What Does the Post Crash VC Market Look Like?

But I thought a better way of thinking about how we manage our portfolios is to think about it as a funnel. If we do 36–40 deals in a Seed Fund, somewhere between 25–40% would likely see big up-rounds within the first 12–24 months. This translates to about 12–15 investments.

The way we see it is that in venture right now you have 2 choices — super size or super focus. W e largely sat out fundings of NFTs or other areas where we didn’t feel like we were the expert or where the valuation metrics weren’t in line with our funding goals.

From 2019 to May 2022, the market was down considerably with public valuations down 53–79% across the four sectors we were reviewing.

And reset they must. When you look at how much median valuations were driven up in the past 5 years alone it’s bananas. Median valuations for early-stage companies tripled from around $20m pre-money valuations to $60m with plenty of deals being prices above $100m.

Valuations will get reset. First in late-stage tech companies and then it will filter back to Growth and then A and ultimately Seed Rounds.

feel like we were the expert or where the valuation metrics weren’t in line with our funding goals.

The last 12 years were "up and to the right". It’s easy to make IRRs work really well in a 12-year bull market but VCs have to make money in good markets and bad.

What happens in the public markets is highly likely to filter back to the private markets because the ultimate exit of these companies is either an IPO or an acquisition.

Our conclusion was that this isn’t a temporary blip that will swiftly trend-back up in a V-shaped recovery of valuations but rather represented a new normal on how the market will price these companies somewhat permanently. We drew this conclusion after a meeting we had with Morgan Stanley where they showed us historical 15 & 20 year valuation ... See more