Michel Del Buono | Sourcery Summary

Podcast: Sourcery | Participants: Michel Del Buono (CIO, A16Z Perennial), Molly O'Shea

1. Key Themes

The Three-Silo Problem in Wealth Management

The most critical and recurring theme is that founders and newly wealthy individuals receive fragmented advice from attorneys (trusts), CPAs (tax), and asset managers (investing) who don't communicate with each other. This creates a massive blind spot in optimizing outcomes across all three simultaneously.

"The real challenge, I think, for people is how do I trade these things off? And that's where having a multidisciplinary kind of background is really important because each of those silos doesn't know enough about the other one to trade them off." 00:04:31

"Very few people know enough about the two to help you trade the two off. We've done some work on that, and it turns out that there are many situations where the trusts are not necessarily the right answer. They save you tax, but you can achieve the same or even better outcomes using these tax loss harvesting strategies." 00:46:15

The Pre-Liquidity Event Preparation Imperative

The biggest mistake people make is not preparing mentally, legally, and structurally before a liquidity event. The bottleneck is not legal complexity — it's unresolved family philosophy about wealth inheritance, which causes paralysis and missed tax windows.

"A lot of the preparation is actually sort of psychology, philosophy, family values, whatever you want to call it, have all that thought out. So that when it comes time to structure things, you already know... If you don't have those basic things thought out, trying to structure the trust itself is not the difficult bit. It's these things you define inside it that are the difficult bit." 00:11:04

"The biggest one is they don't think about this. And then at the last minute, they try to sort of build all this and run all these roadblocks... they drop the ball in terms of getting these things done." 00:11:52

The Secondary Market Is a Minefield of Nested Risk

The explosion of demand for pre-IPO access to companies like SpaceX, Anthropic, and OpenAI has created L1, L2, and even L3 SPV structures where investors are increasingly removed from the actual shares — with layered fees, undisclosed pledging rights, and almost no regulatory protection.

"People are so excited about getting these things that they gloss over these details. The other thing, of course, is that people layer in a lot of fees, carry. So it's not unusual to see one in ten, two in twenty type structures or a 5% transaction fee. And often it's not done at the last round. It's done at a significant increase to the last round. So it's a very complicated space." 00:17:20

"Just because you put it into a vehicle doesn't mean you don't have the right to take a loan out against it. Right. So there are things like that. You have to sort of think of all these eventualities." 00:19:30

2. Contrarian Perspectives

Trusts Are Often the Wrong Answer

Conventional wisdom says founders should set up complex trust structures to minimize taxes. Del Buono challenges this, arguing tax-loss harvesting strategies can match or beat trusts without the legal complexity, family friction, and irreversible decisions.

"Sometimes just barreling down the 'I need a bunch of trusts and doing all this stuff' is not necessarily better than having a tax loss generated investing strategy that doesn't require you to do all those trusts. Right? And that trade off is not obvious to figure out and navigate." 00:04:57

Keep Your Concentrated Position — Don't Listen to Your Wealth Manager

Wealth managers are structurally incentivized to push diversification because they can't charge fees on your pre-existing concentrated stock. Del Buono argues that the founder is the most informed person about that stock and should make the call themselves.

"History has shown that hanging on to your stock, generally speaking, not always... that stock that got you to the liquidity point will probably continue to do pretty well. And if anything, you're the most informed person in the world about that stock. So for me to come in and sort of tell you that you should sell it or not sell it is silly. I don't know more than you do." 00:13:49

The AI Frenzy Is Creating an Asset Valuation Trap in Private Markets

Everyone is rushing into AI-adjacent vehicles, but the implied returns required to justify current price premiums may be mathematically impossible. Paying 15x the underlying value in a public closed-end fund negates the upside of even a legitimate AI winner.

"If you pay so much for these things that there's no way you make your money back, that becomes complicated... If you're paying 15 times or whatever you said it was, the underlying value, you may not benefit from that." 00:36:04

Endowment Pullback from Venture Is About Liquidity, Not Conviction

The widely reported narrative that institutions like Yale are "abandoning venture" misrepresents what's happening. Del Buono argues it's a liquidity management problem driven by poor distributions across all private assets — not a loss of faith in the asset class.

"Many of these private vehicles have not distributed money. That's been the big problem. Historically you'd look at sort of patterns of how long it takes to distribute. In the last few years, the distributions have been pretty weak from all private asset costs... So that if you sort of project that forward, you might start worrying that your portfolio is too illiquid." 00:31:46

Real Estate + Death = The Ultimate Tax Strategy

Most people focus on income tax optimization, but combining depreciation credits with step-up in basis at death creates a scenario where you pay near-zero tax on income throughout your life and near-zero capital gains tax at death — making real estate one of the most powerful multigenerational wealth vehicles when properly structured.

"Along the way, all the income you get from the asset doesn't pay tax because you got the depreciation credit. And then normally if you sell it at the end, you pay a ton of tax. But if you pass away and hand it to your heirs, they get a new basis, a new price for the asset that's gone up so they can sell it with no tax." 00:49:47

3. Companies Identified

A16Z Perennial Description: The multi-family office wealth management arm of Andreessen Horowitz Why Mentioned: Del Buono serves as CIO; the firm represents the gold standard of integrated, multidisciplinary wealth management for tech founders and executives

"You are the CIO of A16Z Perennial. I like to call this Mark and Ben's multifamily office — it is the wealth management fund of A16Z." 00:02:57

VCX by Fundrise Description: A publicly traded closed-end fund providing retail access to private tech companies including OpenAI, SpaceX, and Anthropic Why Mentioned: Cited as an example of the democratization of private market access and the dangers of momentum-driven pricing; noted as being directly on the cap table (a positive structural differentiator)

"VCX, who is a sponsor of Sorcery... they went public and their stock shot up 15x. Like there was just so much demand because they had big names like OpenAI, SpaceX, Anthropic... I do know that VCX is direct on the cap table and it did weight back down to a normal price." 00:32:42

AngelList Description: Platform for startup investing Why Mentioned: Called out for launching a private market fund accessible for $500, representing the democratization trend in private markets

"AngelList just came out with their private market fund that you can buy into for just $500 today." 00:32:18

Exowat Description: A16Z portfolio company providing renewable/solar energy to data centers and hyperscalers Why Mentioned: Referenced as a ground-level signal provider on the real state of announced data center buildouts — which Del Buono implies may be overhyped

"Hanan Hoppy from Exowat... they are providing renewable energy, sustainable solar powered energy to data centers, hyperscalers. And what he's seeing on the ground is a lot of these announced data center projects are not happening." 00:36:42

4. People Identified

Michel Del Buono Description: CIO of A16Z Perennial (Andreessen Horowitz's multi-family office) Why Mentioned: The primary guest; brings rare multidisciplinary expertise spanning trust/estate strategy, liquid investment strategies, tax loss harvesting, private credit, and real assets — a combination that is explicitly rare and valuable

"You're going to have to find an advisor that knows all these things enough to be able to trade them off. So that's the thing. It's rare, quite rare to find people that have that multidisciplinary background." 00:46:55

Hanan Hoppy Description: Leader at Exowat, an A16Z-backed company providing renewable energy infrastructure to data centers Why Mentioned: Cited as a rare on-the-ground, real-time signal source for what is actually happening with data center construction vs. what is announced — a direct counter to the bullish data center investment narrative

"Hanan Hoppy from Exowat... he was really clear because he's right on the ground... what he's seeing on the ground is a lot of these announced data center projects are not happening." 00:36:42

5. Operating Insights

Write a Family Values Document Before You Need It

Del Buono identifies that the #1 bottleneck to estate planning is not legal complexity but unresolved family philosophy. The most prepared clients come with a written, agreed-upon document articulating how wealth will be distributed, to whom, and when. This unlocks the legal and tax work downstream.

"Some people come and are very prepared and they have this sort of family values document they wrote out that they all agreed on about how the inheritance is going to work and who gets what and what the inheritance is for. Some people are very prepared and that makes life a lot easier." 00:12:15

On Secondary Investments: Demand Cap Table Directness or Walk Away

For operators evaluating secondary investments in hot private companies, the single most important structural question is how many layers removed from the actual shares you are. L2 and L3 structures introduce borrowing risk, counterparty risk, and fee leakage that can eliminate the upside entirely.

"Really try to be in a structure where you're only one step removed from the shares. Ideally, you're straight on the cap table. That's really hard to do. But whenever I advise clients, I try really hard to get them straight on the cap table." 00:18:38

Use Carry Structure to Express Your Own Conviction

The choice between a high upfront fee vs. high carry in an SPV is actually a bet on the underlying stock's trajectory. Del Buono frames this as a useful forcing function for operators and investors to explicitly articulate their own conviction level before committing capital.

"That all depends on how much you think the stock will go up. If the stock, if you don't think the stock will go up a lot, hand out lots of carry. If you think the stock's going to go up a lot, you don't want to hand out as much carry. So that becomes again, it's subjective. And when we do these analyses, we sort of map out different scenarios where the stock price might end up to understand the crossover point." 00:21:21

6. Overlooked Insights

QSBS Stacking Across Trusts Is One of the Most Powerful and Underutilized Wealth Strategies in America

This was mentioned briefly and almost casually, but the math is staggering. If a founder can establish multiple properly structured trusts — for children, parents, siblings — each trust may independently qualify for its own QSBS exclusion (now up to $15M per trust). A founder with five trusts could potentially shelter $75M in gains from taxation entirely. Del Buono frames this as a primary driver for why sophisticated founders create large numbers of trusts, but it was not unpacked in detail. This deserves dedicated legal and financial planning attention well before any liquidity event.

"A lot of these strategies of having multiple trusts are to try to multiply these QSBS benefits across the different trusts... You can have several trusts for your kids, your parents, whatever. And each of those, depending on how you structure them... can get, if it's structured right, its own QSBS exemption." 00:08:52

Italy's Flat Tax Is an Emerging, Underappreciated Wealth Relocation Arbitrage

Del Buono briefly mentions that Italy implemented a flat tax regime explicitly designed to attract wealthy foreigners — likely in response to the UK's rollback of its non-dom regime. This is flying well under the radar compared to the more publicized Dubai/Monaco/Portugal conversations, yet Italy offers a world-class quality of life, EU citizenship infrastructure, and a fixed ~$100-200K annual tax bill for potentially unlimited global income — making it a sleeper option for high-net-worth founders considering residency restructuring before a major liquidity event.

"Italy has implemented a new one that was almost in response to what's going on in London. A lot of these countries have sort of a flat tax. You pay a hundred or $200,000 a year and then that's it for 10 years, 20 years, whatever it might be." 00:40:22