Thought Leadership Threads

The past few years in the VC space have been brutal. Darwin has returned from vacation and the frothy gold rush of the 2018-2021 startup ecosystem has vanished.

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The ZIRP environment caused valuations to soar and VCs threw money at any startup with a pulse. The money was put to work by Founders quickly, many of whom chased shiny objects and undisciplined growth because their bank accounts were flush with cash.

Right now, "mistakes were made" is a hot topic of discussion in the startup ecosystem.
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Here are a few common learnings I'm hearing from Investors who don't want to repeat the mistakes they made during "peak madness".

The past 2 years have been brutal to the Startup ecosystem.
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Darwin is back and capital has become less available and more expensive.
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Many startups haven’t gotten “far enough fast enough” and can’t raise the capital they need to survive.

2020 + 2021: Most “valuations relative to traction” were crazy
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2022 + 2023: Bridge rounds helped startups grow into their valuations

Now + 2024: Most “valuations relative to traction” will be reasonable
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But some startups can raise at high multiples due to momentum:🧵👇

You’re probably familiar with SAFE notes if you’re an early stage Founder or Investor.

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But did you know that later stage Investors and Founders are also using SAFE notes?

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And have you figured out that later stage SAFEs can create real downstream problems for a startup? 🧵👇

The startup ecosystem is finally seeing good companies come to market again.

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But after a year of focusing on costs and runway, some startups aren’t exciting anymore. Many startups that try to raise will hear: “We want more proof!”

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Here’s what you need to know about proof:🧵👇

At a startup, stock options can be lucrative depending on the success of the company.

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With valuations down, Founders are asking to reprice historical options.

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Here’s what it means, why it’s important and when it’s appropriate.

Startups that have clean narratives and “up-and-to-the-right” results can generally raise capital with minimal friction.

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But a fundraise takes on an entirely different form when a startup has “asterisks” that complicate the story.

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Unfortunately, asterisks are now the norm!🧵👇

The biggest fallacy in the Startup world is to believe that the entry price for a great investment is irrelevant.

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While great investments generate great returns, being indifferent to price is a function of sloppy thinking.

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A useful mental model that great Investors use:🧵👇

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