All-In with Chamath, Jason, Sacks & Friedberg cover image

All-In with Chamath, Jason, Sacks & Friedberg

E141: State of Series A's, VC dry powder, IPO window opens + more with Bill Gurley & Brad Gerstner

Aug 11, 2023

01:36:00

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Bill Gurley and Brad Gerstner join the hosts to discuss topics like the state of Series A funding, misconceptions about VC dry powder, the opening of the IPO window, managing distributions in venture cycles, and the impact of global warming. They also touch on the economy, inflation, and the success of the podcast.

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Quick takeaways

Series A funding rounds have seen a decrease in median round size and pre-money valuations, but AI-focused companies are experiencing a surge in activity and larger funding rounds.

LPs are facing challenges in liquidity management, leading to reductions in commitments to venture funds and less capital available for deployment.

The IPO window may be opening with companies like Instacart, Stripe, and Reddit considering public listings, but complexities arise from unicorn companies' cap tables and valuation expectations.

M&A activity faces challenges due to regulatory actions and increased scrutiny, making IPOs and recapitalizations more attractive options for companies seeking liquidity and simplicity in their capital structures.

Deep dives

Series A funding and market trends

Series A funding rounds have seen a decrease in median round size, with $7 million raised, down 26% from the previous year. Pre-money valuations have also decreased, down 17% to $40 million. However, AI-focused companies are experiencing a surge in activity and larger funding rounds. It is important to note that while there is dry powder available, VC firms do not have direct access to that capital as it is held by LPs. LPs face their own challenges, including the need to meet liquidity requirements, which impacts the amount of capital available for future funds.

Zoom bombing, the Brady Bunch, and doing stuff that matters

Selling Promise vs Selling Performance in Business

VCs aren't incentived to take markdowns, nor the LPs

Sachs on Selling when companies go public and distributing shares vs money

1.

Introduction

2min

2.

Bill Gurley's Current Projects

13min

3.

A Story of a Math Teacher's Book Success and Other Non-Traditional Inspirations

2min

4.

The Importance of Persistence and Kurosawa's Influence

4min

5.

Exploring the Influences of Kurosawa Films

2min

6.

State of Series A Funding and Competition in the VC Market

12min

7.

Understanding 'Dry Powder' in Venture Capital

7min

8.

The Challenges in the Buying Cycle: Lessons from the Dot Com Crash

9min

9.

Current State of IPOs and Opening of the IPO Window

10min

10.

The Impact of Inflated Markets and Denominator Problem

14min

11.

Private vs Public Companies

10min

12.

Impact of Global Warming and Extreme Weather Events

3min

13.

The State of the Economy: Inflation, Spending, and Job Openings

8min

14.

Discussion about the success of the podcast and recognition in public

2min

(0:00) Bestie intros: Friedberg's bad haircut

(1:17) Welcome BG^2! Biography recommendations and film talk

(22:27) VC market update: State of Series A's

(33:43) Dry powder misconceptions, marking incentives

(48:57) IPO window starting to open, IPO down rounds, incentives to go public

(1:03:17) Cyclical venture cycles, managing distributions, benchmarking VC performance vs public market

(1:22:26) Tragic Maui wildfires, extreme temperatures

(1:26:11) Macro picture: inflation cools, deflation risk?

Follow the besties:

https://twitter.com/chamath

https://linktr.ee/calacanis

https://twitter.com/DavidSacks

https://twitter.com/friedberg

https://twitter.com/altcap

https://twitter.com/bgurley

Follow the pod:

https://twitter.com/theallinpod

https://linktr.ee/allinpodcast

Intro Music Credit:

https://rb.gy/tppkzl

https://twitter.com/yung_spielburg

Intro Video Credit:

https://twitter.com/TheZachEffect

Referenced in the show:

https://youtu.be/xmYekD6-PZ8

https://www.amazon.com/Setting-Table-Transforming-Hospitality-Business/dp/0060742755

https://www.amazon.com/Steve-Jobs-Walter-Isaacson/dp/147770146X

https://www.amazon.com/Elon-Musk-Spanish-Walter-Isaacson/dp/B0CBTHK86N

https://www.amazon.com/Good-Great-Some-Companies-Others/dp/0066620996

https://www.amazon.com/Man-Arena-Selected-Writings-Roosevelt/dp/0765306700

https://www.amazon.com/Shoe-Dog-Memoir-Creator-Nike/dp/1501135910

https://www.amazon.com/Alexander-Hamilton-Ron-Chernow/dp/1594200092

https://www.amazon.com/Something-Autobiography-Vintage-Akira-Kurosawa/dp/B0C3D5NDJX

https://www.amazon.com/Born-Standing-Up-Comics-Martin/dp/B017QUU3EO

https://www.amazon.com/Writing-Memoir-Craft-Stephen-King/dp/1439193630

https://www.amazon.com/Autobiography-Malcolm-told-Alex-Haley/dp/0345379756

https://www.linkedin.com/posts/peterjameswalker_cartadata-seriesa-valuations-activity-7092542118803488768-vOcY

https://www.theinformation.com/articles/venture-firms-still-writing-small-checks-despite-271-billion-in-dry-powder

https://twitter.com/bgurley/status/1688605654188224512

https://finance.yahoo.com/chart/SN

https://www.google.com/finance/quote/CAVA:NYSE

https://finance.yahoo.com/quote/SRFM

https://twitter.com/altcap/status/1686086247029055489

https://www.wsj.com/articles/university-endowments-mint-billions-in-golden-era-of-venture-capital-11632907802

https://www.youtube.com/watch?v=Hhy7JUinlu0

https://twitter.com/gokulr/status/1680006171149869056

https://www.statista.com/statistics/277501/venture-capital-amount-invested-in-the-united-states-since-1995

https://www.bls.gov/charts/consumer-price-index/consumer-price-index-by-category-line-chart.htm

https://www.bloomberg.com/news/newsletters/2023-08-10/disinflation-wave-the-bloomberg-open-americas-edition

https://www.nytimes.com/2023/08/09/business/china-economy-inflation.html

https://twitter.com/KobeissiLetter/status/1689010884062904320

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