For VCs, the game right now is musical chairs – TechCrunch – California News Times


In many ways, it’s never been better to be a venture capitalist.Almost everyone in the industry is raking money through the long-awaited exit or for more capital Flood to the industry Meaning more money for administration costs — and sometimes both.

Still, more and more early-stage investors are becoming more cautious about the pace of trading. Not only is it very difficult to write a check. Reasonable clip I feel I can do most VCs at this time I can’t afford to be price sensitive.. Many of the founders they work with undergo follow-up checks before considering how best to deploy the final round of funding.

Consider that from 2016 to 2019, an average of 35 transactions per month resulted in over $ 100 million in rounds. According to data company CB Insights..This year, that number is close to these so-called 130 Mega round Monthly amount. Foam is rarely found in mature companies. Median valuations for US Series A reached $ 42 million in the second quarter, according to CB Insights data. This is due to some of the crossover investors like Tiger Global who closed 1.26 transactions. Per business day In Q2. (Andreessen Horowitz wasn’t too late.)

It’s a time of some embarrassment, including Jeff Clavier, the founder of the early-stage venture Uncork Capital, a longtime investor. Like many of his peers, Clavier benefits from a booming market. Among Uncork’s portfolio companies, for example Launch Darkly, A company that helps software developers avoid mistakes. The 7-year-old company announced $ 200 million in Series D funding last month. Valuation of $ 3 billion.. This is three times the rating assigned earlier last year.

“I’m very excited about them because it’s a great company,” says Clavier.

At the same time, “you need to invest this money to work in a very smart way,” he adds.

In this market where the founders are curious and in some cases talking about termsheets after the first zoom with investors, it’s not that easy. (“The most ridiculous thing we’ve heard is the fund that makes the decision after a 30-minute call with the founder,” said co-founder of LA-based seed stage company Fika Ventures. TX Zhou says. Just tripled The amount of assets you manage. )

More money can mean a much longer lifeline for a company.But as many investors have learned difficult ways, it can also be done Acts as a distraction, And hide the basic problems of the business until it becomes Too late to deal with them..

Taking on more money is often closely associated with larger valuations, and lofty valuations have their own strengths and weaknesses. On the plus side, of course, many can get more attention to the company from the media, customers, and potential new hires. At the same time, “the more money we raised, the higher our reputation and the clearer we were able to catch up in the next round,” says Renegade Partners, a venture company, Renegade Partners. Mainly in series B stage companies.

Again, in today’s market it is not always possible to try to slow down. Quintini said some of the founders she spoke to said they wouldn’t procure any more and couldn’t deploy or deploy faster than the business model already supports. Explains.To see what’s happening around you, and sometimes if your competitors grow up and they have a bigger treasure chest of war [they’re] You can move the market forward and perhaps they can hire you or spend you in certain areas that can generate more traction than you do, “the next check, often with a higher rating, It begins to look like the only way to survive.

Many VCs claim that today’s assessment makes sense as companies create new markets, grow faster than they used to, and have more opportunities to expand globally. In fact, companies like Airbnb and Doordash, previously believed to be expensive by retail investors, have seen spikes in their reputation as publicly traded companies.

But for more companies, “evaluation is complete. [companies’] “Multiples,” says Clavier, repeating what other VCs personally admit.

It may seem like the kind of problem investors like to face. But, as it has been for years, it depends on how long this go-go market lasts.

“One of our companies that ran a good Series A and before that a good Series B was now replaced by a Series C, and the rating is completely from reality. It is separated. “

He says he is happy with the costume. “There is no doubt that they will catch up. But this is the point. They need to catch up.”

For more information on conversations with Clavier, you can: Listen here..

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