“Venture capital investors are racing to pay more to buy smaller pieces of startups that are less profitable than before,” writes Alex Wilhelm, who studied Silicon Valley Bank’s State of the Markets Report Q4 2021. Going for larger rounds with higher multiples means reduced ownership, and it’s shifting more power to founders as investors are “paying more and at shorter intervals for less of less profitable startups.”
I have never used this space to offer advice, but if you believe you have a good idea for a startup — go for it. When venture capitalists say this is a good time to be a founder, you know they absolutely mean it.
VCs are racing to pay more to get smaller pieces of less profitable companies. The pandemic has rewritten the way investors and startup founders do business, but “chemistry is important,” notes Brian Heater.
Laela Sturdy, general partner at CapitalG, and Webflow co-founder and CEO Vlad Magdalin joined Brian on TechCrunch Live to discuss COVID-era deal-making and the changing nature of startup-investor relationships.
“As great as Zoom is, to me, that in-person experience takes you to the next level of getting to know someone,” said Sturdy. Deep tech holds a lot of potential for changing how our world functions, but many applications are still years away from reaching the market.
Looking to the future, Anna Heim analyzed pi Ventures’ Deep Tech Shifts 2026 report, which explores 15 deep tech subsectors expected to reach an inflection point in the next five years.
“If you invest too early in an innovation, then you will have suboptimal returns,” said founding partner Manish Singhal. “If you invest too late, you may also end up getting suboptimal returns, because it is no longer a cutting-edge thing.
“If investment and the timing of innovation getting to a resonance point come together, then good things happen.”
Brazil-based Nubank’s IPO is generating a lot of interest, so Anna Heim and Alex Wilhelm interviewed Lauren Morton, a partner at QED.
Her firm invested in Nubank’s Series A, B, D and E, but “since then, the fintech-focused fund has made more investments in the region,” they report.
In an extended Q&A, Morton shared why QED is bullish on LatAm fintech and offered a few predictions:
I think the volume and pace we have seen so far this year will continue into 2022, but we’re also realistic enough to know that valuations can’t keep rising indefinitely. There will be a correction at some point, but make no mistake that some big, real businesses will emerge over the next few years regardless of whether money into the region slows down or not.
SoftBank’s Vision Fund 1 is still the world’s largest tech investment fund, but founder Masayoshi Son committed to an $8.8 billion buyback after it reported its latest quarterly results.
One aggravating factor: Chinese regulators made ride-hailing app Didi, one of the fund’s chief investments, stop accepting new customers and pull its app, resulting in the company’s shares plummeting.
The Japanese fund’s investment in Didi has now lost nearly $5 billion in value since its initial investment, Alex Wilhelm writes.
Thanks very much for reading!
You must be logged in to post a comment.