And We’re Off 🚀
Launching VC Minute took a lot more courage than I thought it would. I recorded, deleted, re-recorded, queued for posting, deleted, re-re-recorded, and finally re-ordered episode flow for good measure.
I was definitely stressed and nervous, which is strange because I’ve already published a lot of these thoughts as segments of the Startup of the Year podcast. But when you’re hanging your own shingle out there, the pressure really hits home.
Taking that leap is hard. I’m glad it did it. The ball is rolling and there’s a lot more fun to come. Thank you for being part of the launch! I truly appreciate it.
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Pool Party
VC Minute launched with the Pool Party analogy because it’s the most important framework of all for fundraising. It sets the stage for the social dynamics at play: peer pressure, group think, fear of looking stupid (FOLS), followed by the FOMO, even creating scarcity. Founders need to be thinking through all of these things as they try to bring their funding rounds together.
There are a few more frameworks coming. But for now, you need to throw the hottest pool party.
🤔 Am I showing my age as a Gen-Xer by saying “coolest pool party” on the podcast instead of “hottest”? It doesn’t take much to make me feel old these days.
I’ll spare you the full episode-by-episode recap, but if you want to read it: it’s here.
⚠Everything below here turned into editorial and market commentary. I’d welcome your feedback on this: was it interesting? Irrelevant? Feel free to read on.
Pig in the Pipe
It’s been a wild few weeks in Startupland, hasn’t it? We’re about where I expected we’d be regarding Seed stage financing: there’s still plenty of investments being made but cracks showing. Recent Series A data has me concerned that the pig in the pipe is wreaking havoc faster than I thought it would.
Pig in the pipe, you ask? TL;DR - the path to big exits are closed temporarily, and that will have ripple effects throughout the funding landscape, eventually leading to lower valuations and fewer investments at every stage. But it might take a while for it to hit Seed given all the new seed funds over the past few years. If you missed my report published May 20th, you can read it here.
My thinking on that report started when a founder asked me in December what we thought was going to happen to the startup market in 2022. I told him I was watching Late Stage investment activity as the early warning indicator. It all clicked into place for me in early Q2, and after the path to (big) exits shut did I feel I had to write that piece.
2020 Made People Not Fear Dips
What does the rest of 2022 hold? I don’t know but I have come to grips with being a near-term Bear, long-term Bull.
In an epic text thread with my friend Cheryl Foil on Friday night, she said, “2020 made people not fear dips.” 🔥 It’s true and scary.
The more I see “buy the dip” and “the best investments I made were in 2008” the more I believe there’s more fear to play out. Even with many aspects of the underlying economy holding strong, there are still fundamental macro economic issues to contend with. The main one that’s relevant to us are public market tech stock multiples.
In private markets it’s a similar story with plenty of investors tweeting about “competitive rounds” and it being just as frothy as three months ago. That’s more scary to me than “buy the dip” because high-priced seed rounds right now I believe will destroy value for everyone involved. Here’s a great thread on VC math.
Shorter Cycles, Increased Volatility?
The main thing I’m trying to understand right now is if the speed at which things change today will impact economic cycles. Specifically, will we have shorter cycles that swing more wildly?
The world today is vastly different than it was in 2000 and lightyears different than 1980. How does the speed of money, information, and change impact economic cycles? My working thesis is compressed time + more extreme swings. That’s what I’m noodling on right now.
That’s all for now. Have a great week!