups in the portfolio per fund. 
  • We track the number of opportunities our partners look at – we only track the number of deals a partner looks at that went on to get funded by someone else. On average, each partner sees 100 deals a year that get done in the market and invests in two. So they’re passing on 98% of what someone else is doing. 
  • Our mantra is “wait for great.” We want our internal deal flow to look like: good, good, pick great. Not: crap, crap, pick good. It’s about staying disciplined. Our first two funds have been great because out of the first 35 deals we did, we had eight unicorns – all at seed. That doesn’t include Coupang or Jet, which I did personally before starting the firm.
  • Decision-making process
    • SPW: Single trigger pull with a veto that has not been ever used. 
    • …everyone on the investment committee – including junior members and people on the impact team – scores the investment. We never really go back and look at it, but we have a record. It’s a good way to let people share their point of view and talk about it. We can say to the sponsoring partner, “Hey, there’s a wide variety of opinions and scores here, but that shouldn’t deter you. If you want to do it, you should do it.” But people want that feedback because it forces your thinking and forces you to make sure you’re picking great. If you’re getting negative opinions from the room but still think, “Man, I want to do it,” that’s a good sign. To me, that shows that you have total conviction, even when other people have things they don’t like about it. 
  • The other thing I try to do is focus on underwriting the company’s ability to raise a Series A. Trying to predict if a company will become a unicorn 8 to 10 years out? You’re kidding yourself. Coupang, for example, started as a different business. Today, it’s the Amazon of Korea, but it started as a Groupon deals business – it’s 100% out of that today. Becoming Amazon was never part of Bom’s initial plan, so trying to predict that ten years in advance is just crazy. Focusing on the journey from seed to A is a much easier task – 18 to 24 months. If you do it well, you can really improve your hit rate. If you look at the data, when you get to a Series A, 60% get to a Series B, 60% of Series Bs get to a C, and 60% get to a D. It really is that clean. Unicorn rounds happen around Series D, E, or F, depending on the year. So if you want to get to a 20% unicorn hit rate from the seed, you have to have a graduation rate to the Series A of 80 to 90%. 

Termsheet experience

  • Here’s some of our secret sauce of how we win so much. We’ll invite a founder in when we issue our term sheet, saying we have a few final questions. Then, when they get to our office, they’ll find our whole firm in the conference room, ready to pop the champagne and celebrate. But then it’s our turn to pitch. We go through our deck and walk through it. It’s like, “Hey, this is why we’re so excited, this is our thesis, this is how we can be helpful.” Then someone on our People team goes, “You know, based on our diligence and your plan, you have to hire ten people. Let us show you the pipeline we can get for you today, right now.” Then someone from the go-to-market team says, “You need help getting in front of customers, we have a whole team that can help generate real leads for you on the market development side. Let us show you who we can introduce you to tomorrow.” 
  • Win rate of 90%


  • “If they’re passing a plate of cookies around, take one.” I remember, this must have been seven or eight years ago, I talked with this partner at Horsley Bridge, the fund of funds. They’ve been in venture for a long time and have great data. This one guy, I think he’s retired now, told me that if you look at the realization period for later-stage growth funds and early-stage funds, it’s actually about the same.