E17: Sequoia & the Hewlett Foundation on VCs NOT raising funds, Cisco's $1B AI fund, and more!
Jun 27, 2024
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Konstantine Buhler, Ana Marshall, and Jason Calacanis discuss VCs not raising funds, challenges for new fund managers, capital deployment, emerging managers, Cisco's $1B AI fund, AI applications, M&A vs. IPO investments, and Lightning round on latest investments
Increased trend of VCs not raising new funds impacting valuations and pricing in different sectors.
Shift in investment pacing towards AI sectors while still funding non-AI companies at reasonable valuations.
Challenges in venture capital industry leading to fund closures, emphasizing need for realistic expectations and high returns.
Deep dives
Increased Number of VCs Not Raising Another Fund
The podcast discusses the doubling of VCs not raising another fund compared to last year. This trend may be underreported as 38% of VCs have stopped deal making, with only 2,725 active firms remaining. Sequoia, though strong in fundraising, is influenced by the weaker market, impacting valuations and pricing in different business sectors.
Shift in Valuations in Different Sectors
While AI valuations remain high, traditional businesses like software as a service and consumer sectors have experienced valuation corrections. The industry has shifted its pacing of investments, focusing on AI sectors but still funding non-AI companies at reasonable valuations.
Challenges and Realities in Venture Capital
The discussion highlights the challenges in venture capital, with many VCs facing difficulties due to market dynamics. The industry is experiencing a need for realistic expectations and exits, with LPs focusing on sharpening their strategies and managing expectations. Some funds might face struggles, leading to fund closures and industry adjustments.
Impact of AI on Venture Capital
The episode explores the impact of AI on early-stage investments, emphasizing the need for high returns in every investment. The conversation delves into the complexities of AI-native architecture versus traditional SaaS models and the shift towards AI-focused applications. The evolving AI ecosystem presents opportunities and challenges for investors.
Strategies for Building Successful Startups
The speakers discuss strategies for developing successful startups by emphasizing early-stage investments and customized approaches to pitches. They highlight the importance of fostering innovation through early-stage funding, strategic networking, and value creation. The episode underscores the significance of long-term partnerships, efficient market strategies, and navigating the evolving venture capital landscape.
David Weisburd hosts Konstantine Buhler, Ana Marshall, and Jason Calacanis to discuss VCs not raising new funds (1:28), Cisco's $1 billion AI fund (27:29), and more!
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Timestamps:
(0:00) David Weisburd intros Konstantine Buhler, Ana Marshall, and Jason Calacanis
(1:28) VCs not raising new funds, market impact, and the current state of venture capital
(3:56) Challenges for new fund managers, power laws, and investment strategies
(9:02) Capital deployment, returns, and portfolio assessment
