Rennick Palley: The Founder of Stratos Technologies on Investing in Venture Debt & Equity

Rennick Palley is the Founder and Chief Investment Officer of Stratos Technologies. Prior to founding Stratos, Rennick worked as a Research Associate at Sanders Capital — which manages over $40 billion in global equities. To date, Stratos Technologies has made 16 investments with an aggregate transaction value of over $250 million into companies like Rezi, Tala, Dave, Compound Finance, and Clearbanc.

In Part 1 of this two-part interview, Rennick and I discuss the war of growth vs. value investing, the concept of reflexivity, and Stratos’ approach to investing across the capital structure in early-stage technology companies. In Part 2, which will be released next week, we zoom way out to get Rennick’s thoughts on everything from the recent boom in SPACs to his interest in DeFi movement and investing in the crypto space.

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“I think every stock that has future growth can be value, and every stock that is value can also be growth. They go together.” – Rennick Palley 

Chapters in this interview:

• 00:00:16 – How Rennick got his start at investing
• 00:05:43 – What Rennick learned as a Research Associate at Sanders Capital
• 00:19:23 – The story behind Stratos Technologies
• 00:25:26 – George Soros’ concept of Reflexivity (and why it’s applicable today)
• 00:30:02 – Why venture backed technology companies are under-levered

For more, explore the full text transcript of this episode.

Links from the Episode

• ‍Connect with Rennick: LinkedIn | Stratos Technologies
• Sanders Capital
• Lew Sanders
• AllianceBernstein
• Sanford Bernstein
• Gamestop and its stock frenzy
• Puerto Rican sovereign debt
• The Alchemy of Finance by George Soros
• Airbnb
• Alex Danco’s writing about SaaS lending
• Benedict Evans’ presentation: The End of the Beginning
• Rezi
• YCombinator 

Investment Terms:

• Short position
• Growth investing vs. value investing
• FANG stocks 
• Valuation multiple
• Current cash yield
• Debt deals
• Upside
• Reflexivity
• Safe note
• Preferred equity investment
• Special Purpose Acquisition Company (SPAC)
• Series A, B, C funding
• B2B SaaS
• Leveraged Buyout (LBO) 
• Tech bubble of the early 2000s
• Life-cycle investing
• Seed Capital
• Credit fund vs. equity fund
• Russell 2000 Index
• Private equity vs. public equity‍

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