Michele Mattei’s Post

Today, along with my Partner Liza Benson, I am thrilled to share the final closing and launch of MV Core Fund III! With $230M in fresh capital, our latest fund brings the firm’s total assets under management to more than $500M. Thank you to all of our investors, strategic partners, portfolio companies and friends of the firm - you are the foundation that propels our journey forward and we celebrate this milestone together with you! And of course, a huge thank you to the best-in-the-business Moderne Ventures team - your hard work is what keeps us growing and delivering results, quarter after quarter. Today’s venture investing environment is among the best we’ve seen in decades and we are thrilled to have fresh capital to deploy while continuing to scale our one-of-a-kind industry immersion program, the Moderne Passport, to help create customers for our companies and value for our strategic partners and the Fund. Even after two decades of venture investing, we are more inspired than ever for the innovation that lies ahead. Let’s GO! 🚀 Read the full press release here: https://lnkd.in/gimNQWbe Check out these stories featuring our news: The Wall Street Journal: https://lnkd.in/gszsXk3m Axios: https://lnkd.in/g_sEfta2 Crain's Chicago Business: https://lnkd.in/g6iy4wf5

The gold rush into venture by 'tourist VC's' from 2018-2021 has created a massive liquidity mismatch between fund sponsors and their LPs. The managers are focused on vanity metrics such as MOIC while investors are hoping for liquidity. When your fees are a percentage of AUM, this creates a powerful incentive to push your head in the sand and hope fair value eventually catches up. I think Sara Ledterman is spot-on here. Accounting firms all over the world will be FORCING managers to take write downs over the next 12 to 18 months. Opportunistic buyers of these assets should be in a fantastic position to acquire early-stage equity in future unicorns at fire sale prices!

Big news from Index Ventures! We’ve raised $2.3bn in new funds—an $800m venture fund and a $1.5 billion growth fund. Across nearly three decades of investing, this latest announcement is possible because of a strong foundation built by exceptional entrepreneurs, incredible LPs, and a team of investors, strategists, and operators all deeply committed to our craft. 108 Index-backed companies have reached a valuation of $1 billion or more, 23 have surpassed a $10 billion valuation, and 57 became publicly traded companies. I look forward to seeing what the next generation of entrepreneurs will create. I can only imagine it will be even better than what I can envision today :) https://lnkd.in/gDxiN8ig

Venture capitalists are embracing the secondary market as a viable option for generating exits in a market where liquidity events are scarce. The stigma around selling on this market is starting to fade. #VCJ #VentureCapital #Secondaries

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

Billionaire Family-Backed Firm Raises $100 Million Venture Fund, Congatuations Mark B. 👇 HIPstr, the venture arm of Mark Bezos and David Moross's HighPost Capital, raised $100 million from investors including rich individuals and institutional firms for early-stage deals outside its traditional buyout focus. Why is this so significant? As the venture capital ecosystem continues to evolve, family offices are increasingly seen as pivotal players. Challenging macroeconomic conditions such as higher interest rates and inflation, as well as tighter credit markets, have put downward pressure on the direct investing portfolios of many family offices over the past couple of years. Some have responded by slowing or ceasing direct investing. But the family offices with the greatest AUM have tended to take the opposite approach, doubling down in the expectation of benefiting from lower valuations and opportunistic situations. An investment firm founded by Jeff Bezos’ younger brother Mark Bezos and a US private equity veteran that focuses on consumer bets has raised its first venture fund. Read more below 👇 https://lnkd.in/eKAFzT4K #Startup #innovation #entrepreneurship #sustainability #investing #networking #venturecapital

I don't do a lot of stories about firm/fund launches, but I thought this one was worth digging into because of the existential debates currently happening about the future of venture capital. The VC asset class has expanded enormously over the last 10-15 years. Many of the biggest firms have tens of billions of assets under management and are only getting bigger. It has made me wonder whether VC firms must become next JP Morgan / Blackrock / Blackstone, accumulating as many assets as possible and raking in fees, or else wither and die. (Bigger funds tend to mean lower returns, btw.) The other big question is whether the firms that cling to the old school, traditional unscalable VC model can survive in a world of giants. Some investors are trying to forge a new path in the middle. I thought Nicholas Chirls' approach with his new firm, Asylum, was interesting. It will stay small, invest slower, and seek out companies that require less funding. He wants to model the firm after A24, the indie film studio. Read more about it and the broader industry debate happening here: https://lnkd.in/gXmnviv5

In the past few years many VC firms have raised new funds smaller than their previous funds, which goes against the historical trend. The weak fundraising environment definitely had a lot to do with it, but some investors chose to scale back. This trend suggests some VCS are taking a more cautious approach to investment, driven by market uncertainty and a greater emphasis on long-term value creation. Investors are increasingly focusing on sustainable growth, thorough due diligence, and supporting their portfolio companies through more turbulent times. For founders, this means a stronger focus on capital efficiency and building businesses with a solid path to profitability. For VCs, it’s about balancing the need for returns with a more thoughtful, patient approach to backing the next generation of innovators. I'm of the view that this is all good for the industry and the economy, but I do wonder where all this capital efficiency is going to come from after two years during which most of the startups that have managed to stay afloat have already been forced to cut costs to the bone. Interestingly (from my perspective, at least), one area where many startups could still cut costs considerably without sacrificing quality is on legal fees. I'll be discussing how next week at Startup Boston. Register here: https://lnkd.in/e9a4S2TP. #VentureCapital #Fundraising #Startups #InvestmentTrends #SustainableGrowth #Entrepreneurship #VC

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

Congrats to Gaurav and Stephen for raising $500m for JP Morgan's debut life sciences venture fund, including undisclosed corporate LPs. https://lnkd.in/ehxigFFn It might be less than the $650m i-bank peer Goldman Sachs raised for West Street Life Sciences I in January but points to an emerging trend for the big financial services firms to finally be taking venture seriously and use their distribution muscle to raise large amounts and put them in the same category as experienced VCs like Foresite Capital that are on their sixth fund (and congrats on raising $900m this week!) It also points to the forthcoming challenge a lot of the independent VCs will face - few folks want to give them money. Pitchbook noted 13% are not planning on raising another fund and Joe at Inc lays out some good reasons why https://lnkd.in/ea9s-7ha But crunch the LP data on the VCs that do raise and raise again and you'll find there's a good indicator for these folks - delighted to share at the www.GCVsymposium.com