Derek Xiao

“Venture distribution cycles have elongated to the point that LPs now risk a decade of negative cash-flow on many of their VC relationships. That's not sustainable for institutions with large spend requirements, such as a university endowment.” A lack of liquidity in VC is proving to be a major issue for some endowments. There are plenty of medium sized endowments who went full in on the Yale model, but have a lot more concentration risk due to size. That’s a tough game to play when you have required outflows. https://lnkd.in/ewkhEDSi

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VC world can be cruel and unforgiving. With LPs more and more pushing for distribution and liquidity, fund managers in the mid-tenure of their fund with zero DPI and TVPI around 1.0 would have much more difficulty to raise new fund. The ability to fundraise is one of the crucial indications and validation of the job for VCs. Key highlights from the article below: Thirteen percent of venture General Partners (GPs) no longer plan to raise another fund due to LP pullback. This rate has doubled since H1 2023 when only 6% of GPs had no plans for another fund. Nearly 44% of venture firms surveyed in mid-2023 had previously postponed their fundraising plans due to concerns about overexposure to the asset class. Many emerging managers entered venture capital in 2019 or 2020 when the LP market supported more funds. However, slow exits in the first half of 2024 have led to challenges in raising second funds without significant cash distributions to LPs. Some venture GPs are now actively participating in the secondaries market to demonstrate returns. Despite the challenges, GPs who secured fresh capital remain optimistic. They expect the 2023 and 2024 vintages to be the strongest return years since 2019. 🚀📈 #VC #VentureCapital #Fundraising #LPs #EmergingManagers #TechInvestment #MarketTrends #CountdownCapital #IndustryInsights #JetVentures #JetInvestment‍‍‍‍‍‍

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Series A or B wondering when to bring in a VP of Finance or CFO? It’s a crucial decision that can shape the future of your company. At this stage, financial leadership is not just about managing numbers but also scaling processes, securing funding, and driving strategic growth. My colleague Paul breaks down key signs that it’s time to hire and indicators for choosing between VP of Finance and a CFO #FinanceLeadership #CFO #StartupGrowth #SeriesA #SeriesB #NextGenLeadership

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Venture firms rarely return uninvested capital to LPs (see 1990s), and when it happens, it’s a sure sign that something big is afoot - in this case, a realization that there aren’t enough attractive late-stage deals to park that capital. The lever driving the unprecedented revenue growth rates of today’s startups is AI-enabled capital efficiency, not capital. With new operating leverage via automation, these startups are starting to forgo growth-stage capital, which means early stage is the only access point to these outliers.  We’ve always known alpha is at the early stage. That’s why we built an ecosystem of emerging managers who are proven scouts of early-stage outliers. MDSV invests in the top-1% emerging manager funds and their portfolio outliers to deliver 𝗘𝗺𝗲𝗿𝗴𝗶𝗻𝗴 𝗠𝗮𝗻𝗮𝗴𝗲𝗿 𝗔𝗹𝗽𝗵𝗮 𝗮𝘁 𝗦𝗰𝗮𝗹𝗲. Learn more: https://lnkd.in/g2VQt7vc #VCInvesting #EmergingManagerFunds #InvestInVC #MDSVCapital

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September 28 2024 – 5 Notable Articles To Read Article: Capmont raises €100M for early-stage B2B startups Takeaway: Capmont Technology partners with founders from the late seed to Series B stages, investing in companies that have demonstrated early traction and strong customer demand. Their expertise covers software-defined hardware, industrial technology (including supply chain, manufacturing, and IoT), enterprise SaaS, robotics, and cybersecurity. Initial investments typically range from €2-5M, with additional capital set aside for follow-on funding. Source: Tech.eu Link: https://lnkd.in/dnMYh-Pi Article: WhatsApp Dominates Meta AI Use Takeaway: Meta AI sees the highest daily usage on WhatsApp and Facebook apps, with popular applications including research, writing, and editing. Source: The Information Link: https://lnkd.in/d5-pAwKb Article: A $90B World Bank Plan to Electrify Africa Gets Underway Takeaway: A plan to provide electricity to 300M Africans by 2030, supported by an initial $30B pledge from The World Bank and the African Development Bank, has commenced with an evaluation of the first potential beneficiaries. Source: Bloomberg Link: https://lnkd.in/dptN3dDN Article: Palantir Technologies Wins $100M US Contract for AI Targeting Tech Takeaway: The platform, called Maven Smart System, simultaneously displays a unified view of the battlefield on thousands of digital screens. It leverages U.S. intelligence data and incorporates computer-vision algorithms and AI-powered software from various companies to analyze situations and identify adversaries. Source: Bloomberg News Link: https://lnkd.in/dHuW_cjt Article: Apollo Global Management, Inc. Snags $5B From BNP Paribas to Expand Private Credit Bets Takeaway: The bank has committed funding for investment-grade, asset-backed deals, which will support Apollo's new Atlas business in financing assets. Source: Bloomberg Link: https://lnkd.in/dt_2xRVy #news #research #business #ai

