Venture Trends Newsletter, Issue #15
I read daily and this newsletter gathers together this week’s most interesting content I saw related to the venture capital and startup ecosystem. I hope you find it useful as well as being a time saver.
This week’s free issue includes content from Marc Andreessen, Ezra Klein, Ben Thompson, Brad Feld, Mary Meeker, Seedcamp, Fred Wilson, David Sacks, Bill Gurley, Rob Go, Techcrunch, Harvard Business Review, New York Times, The Information, WIRED, CrunchBase News, and many more. Topics are the ones that dominated the week.
- Now is the time to Build – Marc Andreessen
- Why we can’t Build – Ezra Klein
- How Tech can Build – Ben Thompson
- The need for Entrepreneurs – Brad Feld
- Investing via Zoom – Seedcamp
- The Corona Impact – Mark Meeker and Bond Capital Team
- UK Government – Future Fund.
I email the newsletter each weekend. There is little or no commentary included, it is the things I found compelling or interesting.
This is the free version, and I also have a supplemental paid version that includes access to content for full subscribers only. If you like the newsletter and want it to continue please consider a paid subscription by clicking here.
IT’S TIME TO BUILD
We can’t build nearly enough housing in our cities with surging economic potential — which results in crazily skyrocketing housing prices in places like San Francisco, making it nearly impossible for regular people to move in and take the jobs of the future.Demonstrate that the public sector can build better hospitals, better schools, better transportation, better cities, better housing.
Why we can’t build
In a viral essay , venture capitalist Marc Andreessen makes a simple exhortation: It’s time to build.The problem is also conservatives who want government to work poorly when it’s needed most.
How Tech Can Build
In other words, if software is eating the world, then it is the venture capitalists who are among the best positioned to get fat, at least in theory (that noted, one would have likely been better off investing the Big 5 tech companies in 2011 — for reasons I discussed last week — than in Andreessen Horowitz ’s funds ).1 The sort of building Andreessen calls for is very much in the real world, costs real money both up-front and on a marginal basis, and would surely make the most sense anywhere but Silicon Valley.
Entrepreneurs Are More Important Than Ever
Techstars has been extremely active around content, community, and engagement around how entrepreneurs can help with Covid-19 as well as how they can navigate the challenges to their business.Numerous Global Startup Weekends to help come up with solutions for Covid-19 are happening all over the world this weekend .
What an incredible visual of Zoom’s adoption, via Bond Capital / Mary Meeker’s latest (wonderful) report – https://t.co/nAvLoJTqyX pic.twitter.com/g8IB7ihULf
— Nick Francis (@nickfrancis) April 21, 2020
Bond Capital founder Mary Meeker (Internet trend report fame) has a new report titled “Our new world,” focusing on the effects and after-effects of #COVID.https://t.co/zIev3a3r8c
— Pravendra Singh (@hackpravj) April 25, 2020
Exclusive: Mary Meeker’s coronavirus trends report
Bond Capital, a Silicon Valley VC firm whose portfolio companies include Slack and Uber, told its investors this morning via email that the coronavirus’ high-speed spread and impact has similarities to the devastating San Francisco earthquake of 1906.Today’s 28-page report to Bond’s limited partners, obtained by Axios, shares some structural similarities.
Investor Mary Meeker says Covid-19 crisis is separating businesses with strong online strategies from laggards
The report, which Axios published on Friday, says businesses that are doing the best in the current crisis use cloud technologies, sell products that are always needed, can easily be found online, make other businesses more efficient and have a good social media presence.Mary Meeker, the former tech investment banker who has spent the past decade in venture capital, is out with a new 29-page report on how the coronavirus is shaping economic activity, consumer behavior and technology.
How we invested in three new pre-seed companies we only ever met remotely
We definitely had some serious questions about how we would be able to migrate our Investment Forum into an online-only format and what it would mean from a relationship perspective, both in terms of getting to know new founders and being able to engage with our own LPs. Thankfully, with the right tech tools, team and planning, we were able to come up with an incredibly detailed operation to ensure a slick operation.To reduce friction in an online-only arena creating a seamless experience where multiple pre-seed founders can present their businesses, investors feel engaged and stay for the duration and our core team participates throughout, ultimately leading to us investing in multiple new companies.
