AACE Venture Fund’s Post

Public market pricing has materially (and appropriately) declined post-COVID, but early stage funding round pricing has not. It is increasingly difficult to find pre-seed and seed deals where the pricing is aligned with likely outcomes. The result is friction between founders and funders regarding valuations (and valuation caps). This isn't good for anyone involved. Founders feel that funders are unreasonable when asking for sub-$10M pricing at pre-seed or seed, and funders feel that founders have no empathy for the investor's required return math. Here is a VC firm that decided that it could not rationalize deploying capital in the current state of valuation incongruence. There will be other examples of capital withdrawing from the early stage market until the disconnect is resolved. https://lnkd.in/eDqZARAq

We all know references are an important part of any hiring and investing process, but this is especially true at pre-seed where we at Concept Ventures invest, But how do VCs approach reference checks on founders they're investing in? What are some best practices when doing so? And what are they actually trying to find out? Thanks a lot to team Weekend Fund - Vedika Jain & Ryan Hoover for putting together this great piece and including my thoughts. https://lnkd.in/eQsUriap

🚀🚀 Are you looking for growth funding? 🚀🚀 At Blackfinch Ventures we've opened our summer investment cohort and are on the hunt for: 🥇 high-potential tech companies 📈 with strong traction (£500k+ current AR) 🌍 UK based (EIS/VCT qualifying) 💷 wanting upto £1.5m by late July '24 If this sounds like you, or someone you know, please get in touch 📨 #venturecapital #venturefunding #tech #EIS #startupfunding #esg #growthfunding

This past weekend, I came across some data that suggests a divergence in VC returns As the competitive landscape evolves (and the power law for venture firms steepens) we are seeing that the reward of being GREAT in VC (top 5%) has never been higher, while simply being GOOD (top 25%) produces very mediocre returns This means that being “beta” (aka an indexing seed VC) produced great returns for 2010-2020, but that same playbook is currently resulting in poor performance as the curve steepens This reminds me of a quote by famed executive coach Marshall Goldsmith, “What got you here, wont get you there” I dont know what will produce returns for this vintage, but I know what worked before isnt suit for today Dare to be GREAT or be destined for failure, because the perceived “safety of the crowd” is actually the riskiest place to be https://lnkd.in/eCK-APSm

I hit the BIG Three- Zero on The Up Round newsletter from The Multiple. Content is often a labor of love and this is one of the first things to get dropped in any given week- I end up writing it either when when the kids are asleep or I cannot sleep. I have found it to be helpful in staying on top of the happenings within VC whether it's the practicalities of running a firm, discovering a talented new co-investor, or keeping a pulse on what's top of mind for LPs. Fresh off the summer, Issue 30 saw a boom in new fund announcements. A few (not to mention >$1.3B in other new fund announcements): Leo Capital Launches €25M Nordic Strategy Asylum Ventures Closes $55M Debut Fund AENU Announces €170M First Fund Wischoff Ventures Announces $50M Third Fund MCJ Brings in $81M for Second Fund I also share some tid-bits on: - The concentration of LP capital to platform firms and the risk of extinction for emerging manager or "AUM constrained" strategies - The continued growth of family offices who are now estimated to surpass hedge funds on an AUM basis by 2030 - A refresher on startup mortality rates If you want to have a read yourself, check the comments ⬇

"Many of VC's first-time funds from yesteryear are in trouble when it comes to fundraising again," according to data provider Pitchbook, which estimates at least 247 new managers from 2019 to 2021, 37% of all that did so, won't be able to raise a second fund https://lnkd.in/ehg-AH3j That almost two-thirds ARE expected to raise a second fund seems incredible. The thought of almost any of those years' first-time managers hitting the sorts of home run deals in such an era of high valuations is remote at best. Therefore, few should raise again. Asset allocation is 90% class selection so the LPs that rushed to support untried managers without any differentiation was always likely to end in tears (hence our calling in 2016-17 the end of the golden era for venture in that cycle for investing rather than exits). But if they don't then the chances are high that the industry can move to a better, more hybrid model showing robust governance, focus on financial gain and strategic and operational support to entrepreneurs - groups like Chris's Myriad out of Xerox, Nagraj at Touring, Eileen and Tara at Black Opal, Miles at DTL, Jeff and Jay at GFT, Alexis at Primer, Christine at Nova, Dr. Terhi (TJ) Vapola at Greencode, Harshul at Willowtree, Brian at AEI horizon, Stefan at Swisscom, Matthew at Telstra, etc etc A return to status quo ante and mediocre managers living off management fees and playing the odds on striking it lucky would be disappointing at best - let's work for a better future