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Let's look at valuation multiples for Seed, Series A and Series B to E Using the latest Q2 2024 data from Peter Walker 🙌 Starting with Carta’s valuation data, adding in the time between rounds and then mapping both to the definition of venture scale to get (an estimate of) Valuation Multiples for each stage 😃 In Q2 2024.... → Seed reached new highs → While Series A was largely flat  → Multiples trended towards the public index until Series C → And then Series D and E+ saw huge bumps on a low # of deals Let's take a look 👀 -- ♻️ Repost to help a founder in your network Click 'visit my website' at the top of this post to register for my Seed to Series A session

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Seed VCs are turning to new ‘pro rata’ funds that help them compete with the big firms Alpha Partners, SignalRank and now SaaS Ventures help seed VCs pay for shares when big VCs try to price — or push — them out Lee Edwards, partner at Root VC, has a saying at his firm that “pro rata rights are earned, not given.” That may be a bit of a stretch since pro rata refers to a term that VCs put in their term sheets that gives them the right to buy more shares in a portfolio company during consequent funding rounds to maintain an ownership percentage and avoid dilution. Still, while these rights are not exactly “earned,” they can be expensive. One of the latest trends in VC investing these days are funds dedicated to helping seed VCs exercise their pro rata rights. https://lnkd.in/dRM3RvdA By Christine Hall

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WE DID IT! After 2 years of pushing through the biggest downturn in VC in decades, Matthew Stotts 🌐 and I made it to the finish line with Fund I! We couldn't have done this without One Small Planet (Will Peterffy and Jack Wielebinski 🙏), Regen Network and Regen Foundation (Austin Wade Smith Gregory Landua and Will Szal), and a dozen other family offices and angels who believed that we can build a nature-positive economy utilizing our eye for software and our history as founders from day 1 A shout out goes to all of our founders (only four announced today, but watch this space - there are multitudes!) who trusted us enough to give us a spot on their cap table for this 10-15 year journey. This is the best job in the world, and it's because we get to work with people like you who have weird ideas in the best possible way. Using Bitcoin as anchor base load to decarbonize residential housing in America's most expensive energy market? Make every complex supply chain legible to machines so we can find and eliminate deforestation in commodity supply chains? Build deeply liquid environmental asset markets to price ecosystem services, on a blockchain, that no one needs to know is a blockchain? I'm so excited to get to work on this stuff for the next 10-15 years minimum, and to see what we can accelerate with our tiny fund in the next 5-6 years as we approach 2030 Onward! https://lnkd.in/gy3B-DFe

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Calling all #Founders: Venture Capital Association of Alberta (VCAA)’s Deal Flow Calls represent a great opportunity for #PreSeed to #SeriesA companies to gain exposure to some of the countries most active Venture Capital #investors. If your company is raising equity capital, I strongly encourage you to check out the link below!

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“…DPI for the sake of DPI can be detrimental to overall returns as the asset class is power law driven, and selling too early can have enormous adverse effects on overall return of the fund (especially since selling too early typically only involves the very best companies in a portfolio). VCs need to have a structure and mental model on when to take money of the table, but doing it for the sake of appeasing LPs (and helping to raise a new fund) as the main driver isn't the right path….” “…Liquidity markets in VC are very cyclical….As an LP, consistency of investing through cycles is important to ensure you get the benefit of the high periods to offset the lower periods…” Great post by Samir Kaji from Allocate and the Venture Unlocked podcast.

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Summary: This article discusses various venture capital news, including insights and analysis of VC firms, trends in investments, and the impact of technology on the industry. Key takeaways: The article mentions that Insight Partners is potentially raising over $10 billion for its 13th fund, and OpenAI may be altering its complex corporate structure. There is a growing trend of Silicon Valley companies following China's lead and a discussion of how VC Mike Moritz believes the pace of work in tech companies should be "furious." Y Combinator is expanding the number of cohorts it runs, a new decentralized music streaming service called Tune.FM is introduced, and there is discussion about startups working on addressing climate change. Counter arguments: There may be concerns about the potential drawbacks of following China's lead, and the idea of a "furious" pace of work may raise questions about work-life balance and company culture. Some may argue that expanding the number of cohorts may lead to a decrease in the quality or effectiveness of Y Combinator's program. The article does not mention potential challenges or limitations facing the new decentralized music streaming service or startups working on climate change solutions. #venture #venturecapital #vc

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Interesting report from PitchBook on first quarter Digital Health VC activity. - $1.1 billion in funding. Key late-stage deals were led by Transcarent ($126M) and Rightway ($108.8M). - The top investment categories were general & primary care ($213.4M) and health benefits navigation ($140.7M). Challenges & Trends: Valuations: Less than 20% of startups reported a priced round in the last 18 months, with an increase in extension/bridge rounds. Digital Therapeutics: Facing significant challenges due to elusive reimbursement and cautious investors. Better Therapeutics is winding down operations, and Akili is being taken private for $34M, a sharp decline from its peak valuation of nearly $450M. Telehealth: Setbacks include the shutdown of Optum's virtual care and Walmart's telehealth services. The pandemic saw over $15B in VC funding since 2020, but some platforms struggled with unsustainable business models and strategic missteps (e.g., Teladoc's costly Livongo acquisition and Amwell's delisting from Nasdaq). Looking Ahead: While digital therapeutics and telehealth face hurdles, there's potential in: Platforms integrating various treatments for conditions like diabetes, metabolic health, and mental health. Specialty telemedicine, B2B platforms, and hybrid-care models, which offer a promising investment outlook. Despite current challenges, strategic investments and a focus on sustainable models can drive the next wave of innovation in digital health. As a former digital health founder, I encourage founders in this space to keep going...there is light at the end of the tunnel! If you are a digital health founder with impressive traction based in Virginia, feel free to reach out! #digitalhealth #venturecapital #virginiaipc #virginiainvests

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Since early 2021, VC quarterly exit values have plummeted to $50B or below, a stark contrast to the six consecutive quarters of $100B+ exits before then. With IPOs dwindling and M&A activity slow, the future of venture industry exits appears uncertain. Will we see a surge in private venture-backed company acquisitions? This could be a crucial and innovative strategy to boost VC exits. Increased private acquisitions might offer a much-needed lifeline, providing a creative solution to the current exit drought in the venture capital market. #venturecapital #inspireglobalventures

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Summary: Industry Ventures has raised a $900 million early-stage hybrid fund for investing in emerging managers and directly backing growth-stage companies. This is their seventh hybrid fund and is larger than their previous one. The fund will be split between backing VC funds, direct investments, and acquiring stakes from emerging managers. Key takeaways: Smaller, newer funds are finding it more difficult to raise capital, but this fund from Industry Ventures offers hope for emerging managers. The fund will be split between various investments, including backing VC funds and buying secondary interests. Industry Ventures may have an advantage due to their ability to invest in both emerging and more established managers. Counter arguments: Some may argue that it is still difficult for emerging managers to raise funds. The success of Industry Ventures may not be indicative of the overall climate for emerging managers. #venturecapital #venture #startups #fundraising

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🔋 #TodayinVC - All of the biggest deal announcements in venture capital - July 17th, 2024. Sourced from Litquidity's Exec Sum. 💰 Fundraising Announcements: - Botrista, Inc., a data-driven automated beverage platform, raised a $120M Series C led by JFC (PRN) - OCN (onecarnow.com), a fintech providing financial services for gig workers, raised an $86M round led by Caravela Capital, Collide Capital, and Great North Ventures (PRN) - Healthcare AI startup Huma raised an $80M Series D from AstraZeneca, Hitachi Ventures, and more (EU) - DreamBig Semiconductor Inc., a chiplet platform for AI inference and training, raised a $75M Series B led by Samsung Catalyst Fund and the Sutardja Family (PRN) - Energy transition transaction infrastructure provider LevelTen Energy raised a $65M Series D led by B Capital (FN) - DataCore, an edge data management platform, raised $60M in funding led by Vistara Growth (BW) - Data management startup One Data raised a $36.7M Series B extension led by Vsquared Ventures, Molten Ventures, and HV Capital (EU) - Infinitum, a creator of sustainable air-core motors, extended its Series E with $35M from Marunouchi Innovation Partners and Rice Investment Group (BW) - Vectara, a GenAI product platform, raised a $25M Series A led by FPV Ventures and Race Capital (BW) - Heimdall Power, a startup enabling power grid optimization for utilities, raised a $25M Series B led by Orlen and NRP Zero AS (BW) - Geo-distributed cloud storage startup Cubbit raised a $12.5M round led by LocalGlobe and ETF Partners (EU) - Indian ridesharing startup Namma Yatri raised an $11M pre-Series A led by Blume Ventures and Antler (TC) - Mira, a decentralized infrastructure platform for AI, raised a $9M seed round led by BITKRAFT Ventures and Framework Ventures (PRN)  - itselectric, an EV curbside charging startup, raised a $6.5M seed round led by Failup Ventures and Uber (PRN) Congrats to all - what #startups do you have your eyes on? 👀 Follow @Today in VC for daily #venturecapital news! 📆

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Well-written and sourced article describing what's going in seed-stage venture market. At 9point8 Collective we tend to orbit the seed-stage (both ideating and developing companies to reach seed and helping post-seed companies refactor and scale in anticipation of A) and for many companies it's a critical inflection point which determines their long term success or failure. The main takeaways I was able to gather: 1️⃣ Many startups that raised seed rounds in 2021-2022 are struggling to secure Series A funding due to tighter market conditions and increased investor expectations. 2️⃣ Seed investors are becoming more cautious, leading to longer diligence processes and a preference for startups with strong traction or experienced founders. As a result, valuations have stayed relatively high even as deal flow reduces. 3️⃣ Startups are adopting various strategies to navigate this challenging environment, including cutting costs, raising bridge rounds or convertible notes, and M&A/acqui-hires. 4️⃣ Despite the challenges, there are opportunities for both startups and investors in this new landscape, particularly for those who can adapt to the changing market conditions. Investors are accumulating dry powder -- and with rates on the decline -- will be looking to deploy into companies with stronger fundamentals than their 2021-2022 counterparts.

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The data showing emerging manager funds as a critical driver of Alpha keeps coming. The closer alignment between GPs & LPs along with the sheer hustle to find the best companies at the earliest possible points in their lifecycle make emerging manager funds a critical part of the mix for LPs. #InvestingStrategy #MDSVCapital #VentureInvesting #Emergingmanagerfunds

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Southeast VC Update: Q2 2024 PitchBook Venture Monitor Highlights The Southeast continues to hold its position in the VC regional landscape #5 in dollars raised for Q2 2024 🥉 #3 in deal count (just behind the West Coast and the Mid-Atlantic) H1 2024 Southeast Breakdown:  📊 10% more deals than Northeast  📈 30% more deals than Mountain region, 20% more than South  💰 5% more dollars raised than Mountain region  💸 23.5% more dollars raised than South YoY Funding Trends:  📈 Southeast: Up 29% 📈 Mid-Atlantic: Up 136%  📉 Midwest: Down 67%  📉 New England: Down 11%  📈 West Coast: Up 59% Key Trend: While closing in on Mid-Atlantic numbers, we are seeing more deals but smaller rounds. This could indicate strong activity occurring in the seed & early-stage funding, despite the macro challenges. (Pitchbook classifies the Southeast as AL, FL, GA, KY, MS, NC, SC, TN, Puerto Rico, & Virgin Islands) #BuildInSE

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Insightful breakdown from my great Partner Omri Amirav-Drory on the simple factors that really separate the top 1% of investors from the rest, and how more operators should become investors! https://lnkd.in/gEiZdT2h

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