North American Venture Report: Funding Up Slightly In Q1
Crunchbase projects $34.5 billion was invested in North American startups across all stages in the first quarter of 2020.Projected early-stage funding counts were at a peak this quarter at just under 1,000 rounds.
Ensure 24 months runway if you want to raise VC funding now, says venture capitalist
Startups that are not venture capital (VC) funded and are looking to get VC funding, should have a minimum of 24-months worth of cash in the bank or secured revenue, in order to close investment, says Kalon Venture Partners CEO Clive Butkow.Startups that want to get VC funding, need at least 24-months of runway, says Clive Butkow
‘Expert Twitter’ Only Goes So Far. Bring Back Blogs
During the pandemic, however, when our affinities have turned toward a desperate craving for useful information, the dynamics of this algorithm now serve a crucial purpose: helping to surface otherwise hard to find niche experts.It’s how, for example, so many now know about Trevor Bedford (@trvrb), a virologist at the Fred Hutchinson Cancer Research Institute, who’s using computational algorithms to understand how the virus is spreading.
Today I want to share with you publicly where our deals @HustleFundVC fund come from. We’ve done 135 investments since Sept 2017. 1 investment per week. Here’s a high level graph.
Some thoughts on these referral channels… pic.twitter.com/NVwyBCAmMi
— Elizabeth Yin (@dunkhippo33) April 23, 2020
Each situation is different but a framework I like is to take your pre-event baseline, your event driven peak, and assume you will give up half of the delta when things return to normal and that will be your new baseline.I’ve seen event driven growth spurts over the years.
Venture Firm Benchmark Raises New Fund Without Early Uber Investor
The New York Times (Reuters) –
The Silicon Valley venture capital firm known for its early backing of companies such as Uber Technologies Inc is raising a new fund, but without one of its most prominent general partners, a source close to the firm said on Wednesday.But influential general partner Bill Gurley, who led the firm’s early investment in Uber, one of the largest tech companies to emerge in the past decade, will not be part of the new fund, the person said.
Next Year’s VC Funds May Be Hit Harder by Covid Recession, Says LP
For the people who invest in venture capital funds, the impact of Covid-19 is like watching a “slow-motion plane crash,” Sapphire Ventures managing director Beezer Clarkson said in an interview with The Information.
The good, better and best of cloud and SaaS growth
This year the report included a six metric rundown of “good, better, and best” startup cloud and SaaS startup performance.The crew at Bessemer released their new, yearly cloud report this week.
The Burn Multiple
If extraordinary investment (3x burn or more) is required to deliver that growth, it’s an indicator that product-market fit isn’t quite what it appears to be or there’s some other problem in the business.A sales efficiency problem — If CAC is prohibitive or sales productivity is diminishing, burn will increase relative to new ARR, causing the Burn Multiple to worsen even though growth continues.
? Founders: keep an eye on the relationship between how your co’s spend (AKA burn) and the revenue/value it produces.
“Tracking the Burn Multiple is an easy way for founders to make sure that burn isn’t getting ahead of traction.” @DavidSacks https://t.co/NjrW4q2TeP
— lolitataub (@lolitataub) April 24, 2020
Lessons Learned (Senkut, Glickman, Rust)
On this special segment of The Full Ratchet, the following Investors are featured: Aydin Senkut Steve Glickman Ash Rust Each investor illustrates a critical lesson learned about startup investing and how it’s changed their approach.
Tomahawk.VC Launches to Invest in Global-First Startups
Founded by Cédric Waldburger, who has more than twelve years of experience working with decentralized teams, Tomahawk.VC invests in companies that think and work globally from the beginning.With Tomahawk.VC, he starts a decentralized venture capital firm without an office, that focuses on global-first companies, which think and act on a global scale from their very start, build their team and culture remotely and are not tied to a certain geographical location.
How to Recover When Your Career Gets Derailed
If you can’t or don’t want to resume work in your previous field, think about your passions and take a chance on pursuing one of them as a new career.But how do you recover from a setback so big that it causes you to lose your job or completely derails your career?
