What Is the Customer Value Fund?

Ramtin Naimi says GC's customer value fund finances growth when a company can prove that every $10 million unlocks $30 million of revenue. Patrick O'Shaughnessy calls the fund enormously successful as a product, and it has raised tons of money.

Some venture firms now finance companies with compute as opposed to cash. For a lot of the founders, bringing compute instead of cash is more attractive, because the company will spend the round on compute and the compute can lock in the allocation. The firm still has to secure the compute and get good pricing, then decide whether the compute lasts in perpetuity or covers one training run, and whether the same amount can be recycled three times, two times, or one time as it degrades.

Getting new capital structures widely adopted in Silicon Valley is complex. Venture firms want companies to keep clean equity without unique covenants that can put a company in a tricky spot, and most founders want a clean equity deal where they know what they gave away and what they got in return. The fund is doing great now, but the early couple of years required a significant education process. Founders usually rely on venture backers for an opinion on a capital source, and venture firms have historically disliked venture debt and give a million reasons not to use it. The other side has to give a million reasons to do the deal. Billions of dollars in equity capital spent all on compute might not be the best use of equity capital.