2021 was a banner year for new VC funds- $14.7B. I said then + since, many will fold up and die along with portfolio companies. There are ways out for fund managers and entrepreneurs in dire straits to at least recoup capital and avoid total loss, if they know where to look. PitchBook estimates 37% will not be able to raise a second fund. Many have been and are sweating as cash call to LP's go unanswered. Portfolio companies with fiscal models designed to drain cash need to pivot fast - some management teams are just draining the cash knowing they are going to go under. Why is this the case? Lots of reasons - the economy, inexperienced fund managers, bad portfolio choices, and on and on, including lack of exit strategies. Founders are taught by their ecosystems and funders that there are 2 exits - a massive IPO, or get bought out by a huge firm for big money. There are other ways. It my involve - Changing it up to keep the dream alive. - Be realistic, and create attainable goals leading to definable exit strategies. We have been there done that- and we can help. Which is why we are out there and talking to both VC and PE funds- we are positioned to assist and find solutions. Stony Hill Advisors, Inc. Roy Y. Salisbury Geoff Miller Scott Rother John Andrews Paul Visokey Rico Dinolfi Carlo Ruggiero Joseph Radic Patrick A. Howell

Delighted to share the 4th thought leadership article by DWF's Venture Capital Group in collaboration with DWF's Private Equity Group entitled "Understanding the language of Venture Capital and Private Equity: a glossary of key terms". This article contains a comprehensive A to Z glossary of key terms used in the Venture Capital and Private Equity industries to support investors, entrepreneurs, business leaders and anyone navigating the complexities of Venture Capital and Private Equity transactions.   A link to the article can be found on the following webpage: https://lnkd.in/dYEYgkAC. It was written by Dhruv Chhatralia BEM (corporate partner and head of Venture Capital (UK)), Alex Stoughton (senior associate) and Sarah Deloison (trainee solicitor) of our Corporate team. Hope you enjoy reading the article and that you find it helpful. If you would like to talk to us about our expertise and commitment to supporting investors, lenders and corporates in respect of Venture Capital and Private Equity transactions, please feel free to contact us. #Corporate #VentureCapital #PrivateEquity #Transactions #Insights #LawExperts #LegalInsights #ExpertOpinions #StayInformed

As per The Wall Street Journal, LPs are increasingly scrutinizing fund managers' valuations, causing prolonged fundraising timelines. Act One Ventures, for instance, took three years to raise its $73 million third fund, with increased LP scrutiny of portfolio companies' cash position and burn. Valuing private companies becomes challenging amid illiquidity, with differences in opinions on appropriate marks. Overvaluation by venture managers raises concerns among LPs, impacting trust. Venture fund returns have declined, and the gap between public and private company valuations raises portfolio valuation and exit strategy concerns. A record 15.6% of global financings in Q2 2023 experienced down rounds, contributing to heightened anxiety among LPs assessing potential private company insolvencies. 💭How do you think the current challenges in venture fundraising, marked by a record accumulation of unspent cash, increased scrutiny on valuations, and rising concerns about private company insolvencies, will reshape the landscape for both fund managers and investors in the coming years? Share your insights below. 👇🏼 ——— At AXIS Capital Markets, we specialize in global debt placement and secondaries for VC- and PE-backed companies. Follow us to stay updated on the latest developments in #privatemarket, #venturecapital, #privatecredit, and #privateequity.

Must read: "A Scientific Approach to VC" Omri Amirav-Drory does a great job of explaining early stage investing with guidance for companies raising money from VCs. Love this part of the intro: "I made 148 different versions of my pitch deck for my company when I was a scientist-founder. In hindsight, as an investor, they all look stupid. What I was missing was an understanding of how investors think, and what incentivizes them." https://lnkd.in/e94nUaYA