Episode 6: Inside Capital’s New Playbook: A Conversation with Bank of America’s Shawn Hoyer

In this episode of Inside CVC, we sit down with Shawn Hoyer, Head of Venture Capital Coverage at Bank of America, to explore how capital markets are evolving—and what it means for founders, investors, and corporate innovators. From the fluidity of global capital and the rise of sovereign wealth funds to the future of AI-driven startups and public market exits, Shawn unpacks the macro trends reshaping the venture and CVC landscape. We also dive into the shifting role of the U.S. in global innovation, the risks of isolationism, and how legacy systems and political fragmentation are holding back progress. Whether you're on Sand Hill Road or inside a corporate innovation lab, this is a must-listen for anyone navigating the future of strategic capital. 

Transcript

Shawn Hoyer:

Yeah, so I am Shawn Hoyer. I sit within the investment bank at Bank of America, where I lead our venture capital coverage practice.

 So what does that mean? In the context of the traditional things investment banks do—helping companies raise money—a big influence comes from their boards and investors. At B of A, we cover all pools of private capital. If an industry banker knows a company's management team well, then my job is to know the board members and investors really well: venture capital, CVC, private equity, sovereign wealth funds, family offices.

 So today at B of A, we have every type of private capital covered. I cover the traditional venture world. I have a colleague who covers crossovers and hedge funds—the Tigers, Coatues, Point72s. Then there are teams for institutional family offices, sovereign wealth, mid-market and large-cap PE.

 When a company comes to raise money, all of us collaborate. Because the capital landscape has become so fluid. A family office can write a $300 million check, a PE firm $10 million, and a VC $1 billion. It’s much more complex than it used to be.

 Steve Schmith:

You mentioned some of that on stage. I want to dive into some of those ideas you shared. More broadly, in your conversations with board members—those you need to know in making investment decisions—how are they looking at 2025? Or even from your own view, what’s the economic outlook? There's a lot of uncertainty.

 Shawn Hoyer:

Yeah, it’s a good question. All the fundamentals of the American economy are incredibly strong. We’re one of the largest credit card providers in the country, so we have insight into consumer behavior. Credit balances are rising a bit, discretionary spending is tightening due to rising food costs, but it's hard to find cracks in the U.S. economy.

 Compared to Europe or Asia, we’re in a stronger position. China’s becoming more insular—U.S. investors are pulling back due to friction. Europe tends to lag behind the U.S., and equity capital markets there will stay slow. India’s capital markets are thriving, with many IPOs and increasing consumer participation.

 But the U.S. is still stronger. That said, markets love predictability—and we’re not getting that right now. Even with expectations of more pro-business policies, like the possible exit of Lina Khan at the FTC, we haven’t yet seen an M&A rebound. There's uncertainty—look at the auto industry: is it rebounding or still in trouble?

 We’re still the global innovation leader, but Chinese technology, especially in EVs, is coming fast. I’m not sure tariffs or protectionism will stop it. I believe in free markets—that’s why we don’t pay $1,000 for chocolate. We buy from places that grow cacao more efficiently.

 So while there’s nothing fundamentally weak about our economy, we’re all conditioned by past crises—COVID, the financial crisis—to expect a black swan. But our lead economists don’t see it. Inflation may ease, but food prices rarely drop. High prices might be here to stay.

Steve Schmith:

So as a corporate investor—thinking long-term beyond 2025—with all the conversation around supply chain resiliency, tariffs, and regulatory shifts in D.C., do you now have to factor in the speed of innovation coming from outside the U.S. as you evaluate where to place bets?

 Shawn Hoyer:

Yeah, I mean, look, just a quick caveat—I’m not an investor myself, I cover investors. But absolutely, it matters. I did my MBA at UNC, and one of my professors, Peter Brews—he’s now the dean at South Carolina—he was a phenomenal strategy professor.

 I remember back in 2011, everyone had their iPhones and iPads, and he said, “It’s these devices that are going to make us less competitive in the U.S.” Because if you have an internet connection anywhere in the world, you can learn. If I’m in a rural part of Africa and I learn a skill online, I might do it cheaper than someone in New York City.

