2024, 2025, and Beyond

Thank you for being patient! I know you’ve been waking up every day asking yourself when I was going to write another newsletter. Today is that day - so you can breathe a little easier and relax knowing that your thoughts are once again being led by a professional. (i joke - i don’t sell ads anymore so technically not a professional - happy to be back though)

This was my first year as the owner of Sandhill. Reminder on that story here if you don’t remember or missed it. Here’s a basic summary of what I did and some thoughts on how it went:

I ripped out the tech and focused on deal quality.

This was occasionally confusing for people, but very happy with this decision overall. Making good investments is what matters. I like smooth investment experiences as much as the next guy, but optimizing that process from a tech perspective is mostly a distraction. Given the reduced team size when I took over (just me) it was really important to be realistic about bandwidth and what gets prioritized. I didn’t always do a great job of this, but when in this case I’m proud of decision because it was an honest assessment of what really matters despite having spent years building products that would argue against that point.

Deal quality over everything.

I worked with a small number of trusted partners on diligence and deal execution.

Also very happy with this. I’m an Advisor to Singularity Capital and a Partner at IronArc Ventures. Over $150M was deployed between those two firms in 2024. These partnerships have enabled Sandhill investors to access opportunities and back office support that extends beyond what would have been feasible for me to provide as an individual. Moreover, the opportunities I bring to Sandhill are typically anchored by committed capital and/or larger check writers outside of the Sandhill community. This gets back to the point I made about bandwidth and prioritization. I share economics with partners in order to extend my own sourcing/diligence and to ensure real long-term back office support for LPs.

Continued partnerships that unlock deal quality and execution.

I spent a lot of time (and money) to keep the Sandhill content machine moving.

Not as happy with this one. We went through a few iterations of the newsletter. We did podcasts. We did live events. The workload involved with keeping content volume up turned into me having less time to spend on actually thinking and writing about things I’m interested in. There are benefits to consistency and I think I overcorrected in terms of cutting volume back (essentially to zero for the last few months), but at the end of the day - if it’s not worth me personally taking the time to produce it, I don’t think I can honestly say I think it’s worth you taking the time to consume it. Interesting interviews around niche topics and long-form writing on the subjects I’m thinking hard about are where the highest quality content comes from so that’s what I’m going to do. That being said, consistently publishing is also important in order to stay in the groove so I plan to get back on the weekly grind.

Content quality over volume.

7 late stage deals. 4 early stage deals. 3 YC access funds.

Official updates will come from the third-party partners I mentioned earlier, but to speak broadly - this year went very well. The brand name late stage deals like SpaceX, Anduril, Scale AI, Groq, and xAI have outperformed all reasonable return expectations. Beyond performance, I’m proud to say our fees were always very competitive - if not the best available. We didn’t do many early stage deals, but the ones we did were always with companies we had unique access/insight into through trusted partners and they have all performed well so far. The YC access funds have also continued to be a highlight for me. Singularity has been a great partner there and I’ve gotten multiple compliments on their onboarding/reporting. From a performance perspective we have seen those funds tracking well, but are constantly reminded of how long of a journey it will be from Seed to liquidity. I continue to feel that this “bookend” approach to venture where I split my time between more access driven late stage opportunities and Seed (mostly YC) keeps me balanced. Not too much of a banker and not too much of west coast VC.

More late stage deals. More YC access funds. Occasional miscellaneous.

We had another baby.

Very happy with this and I’ll make it relevant to you as reader/investor. First - quickly - I’m going to use it as an excuse for less than stellar publishing consistency and (at times) response delays. Second - I’ll get to the point here - I think babies (this is our second) have made me much more long term oriented, which I have felt directly in my investing. Venture takes forever. If you don’t know this already, or are lying to yourself thinking there’s a way around it, I’d encourage you to be honest with yourself and get comfortable. You will not be getting rich quick despite what some of these late stage markups might make it feel like. Before I had kids it was hard for me to visualize the world 10 years from now. I would talk about the future theoretically or in models, but 10 years away felt too far to actually feel real. Now - in 10 years, my sons will be 12 and 10. They will be in 5th and 7th grade. This is very real. My hope - 10 years from now, is not only to distribute top-decile returns, but to see the companies we invest in today make the world a bit better for my sons. And your sons. And daughters. And ourselves.

More long-term thinking.

The 2025 and Beyond Part

I wrote a piece for IronArc that explains a bit about how we’re looking at the “AI stack” in 2025 and beyond. It’s too long to include here so I’ll leave you with some key takeaways and a link to the full piece if you’re interested (courtesy of Claude 3.7 Sonnet):

• AI is transforming technology at an unprecedented pace, with innovation cycles compressing from decades to months compared to previous tech revolutions

• The "AI Stack" encompasses everything from power generation to end-user applications, with each layer presenting distinct investment opportunities

• Power is becoming a critical focus area due to AI's massive electricity requirements, with renewed interest in nuclear energy (both fission SMRs and fusion) and innovative renewable solutions

• Energy efficiency is emerging as a priority throughout the stack as enterprise buyers shift from experimental AI budgets to ROI-focused calculations

• AI applications are developing along three tracks: incumbent improvement (e.g., Microsoft Copilot), market share competition from AI-native challengers, and entirely new market categories

• Agents represent one of the most promising new market categories, manifesting as both digital agents (enterprise, research, productivity) and physical agents (robotics in manufacturing, healthcare, etc.)

• IronArc has already invested in companies across the stack (Anthropic in models, CoreWeave in compute, Groq in chips) and is looking for new opportunities in power and applications

• Success in 2025 will require understanding which markets will transform through incumbent adaptation versus AI-native disruption, while executing against compressed innovation timelines

Thank you for reading this far and for being patient with me the last few months!

Talk soon,

Adam