The Longest Punt in History
On findings with a shelf life, why a harder market argues for more shots and not fewer, and Kelli Fontaine of Cendana Capital on episode 105 of Swimming with Allocators
Kelli Fontaine worked in the athletic media relations department at the University of Colorado. She described what you do after a bad football game. You go find the stat that is true. “We could say we had the longest punt in history.” The number is real. It is also a record of a loss.
That is the whole conversation, sitting there in the first three minutes.
Kelli is a partner at Cendana Capital and may be the most data-forward allocator we have had on. Her team runs 78 dashboards. What I did not expect was how carefully she keeps her own numbers from hardening into rules.
The conversation sharpened something I had been circling. In early-stage venture, a finding is not a law. It is a timestamp. A good analysis has a shelf life the analyst does not control.
Three things I took.
First, she dates her own findings instead of defending them. When Kelli joined Cendana she built the data systems, then ran the analysis on their own book. Pre-seed against seed. Same graduation rate. Same mortality, which she thinks was probably acqui-hires. Better multiple on the year of entry. More risk, better outcome.
In our prep call she had put this to me as having grown skeptical of that conclusion, and I read that framing back to her on air. She did not repeat the word, and she did not defend the finding as durable either. She placed it: “it’s one of the things that worked in a market at that point in time.” Then she gave the mechanism that closed it. San Francisco filled with capital focused on early stage. Institutionalized angels became a category. Pre-seed, in her words, “probably arbitrage away in the Bay Area specifically.”
That is more useful than recanting. She keeps the analysis and puts a date on it. “That was a learning for me,” she said, and the learning was not that she had been wrong. It was about why a thing worked, and what that means now.
Second, a harder market argues for more shots, not fewer. I asked how the change in graduation rates shows up in diligence on a Fund I or Fund II, and said the part that seemed obvious: it is tougher now, a manager has to get so many things right to land even one or two fund returners.
She agreed, then went somewhere I did not expect. The instinct she keeps seeing in response is concentration, and she gets pitched a lot of 15 company portfolios. Her read runs the other way: “if graduation rates are lower, you know that would mean that you should probably have a few more shots on goal today, because things can look good at the early stages.”
Run the mechanics. Concentration only pays if your ability to identify the winner improved. A lower graduation rate does not improve identification. It lowers the base rate. Same shooting percentage, fewer makes, so you need more attempts. Her ask of a concentrated manager is not that they drop the structure. It is that they articulate why it is right, and why a prior hit rate repeats.
Third, acqui-hires are a return line. Looking back at Cendana’s historical returns, roughly 10% came from acqui-hires and roughly 10% from modest exits. Same contribution. I have spent years hearing acqui-hires described as what you settle for when the real outcome did not happen. In her math they pay about what a decent exit pays. She paired it with a colder point: it is very rare that a company comes back to life after year seven. Venture built enormous muscle around sourcing, picking, supporting, and winning. Portfolio management, she said, “has been missed along the way.”
Where I am still working it out is founder secondaries. I brought the alignment framing into the room, that founder selling should track GP selling. She came at it differently, and hers is better. Venture runs on hospitals, endowments, foundations, and pensions, so a founder taking cash ahead of those LPs is a fact about sequence, not only optics. Then read it as information. If a founder is de-risking, she said, “almost taking that as a signal is it’s time for you to de-risk some too.”
I prefer her reading to mine, and I am still not sure it resolves cleanly. She drew the line herself: is it enough “to buy a house and like give them some breathing room, or is it enough to make them extremely wealthy?” That line gets drawn by circumstance as much as by conviction. I have watched founders with no cushion make choices that looked like doubt and were just rent. I did not push on it in the room. I would want more resolution before treating sale size as a read on belief.
The phrase I keep sitting with is what she is not underwriting: “the king making marks.” I wrote about a version of this in The Motion Problem, that when capital concentrates hard enough, kingmaking starts doing the work judgment used to do. Kelli is running the LP-side version of the same worry, with dashboards. She would rather know the customer quality and the ACVs than know who led.
That is the data discipline I trust. Not the dashboard that answers. The dashboard that keeps asking whether last year’s answer still holds.
Listen here: https://swimmingwithallocators.com/podcast/finding-alpha-before-consensus-data-judgment-and-early-stage-venture/
With gratitude,
earn