Thread by @nsheth12

Greenoaks is the best investment firm that you’ve never heard of. They've returned 51% annually since 2012 on the back of early bets on Coupang, Deliveroo, etc.

But because they’re ultra-secretive, they’re talked about way less than they should be. I'll try to change that.👇

1/ First, some more details on Greenoaks. They’re tech-focused, based in SF, and manage well over $15bn (exact AUM is not public) with a <15-person investment team.

2/ They focus on privates, and are hands-on w/ portfolio companies. Some current investments include Brex, ScaleAI (which they passed on before co-leading the Series E), Discord, Robinhood, Toast, Airtable, Cockroach Labs, TripActions, etc.

3/ Neil Mehta and Benny Peretz founded the firm in 2012 but today it is run jointly by Mehta, Peretz, and Ben Solarz, a Yale Investments Office alum.

4/ Neil was ~27 when he founded Greenoaks. All three are <40 y/o today. Like most great investors, they started young. And like most great investors of the last 10-20 years, they focused on tech.

5/ They are also concentrated. They make <5 investments/year and 10-12 investments in total per fund.

This kind of concentration is more common in public markets, but rare in private markets because you’re stacking two significant risks: illiquidity risk + concentration risk.

6/ One early investment was Coupang, of which Greenoaks owns more than 15%. They’ve backed Coupang for years and Mehta is still the lead independent director on the BoD.

Coupang was one of those early, firm-defining investments - when Coupang IPO'd, their stake was worth $13bn+.

7/ They build relationships w/ companies over a long period of time before investing. Mehta & Greenoaks got to know the team at Brex for a while, but only invested when...

8/ founder Henrique Dubugras called Neil Mehta after previous investors backed out of a secondary round. Mehta re-evaluated the biz in hours and decided to do the entire round, according to FT.

9/ They also do very deep diligence - analyzing the biz down to a neighborhood level when working on Deliveroo - but at the same time are fast. Just a week after the intro call, Greenoaks led a $100m funding round into Kavak (Carvana of LatAm).

10/ What allows them to do this is they do a bulk of their research before even speaking to management. This is an approach/mindset that most venture investors are not used to, but is natural to public markets investors.

11/ They’re also not buy-and-hold-forever - they sell if their viewpoint changes. They sold most of their stake in Oyo Hotels for 15x their money after Softbank got involved, according to FT.

12/ You have to be willing to sell when the facts change. A lot of investors seem to have become "never sell" investors during this bull market - but you need to constantly cut the mediocre businesses out of your portfolio.

13/ Interestingly, Greenoaks doesn’t invest in China. They don’t think they have the “requisite expertise and networks to successfully invest directly into China.”

14/ This is interesting as it’s directly in contradiction to the success formula of the Tiger Cubs - which was heavily focused on China. That they’ve done so well w/o any Chinese investments is notable.

15/ My last point is on the team: “Greenoaks broadly distributes carried interest across the entire platform, and also maintains 15% of the economics to be allocated to outperforming investment professionals.”

16/ According to Mehta, they seek to be “a place where high performing investors can spend their entire career.”

17/ This is really key. The fund managers who want 99% of the economics are not going to attract & retain top talent.

IMO, how economics are distributed is an underutilized predictor of alpha.

18/ All in all, Greenoaks is an undisputed rising star. Their concentrated private strategy is unique (& risky) but they've executed it well.

Their track record is as much a beneficiary of rising valuations as anyone else's, but my guess is they'll continue to do well.