 Innovation has always been seen as an American thing. China replicates, but we invent, right? But that’s outdated. As middle classes rise globally and more people participate in their economies, they gain the ability to think beyond survival and toward innovation.

 We benefited post–World War II from being the only industrial power left standing. That gave us a head start. But now, anyone can access knowledge—Yale’s first-year courses are online for free. That drives up global innovation and competition.

 I don’t know why we still hold this belief that innovation can’t come from China. They might actually be building EVs better and cheaper. There’s a huge advantage in standardization and leapfrogging legacy systems.

 Our former CTO at B of A used to joke, “The reason God rested on the seventh day is because He didn’t have to deal with legacy systems.” In emerging markets, they don’t build telephone wires or cable infrastructure—they go straight to wireless. Meanwhile, the U.S. still processes more paper checks than any other country.

 There’s a deep, unconscious American bias—“We do it better.” But the smarter and more educated the global population becomes, the more we should want that. The more we’re connected, the harder it is for things to fall apart.

 Consumer spending is the fuel for margin, profitability, and growth. When more countries grow, everyone benefits. The proverbial “all ships rise.”

Steve Schmith:

It’s interesting—sidebar here—what you described about leapfrogging legacy systems reminds me of the EV charging debate. To me, the pace of wireless charging tech is advancing so fast—look at Oak Ridge National Labs, for instance. We’re spending billions on standalone kiosks when we need new roads anyway and the tech is already there. Feels like a missed opportunity.

Shawn Hoyer:

Absolutely. But it’s politically expedient. Isolationist views always gain traction in tough economic times—“It’s their fault you’re struggling.” But that doesn’t help innovation. It doesn’t help the consumer. It doesn’t help society.

Unfortunately, politicians don’t win by taking things away—they win by promising more. So we end up with retrenchment. Two-thirds of the world is electing new leaders this year and last. Every country is rearming. And when you invest in weapons, you tend to use them.

As a history major, I see echoes of the 1930s—nations pulling inward, ignoring global issues. In the U.S., there’s such limited education on how we got here. I asked my 17-year-old nephew, “Would you go fight for Ukraine against Russia?” He said, “No, it’s cold there. Why would I go die?”

But we who’ve lived through some of this understand contagion risk. We know what could happen in Europe if things go sideways.

We’re better when we’re open and connected. Bringing low-value manufacturing—like tire production—back to the U.S.? That’s not the solution. We need to invent more. We need to retrain.

Take people who use hammer and nails and teach them AI. Let’s bring back the spirit of Bell Labs—a government-backed innovation lab focused on building the future.

I’ve always said: Big Tech should become the new Boys & Girls Club of America. Go into underserved neighborhoods, build 150,000-square-foot innovation centers. Public-private partnership. They get early access to emerging talent. They improve communities. The government stays off their back. And the administration gets credit for positive change.

Steve Schmith:

That’s such a powerful concept. So, with all of this focus—World Economic Forum, the U.S. Council on Competitiveness—we’ve been talking about this for decades. Why haven’t we made more progress?

Shawn Hoyer:

Honestly, I think it’s cultural. I grew up in rural Pennsylvania—railroads, coal mining. I saw those industries collapse. I saw the opioid crisis take root. The town I grew up in doesn’t exist in the same way anymore.

When you lose your job at the ball bearings factory because it moved to Mexico, and your father and grandfather worked there too—it’s personal. I understood NAFTA as a “Clinton kid,” but now I see why people were angry.

Yes, government is bloated. Yes, free trade has flaws. And yes, we do spend a lot on military and aid for the world. But no one else holds a telethon when wildfires hit California. We do that for others.

Still, every country should have skin in the game. The deeper issue is the fracturing of our society—the haves and have-nots. I’ve had opportunities. I’ve worked for them, but I’ve had them.

People in cities like Brooklyn or San Francisco often don’t understand how someone could vote for Donald Trump. But when’s the last time they went to rural Ohio or Wisconsin? It’s a different world.

