Thoughtful analysis of the venture landscape given the current state of public markets from Redpoint ventures.
The background is – public high performing SaaS firm valuations have fallen below their 10 year average now (see chart).
Past public market corrections led to 10 quarters of decline in venture dollars invested of varying severity. The great recession, for example, saw a 30% fall.
“Currently many companies in private markets (particularly at late stage) are in “price discover” mode in fundraises with everyone trying to figure out market price – rounds are taking longer to get done and “willingness to pay” spreads are wide“
Great profile of Roelof Botha, one of three Sequoia partners who steward the firm.
He is also the man behind the firm’s latest transformation – into effectively a permanent capital vehicle investing cross the company life-cycle whether private or public.
“Crossover investors have become more active in Europe (e.g. Tiger Global, BlackRock, RA Capital, Coatue).
While in 2019 only 2 made the top 15 investor league table, now, as at the half year, 4 of these (all from the US) are part of the top 15, with the number 1 overall being Tiger Global.”
George Lucas was forced to sell Pixar to fund his divorce.
Venture capitalists, 35 of them, refused to back the firm as did eight strategic partners, but Steve Jobs agreed.
“If we’d had any other investor than Steve, we would have been dead in the water.“
He forced the firm to succeed “He’d berate those of us in management, then write another check”
Pixar was eventually sold for $7bn to Disney “This is astounding considering they could have had us for free in the 1970s when we approached them on bended knee.”
“We analyzed over 2,600 seed-stage startup investments made on AngelList dating back to 2013 to determine the likelihood of any startup achieving unicorn status today.“
The answer – 1 in 40 shot or 2.5%.
A 2018 study put that number at slightly more than 1%.
One reason for the increase is the pictured chart – “The first quarter of 2021 was the “best quarter ever” for early-stage startups in terms of rates of markups and positive exits. Just over 85% of the events reported by startups on AngelList during that period were positive ones—an increase of 5% from just one quarter before.“
Who reaps the majority of the rewards from venture backed companies – VC or public markets?
“Over the last decade when measured in terms of total dollars of value creation accruing to pre- and post-IPO investors: post-IPO investor gains have often been substantial.“
Of the 165 IPOs analysed – the vast majority had a large share of value accrue to public markets (blue region).
There are some exceptions (red region), and some shared (yellow region).
Just as in tech companies, many sports franchises are trying to answer a basic question: what do the numbers today tell us about the possible outcomes of tomorrow — and what (or who) do we need to get to a winning outcome?
In basketball and tech in particular, a deeper understanding of efficiency — both in how to measure it and how to leverage that to build winning teams — and usage has changed the game in the last decade.
A great piece applying NBA sports metrics to Start-ups.
The stories of the early days of Airbnb, who recently filed to go public, are the stuff of legend including how the founders turned to selling themed cereal to survive.
The cereals were called “Obama O’s, the Cereal of Change,” and “Cap’n McCain’s, a Maverick in Every Box.” – a throwback to their first success housing delegates of the Democratic National Convention in 2008. It was also what got them a spot on Y Combinator.
