August 14, 2023 Pitchbook : Q2 2023 Public BDC Venture Lender Earnings

At the end of Q2, the 5 BDCs had $1.335BN in available liquidity via cash and credit facilities, a tick up of ~$175M from Q1. Hercules represents 50% of this dry powder, roughly the same share as at the end of Q1. The median investment yield of the 5 venture debt BDCs has increased from 12.4% in Q1 2022 to 16.2% in Q2 2023, an increase of 380 basis point (“bps”), or 3.8%. That’s an ~31% uptick in yield achievement in the span of 6 quarters. The bulk of this increase (290 basis points) occurred in 2022 with a further increase of 90 basis points in 1H 2023. (read more…)

CATEGORY: capital, debt, resilience

August 8, 2023 Bessemer Venture Partners : The Cloud 100

The macro background has nonetheless hurt the average Cloud 100 company. For years we saw growth rates increase, but in 2023, the average growth rate for a Cloud 100 company – the 100 best private companies in the world – has been nearly halved. After years of defying gravity and reaching record highs, headwinds eventually caught up with Cloud 100 fundamentals. The average Cloud 100 revenue growth rate fell significantly to 55% within the year, with the growth rate of the top quartile companies falling to 70%, once again reinforcing the extremely challenging year that the world’s best cloud companies had to deal with. (read more…)

CATEGORY: growth, resilience, SaaS

June 9, 2023 Docsend : The Funding Divide 2023: Tracking Bias in Early-Stage Fundraising

All-female teams raised 36% less than all-male teams. All female teams with minority members averaged 33% fewer investor meetings and raised the least amount of funding. Diverse teams raised 33% less than all-white teams. All-female teams with a minority took 33 meetings to raise $750K.  All female teams without a minority took 53 meetings to raise $1.2 million. All-male teams with a minority took 48 meetings to raise $1.3 million. All-male teams with no minorities took 49 meetings to raise $1.6 million.  Mixed-gender teams with a minority took 50 meetings to raise $1.1 million.  Mixed-gender teams without a minority took 45 meetings to raise $1.8 million (read more…)

CATEGORY: capital, resilience, VC

May 25, 2023 Juniper Square : The State of Venture Capital in 2023

While 63% of VC firms plan to raise capital this year, 66% believe the process will be more difficult than in the past. 45% of respondents say that their LPs are pressuring them to find exit strategies for the portfolio. (read more…)

CATEGORY: downturn, resilience, VC

January 28, 2023 Chris Harvey via LinkedIn : What VC Fund Size is outperforming?

Emerging funds have a higher percentage of outsized returns, but larger growth funds deliver more consistent returns (for example, median returns of 1.86x for fund sizes $500m+ vs. 1.67x for funds under $250m). In other words, emerging funds have a higher slugging percentage, while growth stage funds have a higher batting average. (read more…)

CATEGORY: capital, resilience, VC

January 12, 2023 Anu Atluru via Substack : Rise of the Silicon Valley Small Business

The Silicon Valley small business, the SV-SB, is a hybrid of sorts — it intertwines small business values and discipline with big tech know-how and ambition. Founding teams may look like that of a “traditional” Silicon Valley startup. They’re native to Silicon Valley ethos, skills, and playbooks. But, beneath the surface, they’re different. You might see more solopreneurs and studios (and LLCs instead of C-corps). They value autonomy and flexibility. They envision a range of potentially good outcomes — not binary, all-or-nothing scenarios. (read more…)

CATEGORY: bootstrap, leadership, resilience

September 22, 2022 Pitchbook : Down Rounds, Impacts, and Exit Opportunities

Companies taking on a down round often continue growth. Just 13% of companies raising a down round from 2008 to 2014 were unable to raise a new round or exit immediately after the down valuation investment. Nearly 20% of post-down round exits occur via PE buyout, which is a significantly higher proportion than what is seen in the broader venture exit dataset. The data also shows that investing into a down round could prove to be an investment strategy with decent returns. The fact that 88% of known exit valuations for companies taking a down round were higher than the down round valuation should increase the confidence in down round participants. (read more…)

CATEGORY: downturn, leadership, resilience

September 20, 2022 Pitchbook : Distressed venture is coming to save your orphaned startups

"Our goal is to find companies that are fundamentally good businesses with business models that make sense and are revenue-generating. They just need a second chance so that they can grow profitably and sustainably, and then have a meaningful exit for founders and investors."

CATEGORY: alternative financing, profitability, resilience, VC

September 20, 2022 Carta : Early 2022 data shows a drop in median IRR across funds

While all vintages saw median net IRR decline, 2017 and 2020 vintages saw the sharpest drops (of 3.6% and 3.0%, respectively). The lone exception to the decline was 2021 vintage funds, which are still rising from the dip below zero that private-fund IRR usually takes in the initial stages of the fund lifecycle. (read more…)

CATEGORY: resilience, valuation, VC

June 17, 2022 Crunchbase : Surviving Down Rounds

Raising money at a sky-high valuation feels like a big win on the day you close. But it also raises expectations that much higher. The consequences of failure are asymmetric. If you stumble and need a down round, the VCs just write a check or even buy more on sale. Whereas you can lose all your shares, all your vesting, or even your job. Those are years you cannot replace. So be prudent. Leave enough room to be sure of raising the share price in the future, even if you make mistakes and even if the markets are down. In short, enjoy your swim. Just please keep your suit on. (read more…)

CATEGORY: downturn, leadership, resilience