Steve Schmith:

Absolutely. All it takes is someone to say, “I can help you.” That’s a lot easier to understand than a 17-point economic plan.

Shawn Hoyer:
 Exactly. Simon Sinek talks about this—people buy why you do something, not what you do. He uses Martin Luther King Jr. as an example: if King had said, “I have an 82-point plan for civil rights,” no one would have followed him. But “I have a dream”? That moves people.

The iPhone is a technically inferior phone to Samsung. Samsung’s had more megapixels and waterproofing for years. But Apple tells you they’re connecting you to friends, family, and the world—it sounds better. It’s about the experience.

Unfortunately, we’re in echo chambers. I benefit from traveling a lot for my job. But even I live in a tech echo chamber—Silicon Valley, where everyone believes they’re the smartest people alive. And I think this current wave of venture capital influence in the administration is going to backfire. Four years from now, people won’t like tech. They’ll say, “Those guys? No thanks.”

Steve Schmith:
 Yeah, they’re going to have a brand problem. You also mentioned the abundance of capital right now. From a VC and CVC perspective, how does that change what firms are doing—last year, now, and into the future?

Shawn Hoyer:
 It’s a big shift. Ever since 9/11, we’ve come to love the peaks of capitalism but try to avoid the troughs. But that’s not capitalism. Capitalism has cycles—ups and downs. And every time there’s a downturn—the financial crisis, COVID—governments pump money into the system to avoid pain.

Now we have so much private money sloshing around, it’s created irrational behavior. Look at 2021: people who had no business investing in startups were writing checks. Valuations were inflated. Why? Because capital needed somewhere to go.

Just look at how massive BlackRock and Blackstone have become. They have essentially unlimited funds.

But here’s the challenge: capital isn’t dispersing evenly. It’s concentrating around the so-called winners. VCs anoint a company, and everyone piles in. It becomes a self-fulfilling prophecy.

Facebook and Google weren’t always well-funded—they had to build real businesses. I’m not sure that discipline exists today. The one potential equalizer? AI.

I ask people: does a one-person, $1 billion company exist yet? Because with tools like ChatGPT, some founders are doing 30–40% of the software development themselves—and they’re not even CS majors. That kind of innovation could fundamentally change the game.

Steve Schmith:
 We’re also in a strange place where consumers are siding with Big Tech. Try breaking up Amazon and suddenly your toothpaste takes three weeks to arrive. Netflix goes away, and people revolt.

Shawn Hoyer:
 Exactly. With cable companies, Congress understood the harm of consolidation—buying up competitors and raising prices. But now, consumers don’t care. They just want their services.

TikTok showed us how powerful a single platform can be. And it raises the issue: who holds the power now?

I grew up near Penn State and saw what happens when one person—like Joe Paterno—becomes more powerful than the institution. That kind of imbalance breeds risk.

I work in tech banking, but I worry. I watched a documentary called Wild Wild Space on a flight recently. I had no idea Elon Musk owns 80% of the satellites in orbit. That’s staggering.

There needs to be checks and balances. That’s why I admired the Clinton administration—he understood you can’t let business run wild. If it’s just business, it gets reckless. If it’s just government, it’s slow and inefficient. You need that public-private balance.

Steve Schmith:
 He was also the last president to leave office with a surplus.

Shawn Hoyer:
 Exactly. So I don’t want to sound pessimistic, but capital is still aggregating to the winners. And when that happens, those few firms essentially decide who gets to grow. When you control capital, you control outcomes.

Steve Schmith:
 That’s interesting. I wanted to end on this: earlier you mentioned that the exit market is still a few years away from returning to “normal.” What does that normal look like? And given everything we’ve talked about—are you more optimistic or pessimistic? Glass half full or half empty?

Shawn Hoyer:
 It’s funny. I really respect Bill Gurley. He’s built something incredible, and he’s refreshingly honest about the challenges in the current market.

VC funds are massive now. Management fees alone can make you rich. So what's the real incentive to work hard and find the best investments if you're already financially comfortable?

