Lo Toney, Managing Partner of Plexo Capital, Proposes Contrarian Allocation Logic on TBPN Show
Plexo Capital Managing Partner Lo Toney proposed a contrarian allocation logic on the TBPN show: there are fewer general partners specifically focused on vice sectors and less funding chasing them, resulting in more reasonable valuations and greater upside potential; categories historically considered vices will fluctuate, with some no longer viewed as vices.
He cited several funds focused on vice opportunities, arguing that the competition is thin. The businesses themselves are often strong, and limited buyers keep prices stable, preventing returns from being eroded by successive price hikes. He pointed to peptides as a contemporary example of fluctuation: while he may not define them as a vice, they are approaching vice consumption in some gyms in Southern California; he believes the pendulum is swinging towards acceptance.
Toney incubated Plexo internally at Google Ventures in 2017 and became independent in 2018. The model is to first act as a limited partner in emerging seed funds, then make direct investments from those portfolios. The first fund raised $42.5 million, with investors including Alphabet, Intel Capital, Cisco Investments, Royal Bank of Canada, Ford Foundation, and Hampton University Endowment Fund. Publicly, there are about 53 fund commitments and around 50 direct investments, with an underlying portfolio of over 900 companies covering North America, Africa, and Latin America, including several that have reached unicorn status. The direct investment entry prefers post-money valuations below approximately $100 million to $150 million. By the end of 2024, he disclosed co-investing in OpenAI and increasing his stake, becoming the largest single position at that time.
Discussions of vices and peptides occurred in the same media environment crowded with hot rounds of artificial intelligence. Toney is also a CNBC commentator, having discussed crypto listings and Nvidia-related deals, and his daily allocations are not solely focused on vices. Highlighting vices separately illustrates a style shift: mainstream check-writing models and assistants leave price discipline for niche categories. Peptides exist in a gray area of sports supplements, anti-aging clinics, and not yet fully pharmaceutical products, with acceptance rising alongside celebrity and gym culture, while regulatory classifications have not been fully addressed in this conversation.
In market mechanics, this is about thematic rotation rather than single-stock trading. Buyers are a minority willing to write checks for vice sectors; sellers are cash cow companies blocked by mainstream institutional policies. Funds are being diverted from crowded AI seed rounds to lower-valued constrained sectors. Beneficiaries are general partners who can withstand reputational scrutiny and accept reasonable prices; those under pressure must explain the presence of alcohol, gambling, adult content, or peptides in their diversified funds to limited partners. The event-driven aspect is weak; it provides an allocation excuse: in less pursued areas, discipline appears more like alpha.
Additional data: Plexo's direct investment phase focuses on enterprise services, market platforms, and technology-enabled consumer sectors, with vices being a sub-strategy he has observed, not the only official sector. TBPN's weekday live broadcast occurs in the afternoon Pacific Time, primarily featuring guests from technology and artificial intelligence. Peptides have already appeared in performance discussions alongside sleep, nicotine, and creatine among founders, but have not yet equated to a completed prescription drug pathway.
Source: Public Information
ABAB AI Insight
Toney manages a fund of funds and sees who is hesitant to write checks. The alpha in vice sectors comes from limited partner terms, not from smarter product managers: university endowments and corporate CVCs often write off adult content, gambling, and alcohol, leaving fewer buyers, thus prices remain at "reasonable" levels. By referencing the century-long pendulum, he aims to give peptides a pass—today's gray area at gym counters may become tomorrow's anti-aging sector. OpenAI is his largest hot ticket in the portfolio, while the vice discussion is the same mouth selling cold tickets with discipline.
The capital path is a reputation discount exchanged for entry prices. General partners focused on vices do not compete with $1 billion assistants to acquire cash-flowing, dirtier narrative companies. If Plexo only acts as an LP, it receives shares of these funds; if it makes direct investments, it gets pricing filtered by terms. If peptides continue to swing towards legal supplements or clinic products, today's gray area premium could become tomorrow's compliance premium, with early entrants profiting from reclassification. Money from institutions like the Ford Foundation's "diversity seed" accounts could theoretically flow into "untouchable" accounts, provided the investment memos pass compliance committees.
Comparable cases include the alcohol industry post-Prohibition, the legalization of sports betting and related tech, and the first brands after cannabis legalization in states. One side of the pendulum is moral clauses, while the other is tax and consumption data. The industry phase is one where artificial intelligence has absorbed nearly all seed imagination, and niche sectors are becoming refuges of price discipline again. Southern California gyms are merely cultural outposts; the real pricing power lies in the FDA pathway and whether payers reimburse.
Structural judgment pertains to the transfer of pricing power. The mechanism is: when mainstream capital writes off a certain type of consumption as non-investable, remaining buyers gain bargaining power. Once classification changes, bargaining power immediately shifts to later growth rounds. The vice funds are not betting on perpetual original sin, but rather on the day when original sin is renamed.