When Tailwinds Vanish
- Unlike the organic pull that drove many of the dotcom-era successes, today’s Internet startups need to fight for growth by investing more heavily into sales, marketing, and operations.
- As we approach full online penetration, new companies will need to steal revenue and users from Internet incumbents to grow.
Does a Zoom world change what VCs look for in founders and start-ups? E.g. better story tellers, products/markets that are easier to visualize remotely (e.g. software), repeat founders, or other things?
— Micah Rosenbloom (@micahjay1) April 22, 2020
5 trends in venture capital (beyond the pandemic)
“We’ve seen many billion-dollar companies emerge here in recent years,” said Sarah Hodges, a partner at Pillar , an early-stage venture capital fund in Boston. Before the coronavirus, seed funding grew so popular that it emerged as its own class, causing plenty of firms, like Founder Collective, to specialize solely in this early stage of venture capital funding for startups.
Now you can get paid for your Zoom calls in crypto
“If a yoga instructor wants to collect $20 per participant, for instance, they can choose to reward participants for bringing them new business,” Erez Ben-Kiki, founder and CEO of 2key, the Israeli company that’s developing the software, told Decrypt.Ben-Kiki, of Tel-Aviv, said that the system was created in three weeks and that it is the first paywall to be approved by Zoom.
No major relief expected for portfolio companies
Over the 10 years ended Dec. 31, alternative investment firm assets under management grew by 170% to $6.5 trillion, the McKinsey & Co. report shows.Help from the federal government during the growing economic crisis is not expected to do much for the portfolio companies of private equity and venture capital firms, which are already starting to decide which ones might survive.
So, we launched a new virtual accelerator today focused on our theme of the Everyday Economy. https://t.co/sAmlPCNE5U
Why in the world would we do this? A couple thoughts:
— Rob Go (@robgo) April 20, 2020
Since writing that post, we have watched a bunch of our portfolio companies close financings, some on the same terms as provided before the pandemic and some on slightly adjusted terms.I wrote a blog post on March 12th called Open For Business and thought I would return to the topic.
My Thoughts on the Current Market: on 20-Minute VC
Stories by Mark Suster on Medium
In the private markets it’s much harder to know and you’ll have VCs who don’t want to take “mark downs” so may not immediately encourage you to accept a new reality.In a market where people aren’t just paid to “innovate” but will need to show real economic value, expect gains to come more slowly.
A lesson I have learned many times in my 20 years as a marketplace investor is that aggregating demand is the one & only key. Aggregating supply is not the hard part, & having differentiated supply or thinking because you own supply you can enter the market is misplaced thinking. https://t.co/HWVuQPJ88J
— Bill Gurley (@bgurley) April 21, 2020
In crisis, some start-ups are surging — and saying ‘no thanks’ to hungry investors
Talkspace, which has 120 employees and works with thousands of therapists across the country on a contract basis, last raised money almost a year ago, a $50 million round led by Revolution Growth.Frank is the CEO of Talkspace , a company he co-founded eight years ago with his wife, Roni, to provide therapy over the internet for people in remote areas and those who can’t afford traditional psychotherapy.
Narrative Economics and the Power of Stories
Tomasz Tunguz – Venture Capitalist at Redpoint
Robert Shiller wrote Narrative Economics , in which he explores how stories impact the economy.If there’s reason to believe stories are powerful economic forces at the country level, there’s reason to believe stories are just as compelling for individual companies.
Only 44 startups in Silicon Valley got funded last month
But for startups in the region that raised money in March of this year, the price increase was just 46%. And it dropped further last month, when just 44 companies in the region raised cash, the report said.
New data details the decline in Silicon Valley’s Q1 venture activity
Today we’re unpacking some new data concerning what happened to Silicon Valley’s venture capital market in Q1, with a special focus on private financings towards the end of the three-month period.We’ve already talked to venture capitalists who invest in fintech , social companies , consumer startups , and other niches to understand the present state of the venture capital market.
