‘The tortoise and the hare’ story is playing out right now in VC

The unprecedented liquidity that has entered the venture market in the past year has spurred several trends that require VCs to adapt to a more competitive environment where startup founders have far more leverage than they did in the past.

Structurally, there are only so many startups looking to raise capital, and even though some founders may be opportunistically pursuing deals they wouldn’t have previously, the supply of capital into venture funds has nonetheless outpaced the demand for those dollars. READ MORE

Is Venture Changing?

Good day. Last week, we asked about the lessons from previous climate-tech disappointments investors are applying to the renewed surge of interest in the sector.

Despite a sharp focus in 2019 on lessons learned from the first wave of climate investing, "the market is so hot that most of the accepted 'lessons' have gone out the window -- VCs are pouring money into climate-tech companies with significant technical risk at soaring valuations," said Piva Capital partner Bennett Cohen. The bull case is that the easy money will support the exit markets for these companies, Mr. Cohen said. READ MORE

A VC shares 5 things no one told you about pitching VCs

The success of a fundraising process is entirely dependent on how well an entrepreneur can manage it. At this stage, it is important for founders to be honest, straightforward and recognize the value meetings with venture capitalists and investors can bring beyond just the monetary aspect.

Here are five pointers that founders should consider while pitching to venture capitalists: READ MORE

Venture Investment In Cryptosecurity Jumps 10x Over Last Year

What do you get when you combine never seen before investment in cybersecurity with the increasingly heated interest in cryptocurrency? You get a banner year for investment in cryptosecurity, with venture dollars invested in the sector already past $1 billion this year.

Cryptosecurity—a sector involving technologies that help secure digital wallets and transactions involving cryptocurrency—has already seen more money invested in it in 2021 than in all earlier years combined, according Crunchbase data. While last year saw less than $100 million invested in the sector, investors have started to eye security and compliance features as the crypto market has taken off. READ MORE

Cleantech Funds Scaling Up To Take On Climate Change In 2021

When one faces a seemingly insurmountable problem, a common piece of advice is to break up the job into smaller pieces. Some progress, the thinking goes, is better than doing nothing.

That, in general, is how startups and their backers have approached the species-threatening specter of climate change. Whether the focus is clean manufacturing, energy efficiency, renewables, sustainable packaging, or a host of other focus areas, the broad bet is that we can take incremental steps to curtail our carbon-spewing ways. READ MORE

How VCs Can Build Killer Pitch Decks To Attract Potential Investors

As someone who has been building the venture capital industry in Latin America since 1999, what is happening right now in the region feels very rewarding.

The resilience shown during the pandemic is finally paying off, as the astounding funding numbers of the first half of 2021 begin to come out: LAVCA shows that companies raised approximately $6.2 billion in VC  investments in the first half of the year, a 51 percent increase over the total invested in 2020. Compared to the last half-year, the increase was 138 percent. The need for more local VC funds providing a continuum of financing rounds is clear, but are these funds finding it hard to attract sizable investment? READ MORE

Lenders offer cheap deals to Silicon Valley to compete with flood of venture capital

Banks and other lenders have cut prices and loosened their terms to make debt more attractive to Silicon Valley start-ups, as they try to compete with flush venture capitalists. “We’re all looking for the loan demand that’s left, so to speak,” said Marc Cadieux, chief credit officer at Silicon Valley Bank, the largest lender to tech start-ups. READ MORE

Top venture capitalist: "The climate is f'd"

"The climate is f’d. Even worse than it seems." That's from the opening page of a 12-page letter sent by venture capitalist Chris Sacca to potential investors in Lowercarbon Capital, the climate-focused firm he launched last year after a brief retirement.

What's new: Lowercarbon, which initially funded more than 50 startups via money from Sacca and his wife Crystal, last week announced that it raised $800 million in outside capital. READ MORE

How to hire a venture partner and how much to pay?

In the first part of my guide to venture partners, I talked about the five different kinds of venture partner roles out there and tips for aspiring venture partners. This time, I want to turn the tables and talk about what VCs should think about when hiring venture partners. 

First, VCs obviously need to figure out which kind of venture partner they need. For details on the five main types of venture partners, see my previous piece. Once it’s clear which one you are hiring for, you need to decide how to incentivise venture partners correctly.  READ MORE

What is happening to risk-taking in venture capital?