I’ve always worked in banking—salary and maybe a bonus. My girlfriend, on the other hand, is on Broadway. Her world is the opposite: no stability, no comfort. One day she's working, the next she’s not. I joke that bankers wouldn’t survive in her world—we’d be curled up in a corner.

As VC funds get bigger, portfolio companies also have to get bigger. Firms like Fidelity, T. Rowe, and BlackRock are so large they can't spend time evaluating a company doing $200 million in revenue. The check sizes they need to write are just too big.

So my concern is that everything is getting bigger and harder to scale. You need to reach such massive scale just to qualify for public investment. Maybe AI can help fix that. Maybe. But right now, it’s a tough climb.

This year, most tech IPOs will be large, profitable, and private equity-backed. Maybe next year, we’ll see more higher-growth IPOs. But if hedge funds insist on profitability and 30% growth, that’s not a typical startup profile.

So I think we’ll see more companies skip public markets entirely. Go from VC to private equity, and then maybe IPO. But again, with so much private capital available, do you even need to go public?

Steve Schmith:
 Tradeoffs, right?

Shawn Hoyer:
 Exactly. The whole model has shifted. It used to be that if you wanted VC money, you went to Sand Hill Road, hoped to impress one of the fifteen big firms, and maybe they’d invest. That was the playbook.

Now? You can raise a $5 million check from anywhere in the world.

What we learned during COVID is that some friction is healthy—especially when it comes to capital. At first, VCs said, “I don’t know if I can invest in a company I can’t meet in person.” That lasted three months. Suddenly, every founder realized they could raise money globally via Zoom.

VC used to be about coopetition—“Hey, I like you, let’s do a deal together.” Now? There are sharper elbows. If one firm is in, another might stay out.

Steve Schmith:
 Yeah, and the competition is fierce. I remember hosting the podcast a few years ago and talking to founders who had just closed SPACs—literally while on the show. And many of those companies… they haven’t followed through on those promises. They've stalled.

Shawn Hoyer:
 Exactly. We need to stop viewing going public as some ultimate milestone. It’s just a step in a company’s lifecycle. And it comes with real responsibility—reporting requirements, operational consistency.

Early-stage, frontier tech companies shouldn’t be public. It’s too volatile. But during the SPAC boom, the incentives were misaligned. For about $6–7 million in accounting and legal costs, you could launch a SPAC. Then if you merged with a company and stayed public long enough, you might walk away with 30% of it.

Founders were the ones who often got burned. Everyone told them they were brilliant. Then the stock hits $5 or lower, no follow-on investors, and they’re left holding the bag.

Being public is fundamentally different than being private. The “move fast and break things” mentality doesn’t work under SEC scrutiny.

You saw it in WeCrashed, Super Pumped—VCs sometimes celebrate chaos. The more people say you’re wrong, the more they think you’re onto something.

But there are fundamentals to building a good business. And when SoftBank hands you billions, you’re encouraged to stop thinking small. “What would you do with $5 billion instead of $100 million?”

Well, we saw what happened with WeWork. They bought wave pools. Literally.

Steve Schmith:
 Yeah, it breeds bad behavior. Not enough diligence. Just too much excess.

Shawn Hoyer:
 Exactly. Too much of anything—money, power, even pizza and pasta—isn’t healthy. I love pasta, but if it’s all I ate, it wouldn’t work.

I have a ton of respect for venture capital. They’ve helped build some of the most transformative companies in history. But like Bill Gurley says, the model has shifted: too much capital going into too few companies.

And when that happens, the CEOs aren’t forced to focus. They have too much money. They can chase too many ideas at once.

Steve Schmith:
 And I imagine that becomes a distraction. As a founder, your vision, your hands-on involvement—that’s what drives the company. But suddenly you're in a different mode. You're not building. You're managing excess.

Shawn Hoyer:
 Exactly.

Steve Schmith:
 Shawn, thank you very much.

Shawn Hoyer:
 Thank you. I really appreciate the time.

Steve Schmith:
 Great conversation.

Shawn Hoyer:
 Absolutely. Thank you so much.