How does Compound's research-centric, thesis-driven approach set them apart in the world of high-risk, high-reward investments in sectors like AI, robotics, biotech, and crypto?

In this episode of "Money Moves," host Neil Devani speaks with Mike Dempsey, Managing Partner at Compound, and Kesar Varma from Upfront Ventures about the unique strategies and philosophies behind Compound’s investment approach. The discussion covers the firm's commitment to research-centric, thesis-driven investing in high-risk, high-reward sectors like AI, robotics, biotech, and crypto.

Mike shares insights into the evolution of their investment strategy, particularly in the crypto space, and emphasizes the importance of maintaining conviction during market cycles.

The conversation also delves into the differences between Compound’s first two funds, their thoughts on portfolio construction, and the importance of challenging traditional venture capital practices to optimize returns. The episode offers a deep dive into how Compound identifies and evaluates emerging investment opportunities and the importance of aligning investments with the firm’s long-term vision.

Here the main topics discussed in the episode:

- Compound’s Investment Philosophy: Research-centric, thesis-driven approach focusing on emerging, high-risk sectors like AI, robotics, biotech, and crypto.

- Evolution of Crypto Investments: The journey from early speculative investments to a more structured strategy in the crypto space and managing through market cycles.

- Fund Management and Portfolio Strategy: Differences between Compound’s first and second funds, including portfolio construction, check sizes, and the strategic focus on capital concentration.

- Challenging Traditional Venture Capital Practices: Critique of common VC practices such as pattern matching and the emphasis on larger fund sizes, advocating for a more thoughtful, customized approach.

- Identifying Emerging Opportunities: The process of researching and identifying new investment opportunities through deep academic research and market immersion, with examples like their investment in AI startup Runway.

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