Episode #93: Michael Kim @ Cendana @MKRocks is the Founder of @CendanaCapital, making anchor investments in very early stage VC funds. We talk 204x DPI funds, characteristics of the top performing venture investors, how Cendana does diligence on fund managers, portfolio construction best practices + Michael’s 60x rule, and why a high ownership to fund size ratio drives outlier returns. We also get into how VCs are using AI, the competition between Seed and multi-stage investors, why US endowments are under siege, and how secondaries are driving most early stage venture returns today. Michael also opens up about the early days of starting Cendana, the 18 month grind raising Cendana Fund 1, the day he almost died, and ranking in the top 2% globally in Call of Duty. Shoutout to @infoarbitrage, @kevinhartz, @semil, @jeff, @Beezer232, @jaltma, @jmj, @pitdesi, @nwischoff, @tedalling, and @Rick_Zullo for their help putting this together. Thanks @boltdotnew for supporting this episode (check out their Hackathon with $1m in prizes!) Full episode here on X, or grab a link in the replies. Timestamps: 4:24 The day Michael almost died 5:10 Call of Duty & video games 9:34 Hiring @ Cendana 10:31 How Cendana uses structured and unstructured data 16:51 How VCs are using AI 19:55 Why secondaries are driving most early stage venture returns 22:01 Deciding when to sell secondaries 24:28 Best performing venture funds ever 27:26 The best VCs have amazing access to the best founders 33:42 Why Cendana backs Solo GPs 35:57 How to invest over time and hype cycles 41:35 Why multi-stage firms are investing earlier 44:45 Cendana’s current thesis: High ownership % to fund size 45:51 Why Cendana started backing non-lead VCs 48:41 How Cendana does diligence on fund managers 52:22 VC NPS Scores and Ron Conway’s Silver Bullet 53:49 Good vs bad new VC firm strategies 56:36 Determining defensibility of a strategy 57:57 “Messy middle” software buyout fund 1:03:25 Portfolio construction best practice 1:08:11 Michael’s 60x Rule 1:14:28 How Seed funds compete with multi-stage funds 1:20:05 Should you collect logos writing small checks? 1:21:07 Becoming an LP for the city of SF 1:24:42 Taking 18+ months to raise Cendana Fund 1 in the GFC 1:26:48 Warehousing the first Cendana Fund 1 investments 1:29:56 How to do a first close 1:34:29 Why it’s hard to kill a VC firm 1:37:00 What happens to ZIRP tourist fund managers 1:40:22 How to raise a Fund 2 or 3 today 1:42:07 “US endowments are under siege” 1:44:55 What the best GP LP relationships look like 1:46:41 What Fund of Funds get wrong 1:50:43 The three most interesting trends in venture today