Thought Leadership Threads

We’re witnessing one of the most exciting periods in VC history. Funding is flowing freely, valuations are stratospheric and gigantic exits have become the norm. As a VC this should feel great, but does it? Maybe not. What follows is a rant that bears my soul on the topic:

It was amazing to see the reaction to the thread by @dunkhippo33 about “why ownership doesn’t matter for early stage investing”. There are great nuggets in her thread but I have a very different perspective and counter-argument.

The case for why ownership DOES matter:

I asked a number of institutional LPs that invest in VC funds what they thought about the recent rise in exit valuations and if the resulting VC results were going to impact their view of managers and allocations.

You might be surprised about what they said! Unpacked:

It’s been 6-months since I posted a thread about the trend of early stage companies raising of 2-3 back-to-back rounds with minimal progress in-between. I asked some amazing VCs whether or not anything has changed since. They think it’s gotten worse. Their thoughts:

I’ve been asked a lot why there’s so much variance on “valuations relative to traction”. Some companies are getting 100X ARR multiples while others are getting 2X. There’s no simple answer but a big driver is if a company can demonstrate “Multiplicative Momentum”.

The only way to describe the public markets’ appetite for new Logos is “insatiable”. But why? SPACs vs. IPOs? I’m no public markets expert by any stretch of the imagination but I’m not going to let that stop me from weighing in on what I think is going on. Unpacked:

The most commonly debated and IMHO the least grounded topic in early stage VC is “how do you determine what a company is worth?” Recent early stage #fintech and #venturecapital valuations seem to defy gravity but are they justified?

I pulled a thread together a few weeks ago about how the early stage fintech ecosystem has gotten a bit crazy and overheated. Since then I was asked to comment on the later stage madness.  Unpacked:

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The most disturbing trend I’m seeing in the early stage fintech ecosystem is the raising of 2-3 back-to-back rounds with minimal progress in-between. Unpacked: