Bede Moore’s Post

The hidden years of inception stage. Founders & LP’s rarely understand that the journey of building a great company can involve up to three years of work before an early stage VC will get involved. h/t Peter Walker for the years from incorporation data from Carta https://lnkd.in/e5fFkvDt #vc #founders #investing Antler

It is no secret that many VCs are facing pressure from their LPs to return capital as LPs have become overallocated to private assets in recent years. The problem is exits are few and far between in the current market with already-low counts of M&A transactions dropping by about 6.5 percent, IPOs dropping by nearly 40 percent and SPAC deals dropping by one-third from Q4 2023 to Q1 2024, according to data from CB Insights. That's why Dan Engel told me he "decided to get creative." His firm Santa Barbara Venture Partners closed out Q1 2024 with four exits from its vintage 2020 debut fund, three of which happened in the span of just four weeks. Engel leveraged the secondary market, a long-stigmatized strategy, to achieve gross IRRs of 33 percent and 44 percent on partial sales of his firm's stakes in two companies. He told me that the strategy has been supported by other GPs in the industry, albeit quietly. "I really don't get why other VCs aren't doing the same. It's a strategy that some are quietly agreeing makes a lot of sense, but they aren't going to get loud about it because it will make them look bad." Read more on Venture Capital Journal. #venturecapital #secondaries

Excited to share a fun project I've been working on with Helena Jaramillo, the team at PamPam City (PamPam is a way to make & share guides and maps for your community), and the Brex team. As a resource for founders and VCs, we've created an interactive map 🗺 of all the active VC firms in NYC investing in early stage startups 🗽 *Interactive NYC VC map in comments* From OG funds like Primary Venture Partners, Union Square Ventures, Lerer Hippeau, NextView Ventures, FirstMark, Greycroft, Tribeca Venture Partners, Thrive Capital to newer players in the city like Andreessen Horowitz, Lightspeed, Imaginary, Sequoia Capital, Bain Capital Ventures and more. We created this as part of our ongoing commitment to help make connections across the startup ecosystem. We receive a lot of questions about which firms are actively investing and where they are located, so this will save time for founders Who are we missing? Want to submit a VC that's not currently on the list? Reply in comments and we'll get them added #brex #vc #founders #nyc #nycstartups #nycvcs #techstartups

After years of negotiating and managing venture financing rounds. Round after round. You - as a startup Founder - have finally cracked the code and understood the inner workings of being a venture-backed company. You have taken the journey from startup to scaleup. Now is the time for the big and long-awaited exit. Congratulations, your scaleup has successfully been sold to a Private Equity Fund. As part of your exit to the PE Fund, a large portion of your shares will roll over. Now you are a shareholder of a PE-backed company. Now you have to learn the inner workings of being a PE-backed company. Things will change! Hopefully, your VC lawyer was aware this scenario could happen and best practice for optimizing deal terms has been applied.

Summary: General Catalyst, an influential Silicon Valley capital firm, is launching a continuation fund valued at $800 million to $1 billion. This type of fund is becoming increasingly popular among venture capitalists due to the lack of IPOs and mergers. Key takeaways: Continuation funds are becoming more common among venture capitalists as a way to generate liquidity for their limited partners despite a slow IPO and M&A market. General Catalyst's continuation fund will likely include stakes in successful startups like Stripe, Gusto, and Circle. Selling shares to secondary investors through a continuation fund allows VCs to retain future upside of the assets and is seen as more founder-friendly compared to introducing new owners. Counter arguments: Limited partners may take a hit on existing valuations and potential share price growth when selling shares to secondary investors at a discount. Continuation funds can take time to sell and may fail entirely, as seen with Tiger Global's unsuccessful attempt to sell a strip portfolio. #venturecapital #growthequity #privateequity

Exploring the rise in LP defaults, 3+ Ventures steps in, raising $300 million to purchase distressed stakes and inject liquidity into the venture ecosystem. #VentureCapital #LiquidityCrisis #InnovationStrategy

So excited to gave Ankit Agarwal on this new episode of Unlocking Venture Capital Podcast where we talking about his experiences doing direct venture investments and #LP investments and he looks for. you also get peeks into founder life stories. #podcast #LP #investor #VC #investment #vc #venturecapital

Got funding goals? One of the most important things you can do is develop meaningful relationships with a wide array of VCs early on in the process. 🤝 “Spend the time developing relationships so you can get a feel for their investment style as people, and determine whether or not they have the right expertise for you. By taking the time to be methodical and thoughtful about developing relationships ahead of time, you actually can end up shortening the timeline.” Read our latest Q&A with Ronny Chatterjee, Head of Capital Markets at Companyon, to get expert insights and strategies for raising VC funding as an early-stage founder: https://lnkd.in/gYf-YvPP #VentureCapital #StartupFunding #RelationshipBuilding #CompanyonVentures #FounderTips #TalesFromTheTrenches #StartupSuccess #GrowthStrategies

After years of negotiating and managing venture investments rounds. Round after round. The full venture journey. You - as a startup founder - have finally cracked the code and understood the inner workings of being a venture-backed company. You have taken the journey from startup to scaleup. Now is the time for the big and long-awaited exit. Congratulations, your scaleup has successfully been sold to a Private Equity Fund. As part of your exit to the PE Fund, a large portion of your shares will roll over. Now you are a shareholder in a PE-backed company. Now you have to learn the inner workings of being a PE-backed company. Things will change! Hopefully, your VC lawyer was aware this scenario could happen and best practice for optimizing deal terms has been applied.

"Last month, Santa Barbara Venture Partners took the unusual step of selling shares of its portfolio companies to generate capital to return to its limited partners. Sales are by no means traditional exits—investors generally expect cash-outs like initial public offerings or acquisitions. But the secondary transactions have shown that SBVP can make money for its investors, said Dan Engel, its founder and managing partner." OK, I get it - the need to show LP's distributions is understandable, if not always optimal. So far, so good. Then I kept reading. SBVP was launched in 2020 and by 2022 was out raising a second fund. Well that was quick. Engel then noted the "fundraising market began to sour, LPs demanded more proof of traction." If your LP's expect tangible proofs of traction from a 2 year old early stage venture fund, they don't understand the asset class. Depending on the survey, average time to exit for a venture backed company is 7-10 years. A sale 2 years after investment rarely represents a big win, when such a big win occurs it is pretty much the venture equivalent of winning the lottery. You don't invest with the goal of a big exit in 2 years. However, the issue is not just LP's. Historically venture funds raised every 3-4 years. During the 2021 Bubble this dropped to every 1-2 years. Similarly, companies fundraised every 18-24 months, during the bubble this often dropped to less than a year. The net of this is the following: 1. Historically, when you fundraised a successor early stage fund, no one expected exits, but you were usually able to show valuation increases because many of your portfolio companies completed at least one follow on round before you started your fundraising. 2. In the current environment, venture fundraising is returning to the 18-24 month time horizon and the down market has in effect extended this through convertible notes/SAFEs/flat rounds. As a result, a two year old fund out there fundraising, not only can't show exits (which LPs should not expect), but in many cases they are not showing valuation increases. That might explain the large number of first time funds not raising successor funds. These secondary sales might make the picture look "nicer" for the moment (and maybe help some funds raise successor funds), but likely will reduce LP returns in the long term.