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All Things VC - September 23' Edition
Summary
). published a post on some famous misses like Twitter, Carta and more (
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Tweets & more
Rick Zullo’s tweet and Samir Kaji’s comment are packed.
Meghan Reynolds on Middle East Sovereign Wealth Funds
on bootstrapped companies and linking it to unicorn valuations
Memes & more
Articles & Posts
Forbes article from : 12 Ideas From “The Hitchhiker’s Guide To The Galaxy” Applied To Family Offices
3. Towels: The Basic Swiss Army Knife of Tools
5. The Improbability Drive: You can’t be everywhere at once.
9. Pan Galactic Gargle Blaster: Successful Founder Inventions
11. Galactic Bypass: Disruptive Technologies
Peter Walker on startup employee tenure
90%+ of employees on Carta receive a 4-year vest, 1-year cliff.
64% employees work for 2 years of less.
Peter Walker on startup compensation trends
2. Equity packages are down 26% from November 2022. That is a STEEP drop. And that's not because companies are now worth less than they used to be. The percentage of the company given to each new employee has fallen, for entry-level through VPs.
5. Startup salaries across the US have drifted closer to SF rates. Places like Charleston, Las Vegas, Raleigh, and Jacksonville all closed the salary gap with bigger cities (not entirely, but the movement was strong).
Samir Kaji - Why Benchmarks are very overrated in venture capital manager selection
While benchmarks can provide an excellent comparative measure, too often, they are significantly overweighted for manager selection, and many don't account for the inherent flaws of VC benchmarks (especially recent vintages).
Samir talks about (a) Discrepancies in Valuations: It's not uncommon for different funds to hold the same company at vastly different valuations. Funds that are quick to markdown are disadvantaged when it comes to benchmarks versus funds that don't markdown aggressively. (b) The "One-Size-Fits-All" Benchmarking Problem: Benchmarks often treat VC as a singular class, lumping together funds of all sizes and stages. (c) The Survivorship Bias Trap: Many benchmarks suffer from limited sample sizes and often rely on self-reported numbers.
Steve Kim on portfolio construction
The Concentrated Managers Approach: Should you invest primarily in managers who maintain concentrated portfolios, ensuring diversification by simply incorporating enough of these managers until you hit your desired diversity target?
The Diversified Managers Approach: Should you lean towards managers who already maintain diverse portfolios, gradually reaching your diversification target?
Key Takeaways: Both approaches arrive at similar expected returns, but the paths are very different.
Nikolas Krawinkel on ‘unicorn’ being a vanity metric
Founders and investors have been striving for the wrong goals. Even worse, many of the so-called unicorns will continue to fake a valuation that they should not really have. Just to keep the prestige and fake book valuations.
Marc Penkala on repeatable VC Fund performance
Yair Reem on why at , they shy away from investing the first ticket as a SAFE or CLA.
Charles Hudson on the importance of understanding one’s capital provider’s business model
The pressure that LPs feel to generate liquidity in venture flows down to VCs. Many VCs feel pressure to generate liquidity for their LPs, either through M&A transactions or secondary sales. And, at a minimum, I think it makes many VCs think hard about what portion of their current portfolio will generate returns for their LPs and makes many of us more circumspect about which companies to support financially and which to ask to figure things out with the resources they have available. If your VC investors feel more tight or agitated or pressed of late, it’s likely that they are feeling the effects of pressure flowing downhill.
PwC interview with Sion Evans from VenCap: How do top-tier LP's think about sourcing, allocating, and deploying funds into GP's?
Adam Shuaib on analysing the founders of every seed-stage startup in Europe over the last 10yrs
Adam Shuaib on optimum number of founders for a startup
Abhishek Maran on large VC firms moving earlier in the capital stack
Chris Harvey on New Private Fund Adviser Rules in 2023
Ali A Liaqat on secondary pricing
VC investors have also become a bigger share of sellers in the secondary market, edging aside employees and other company insiders including board members and founders, according to Carta, which sells software that helps private companies manage their ownership. Investors jumped to nearly 70% of all sales in the first quarter of this year from half of all sellers in the last quarter of 2022.
VCs looking to sell some of their investments may be selling into an increasingly unfavorable market with QoQ declines in both common and pref prices.
Brian Rumao’s post on Instacart IPO
Chris Harvey - LP Transfers: Key Insights for Emerging Fund Managers (2023-2025)
Allocate - How to evaluate Venture Capital GPs using the GP-Thesis fit model
VC Anti-portfolio
LP Perspectives: Why LPs are hungry for direct investments
News & Reports
CBInsights - Europe has overtaken the US to become the most active tech M&A market in the world
PitchBook Analyst Note: Analyzing the IPO Market Outlook
PitchBook Analyst Note: An LP's Guide to Manager Selection
PitchBook - Do VC specialists outperform generalists?
Unicorn Founder Pathways report from Endeavor
Without revealing too much I’ll share 5 key commonalities across the board:
Aumni Venture Beacon - First Half 2023
At a high level, the venture capital market during the first half of 2023 is marked by contrasting trends. Early-stage valuations returned to long-term averages, but down rounds accelerated for late-stage companies. Pre-seed deal sizes increased, but convertible notes executed at higher interest rates and with higher discounts. Fund investment velocity and lead investor check sizes remained muted but experienced mild recoveries from recent lows. Across deal stages, these dynamics paint a venture landscape that may be starting to normalize toward historical trends but is nonetheless a market that remains challenged.
Max pog on 9 reasons to look closer at the startup studio model
Podcasts & Videos
Turner Novak’s interview with Semil Shah on how he built Haystack
Staffan Helgesson on fund liquidity, riding winners and recycling early exits
| Founder of on How Small VC Funds Can Return 200X+
EUVC interview with Niels Fritze from Scale Invest
Special Topic - YC
Special Topic - IPOs
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