Silicon Valley Startups’ Funding Troubles Poses Unique Threat to the Crypto Industry
A report from law firm Fenwick & West LLP reveals venture capitalists have tightened spending in light of the economic crisis, spelling trouble for crypto startups looking for investment money.A Decline in Confidence See Investment Spending Dry Up In view of the deteriorating economic situation, it should come as no surprise that the number of Silicon Valley companies able to secure investor funding is on a downward slide.
Unicorn Companies Account For High Number Of Layoffs
Thirty-six private unicorn companies have laid off staff since the coronavirus outbreak, accounting for 8,416 jobs lost according to Layoffs.fyi .Private unicorn companies account for 14 percent of the 252 private startups named in the Layoffs.fyi list.
Venture Capital fund managers look for lifecycle extension to tide over Covid-19
are likely to ask investors to extend the lifecycle of their funds, as they look to ride out the impact of the Covid-19 pandemic that has brought deal making and fundraising to a grinding halt.The exit scenario for VC investors, who typically operate funds with an eight to 10-year lifecycle, has also become bleak, with secondaries-focused investors, with whom conversions around portfolio sales were being discussed, also adopting a wait-and-watch stance.
Covid-19 Crisis Will Bring Seed Investments Down, Says Grove Ventures Partner
The next few quarters will bring a far more limited scope of funding rounds, according to Sigalit Klimovsky, a partner at Israel-based venture capital firm Grove Ventures Capital (GP) Ltd. Klimovsky spoke to Calcalist reporter Hagar Ravet Sunday at Conference Call, Calcalist’s online convention on tech in the coronavirus (Covid-19) era.The Israeli tech sector registered a record quarter in the first three months of 2020 raising $2.74 billion across 139 deals, according to a recent report by Tel Aviv-based research firm IVC Research Center and the Israel office of international law firm Zysman, Aharoni, Gayer & Co.
Why Seed Investing Is Kind of a Sucker Bet (Relatively Speaking)
Well, the “good news” for seed investing is you should have a much lower entry price than a Series A-B-C investor.Let’s say you have a $30m seed fund and want to do say 40 investments for diversification, and keep 50% in “reserves” for later checks into your winners.
2) As it turns out, @HustleFundVC gets just shy of 25% of our startup applications from Twitter!
It’s the channel that yields the most # of applications. Warm referrals are a really close 2nd. Statistically probably the same.
I suspect this holds true for other VCs.
— Elizabeth Yin (@dunkhippo33) April 17, 2020
I made this chart because I had no idea what it would look like if you went back that far (I was mainly wondering what TV did to the market, especially to radio). Charts of important things where you don’t actually know what they’d look like are often worth pursuing. https://t.co/DtAbcNqYCm
— Benedict Evans (@benedictevans) April 24, 2020
All New Ways to Find Opportunities in Crunchbase
At a time when having access to reliable company information is crucial, we’re working hard to uncover new data points that will help signal company growth and buying power.So today we’re launching a better way to find the companies that matter, a personalized homepage that gets you there faster and an expanded dataset with even more companies.
Tough times ahead for European venture capital
European venture capital will struggle considerably because of coronavirus, according to a new report that calls current economic conditions the toughest since the global financial crisis.
What do startups and VCs think of the UK’s initiative to save startups?
With this in mind, we contacted startup founders and venture capital firms based in the UK to find out exactly what they think about the UK Government’s new funding scheme.The requirement that private investment is first attained by companies wishing to access the scheme is a pragmatic mechanism to protect the taxpayer and will go some way towards ensuring that the most viable early stage businesses are supported.
The Future Fund: UK Government Tries Its Hand At Venture Capital
Under the terms of the loan, on a future funding round of the company, the amounts advanced to the company via the CLN will convert into equity at a 20% discount to the price per share paid by investors in that financing.The Government proposes to invest alongside other private investors and the CLN contribution shall comprise no more than 50% of the bridge funding being provided to the company by such investors.
Europe’s innovation to keep drawing venture capital interest despite pandemic
Among them is Silicon Valley Bank, part of California-based holding SVB Financial Group, which provides financing to tech, life science and healthcare companies and their investors across U.K., Ireland, Germany and Denmark.Innovative European businesses will once again amass large amounts of venture capital once the short-term investment hiatus caused by the coronavirus pandemic passes, according to market sources.