Arjun Sethi speaks with the confidence of someone who knows more than other people, or at least knows that sounding very confident can shape perception. Either way, when he tells me via Zoom that “in five years, I’ll have 50% of the world’s private data” in his hands and that it will be “impossible to compete with me,” he says it with all the Warren principle Buffett dropping stock market truths.
Sethi, co-founder of the venture firm Tribal capitalit is about Termina, a subscription AI software platform for “quantitative curation” recently launched by Tribe. Sethi says he can improve results for the investors he can sign up. However, the simple perspective raises questions. So, if Termina is so good, why are Sethi and Tribe giving other investment firms a way to better compete? Relatedly, why should other investors trust Termina, which absorbs its customer data to improve over time?
Termina was founded just six months ago and went soft last month with two products. One is a dashboard that aims to help investors quickly gauge the health of any company by comparing it among companies in Termina’s original proprietary data set, combined with its own customer data. The second is designed to help investors understand the external forces at play, including expected changes in the market. Think of Termina as “giving you the power of 1,000 partners,” says Sethi.
Sethi declines to divulge the names of the early clients, but says they include pension funds, sovereign wealth funds and private equity funds, which he collectively describes as “a large class of fund-raising people who want to stay under the radar.”
He is more than happy to discuss his ambitions for the business. Its biggest initial advantage, Sethi says, is transaction data on about 1,500 companies that Termina has fed into several large third-party language models (Sethi declined to name them), along with an LLM that Termina itself says it built for to strengthen investors. benchmarking capabilities.
To leverage the tool, Termina’s customers also give the outfit their own raw data. “They may be using it for M&A, so a private equity firm will dump its own data [into it] and so is every other VC firm,” he says. What this software spits out, ostensibly, are comparison data sets of companies that exist “across the board, across the board,” says Sethi, who calls Termina the “true Bloomberg of private markets.”
Some will scoff at the prospect of Termina handling so much sensitive data, which is any company’s most valuable resource. This may prove doubly true given Termina’s ties to Tribe Capital.
Sethi dismisses such concerns. For one thing, he says, Tribe invests in Series C-stage companies and seeks venture-like returns. Termina, meanwhile, “enables anyone in any asset class to be able to think about how to invest in software companies, regardless of stage, so these are two very different strategies.”
Sethi — who sold an earlier company called MessageMe to Yahoo and then worked with VC Chamath Palihapitiya at his firm Social Capital before co-founding Tribe — also suggests he has the reputation he needs to pull off what he’s trying to do.
“Part of it,” Sethi says, of convincing other investors to use Termina, “is you just inherently build a lot of trust over a long period of time.”
We’ll see. Certainly, one can see both the pros and cons of Termina’s close relationship with Tribe, which owns a stake in Termina. (Termina has so far raised slightly more than $10 million, including from Sethi personally.)
For example, a team that has been working together for a long time is an advantage. In addition to Sethi — who stepped down as Tribe’s CEO last December, taking on the role of president and chief investment officer to focus in part on Termina — the seven-person startup includes others who split their time between of Termina and Tribe.
Among them is Alex Chee, who co-founded MessageMe with Sethi, joined him at Social Capital, and then co-founded Tribe and Termina with him. Chee oversees Termina’s day-to-day operations. he is also Tribe’s Chief Product Officer. Jake Ellowitz, another Termina co-founder and, for a short time, an employee of Social Capital, is Tribe’s CTO.
On the contrary, the Tribe itself is quite young and has yet to prove itself. The 30-person outfit boasts an impressive $1.6 billion in assets under management already, but was only founded six years ago. It has seen some success investing in crypto tokens, but its other investments have yet to pan out, and the trajectory of some of those bets is unclear, highlighting the limits of quantitative analysis. Take Carta, the cap table management company that has come under fire for tactics that some see as questionable, or Bolt, the one-click checkout company that was hype until it wasn’t.
It’s also worth noting that Termina customers don’t agree to share their data exclusively with the outfit, so if someone else’s black box is better, Termina could be toast.
Again, Sethi fends off challenges. “The reason we exist and why customers work with us is that we have the best data in the world and we have the best product. We have no specific patents. Everything we do is a trade secret. And our tool is not 10 times better than what is out there. it’s, a thousand times better than what people’s existing workflow looks like.”
As for what this means for Tribe, he obviously has bigger ambitions now. “My goal is that as a venture firm, I could only do so much,” says Sethi. “As a company, I can do a lot more.”
