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All Things VC - June 23' Edition
Summary
). Valuation write-downs are still happening (
).
). Secondary discounts are still deep but the bid/ask spread is moving closer (
). Many mega-VC funds are unable to raise funds and are slashing their targets (
). VC capital calls is in steep decline (
). Industry needs to treat the smaller and larger VC funds differently (
). Talent working at corporate VC units are much more likely to change jobs than those working at Institutional VC firms (
). Many established and bigger VCs are starting Funds-of-Funds (
).
). Common mistakes from VC LPs (
). VC benchmarking: Funds that are diverse outperform, funds with a female GP outperform, solo GPs outperform, and career operators outperform those with a fund management background (
).
). Majority of investors in EU believe unicorns are overvalued, more U.S. VCs are coming to EU, and lack of exits a key weakness in the ecosystem (
). Generative AI wave has reached the EU shores with it making up to 35% of total AI funding in the EU (
).
‘All Things VC’ focuses on topics relevant to GPs & LPs in the venture capital world on a strategic level i.e. valuations, market dynamics, fundraising, D&I, portfolio construction & more.
Tweets
Henri Pierre-Jacques - Motivational Quote
Samir Kaji on mistake of lumping all fund types together
Elizabeth Yin on VC Fund Manager Fundraising
Megan Reynolds on VC LP thoughts
Janelle Teng - Will we see more unicorpses than unicorns in the coming quarters?
Turner Novak - VCs successfully pivoting from web3 to AI
Joel Cohen - LP QUALITY, WHY IT MATTERS, AND HOW TO DILIGENCE IT
Rick Zullo - Death of revenue multiples
Shai Goldman on VC being a tough business
News and Articles
PitchBook - Record levels of dry powder in Europe?
Speedinvest - Inside the Minds of European VCs
ATO Capital - An Allocator’s Perspective on Emerging Managers
FT - Calpers plans multibillion-dollar push into venture capital
PitchBook - Will fund-of-funds open the door to early-stage deals?
Most investors who focus on more mature companies have simply begun making direct investments in younger companies.
The universe of VC-focused FoFs is small, but the strategy has a strong track record. Over the past decade, vehicles that invested in VC across all other private market strategies, according to PitchBook data.
CF Private Equity - Is Now the Right Time to Invest in Venture Capital?
Ryan Hoover - Fundraising Guide
TechCrunch - What are Series A VCs looking for?
Series A investors are still taking longer to do due diligence, are more focused on the metrics, and are looking to participate in rounds at reasonable valuations.
The muted late-stage funding and exit environments have left investors with few data points and examples of how to price companies — and that now affects the Series A stage, too.
For one thing, it’s harder now for founders to start planning a fundraise because it isn’t as clear who is even actively investing or adding new portfolio companies
TechCrunch - There are signs that it will be a hot secondaries summer
“Discounts are still high, but there is a collection of companies, a block of them, that are trading at premiums which aren’t really covered in the averages because a lot of them are written down from their averages,” he said.
Ilya Strebulaev - Changing dynamics in Corporate Venture Capital
Samir Kaji - 9 Common mistakes made by VC Limited Partners
Marc Penkala - Capital calls are falling off the cliff
Recent steep decline of (45%) in capital calls have significant implications for both LPs and VC funds.
LPs may benefit from increased flexibility in managing their committed capital, while VC funds may face challenges in maintaining investment momentum and meeting their performance goals.
Bloomberg - Shares of Startups Are Turning Dirt Cheap, Attracting Venture Funds
Cash-strapped founders, employees and investors are under pressure to sell their stakes amid a wave of tech job cuts, a tepid IPO market and rising interest rates. That has helped to drive down prices. As of May 31, shares of startups were trading at a median discount of 61% compared to valuations at their latest funding rounds, according to a by
SiftedEU - Europe kicks off new support measures to help (future) deep tech innovators scale up
Samaipata Ventures - In the ecosystem: A polarizing market
In just Q1 of this year, there were 185k global redundancies (6% in Europe) compared to 165k in 2022.
AI accounts for around 12% of venture funding in Europe, but a staggering 35% was invested in Generative AI to date in May 2023 vs 5% in 2022.
FT - Rocket Internet backs away from start-up investing in tech downturn
Meanwhile, over the past couple of years, Rocket has slashed staff at its venture funds, closed one of its investment units, abandoned plans to raise a new start-up fund, and urged certain nascent tech companies it has invested in to adopt more conservative spending plans.
TechCrunch - Filings reveal PE and VC returns amid escalating write-downs
Some high-profile venture capital and private equity firms are slashing the valuation of their holdings, causing billions in apparent profits to evaporate as the economic downturn undermines the sustained growth of the last 13 years.
The real story for me is not the VCs, it’s the HBCUs and it’s the endowment gap — and the gap’s been growing in part because of the success of venture firms
Charles Hudson - What Happens When Small and Large VC Firms Decouple and Have Less in Common?
For most of my venture career, it felt like small funds and larger funds were part of the same ecosystem, where winning looked the same for most folks regardless of fund size. As the scale of the largest venture funds continues to increase, it feels like the shared incentives and winning that bound smaller and larger firms together no longer applies to the degree that it once did. I wrote up some of my thoughts on this change and what it means in terms of competition in our industry.
Institutional Investor - There’s No Easy Exit for Companies Backed by PE and VC
BusinessInsider - VC fundraising goals are hit
Videos and Podcasts
Disrupting VC Benchmarking and Closing The LP-GP Information Gap
Generational change in venture capital
20VC: How to Raise a Venture Fund from Deck to First Meetings to Final Close
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