Sam Lessin’s post in The Information, “The End of Venture Capital as We Know It,” prompted heated debate in Silicon Valley. He argued that the arrival of new players with large amounts of capital is changing the landscape of late-stage investing for venture capitalists and forcing VCs to “enter the bigger pond as a fairly small fish, or go find another small pond.” READ MORE

How alternative is alternative?

The private capital sector has continued to grow in ways that blur the distinction between traditional buyout private equity funds and alternative investors.

While investment in buyout funds has continued to grow, it is being eclipsed by investment in alternative strategies and sector-focused funds. Buyout funds held 41% of global private equity assets under management in 2020, down from 62% in 2010, according to a recent Bain Report on private equity activity. READ MORE

The secret to successful private equity deals

Private equity (PE) has dramatically altered the management buy-out (MBO) market. The days of the traditional debt-backed MBO are long gone. If MBOs happen these days, they are almost exclusively backed by PE. So, if you are part of a management team contemplating a PE-backed MBO, what should you know and what should you be worried about?

Everyone wants to know: “what is market?” This can be in the context of M&A terms, equity terms (or indeed, just about anything else), if only to establish a baseline against which to gauge your own performance. What a management team needs, though, is a view of “market” that is based on more than what a lawyer can remember from their last few deals or a general hunch. READ MORE

It’s harder to schmooze a VC over Zoom, but the money’s still flowing

Last year, Donald Hawkins launched First Boulevard, a digital bank meant to help Black people build more wealth.

Hawkins is based in Kansas just south of Kansas City. He said that when he went to raise money for the startup, it was way easier to get meetings with venture capitalists in Silicon Valley and New York than it was before the pandemic. READ MORE

Venture Capitalists Can Fund Traditional Small Businesses, Too. Here’s How.

Over the past year, we’ve seen small businesses and startups converge like never before. 

Small and local businesses had to move online in the digital rush, removing the physical brick and mortar walls that once constrained their growth. Now in the online space, these businesses have greater potential to scale, and essentially, be startups. But they still don’t have access to capital in the same way that trendy startups do. READ MORE

Venture Capitalists Are Not Going Away Anytime Soon

It’s an interesting question, as investing in private tech companies becomes increasingly competitive. 

If nothing else, we’re experiencing the end of venture capital as we know it, according to  Sam Lessin of Slow Ventures, who predicts in a recent column in The Information that by next year, nontraditional tech investors will invest more in private tech companies than traditional Silicon Valley VC firms will. READ MORE

Venture capital undermines human rights

The future of technology is determined by a handful of venture capitalists. The world’s 10 leading venture capital firms have, together, invested over $150 billion in technology startups. The venture capitalists who run these firms decide which startups today will develop the new platforms and technologies that will shape our lives tomorrow.

There is a startling lack of diversity within the venture capital sector. This means that a small group of men — mostly white men — make decisions that affect all of us. Unsurprisingly, they all too often ignore the broader societal and human rights implications of these investment decisions. READ MORE

5 factors founders must consider before choosing their VC

Though 2021 is far from over, it’s already witnessed a record level of venture capital activity in the technology sector. With larger round sizes announced daily, founders may have their pick of term sheets — but they need to think critically and strategically about which firms to add to their cap table.

So far this year, we’ve seen $292.4 billion in venture financing across the globe, of which $138.9 billion was raised in the United States. Specific to tech companies, the capital is only accelerating: In Q2, founders raised 157% more capital compared to the same period last year, according to the latest data from CB Insights. READ MORE

The Big Five Are Buying Far Fewer Startups This Year

The five most valuable American technology companies have enough money to buy any startup at virtually any price. But although they have the means, Apple, Google, Microsoft, Amazon and Facebook have not been especially acquisitive this year. 

Among them, the companies have made just 12 disclosed purchases of private, venture-backed companies this year, according to an analysis of Crunchbase M&A data.* Of those deals, only two had reported purchase prices, adding up to just $515 million. Most of that came from a single transaction: Microsoft’s $500 million purchase of security provider RiskIQ. READ MORE

Raising Capital In A Frothy VC Market

With headlines like “Mmhmm raises $100M” popping up every other week, it’s hard not to feel like we’re in the midst of an extraordinary bubble. Some investors are even having flashbacks to 1999. 

Unprecedented liquidity is flowing through VC funds, making it a great time to be raising money, but founders should be careful and leverage this market wisely. All too often, I find myself in the unusual position of advising founders not to opportunistically leap to raise as large a round as possible. READ MORE

VC Tear Continues With $61B Invested And 53 New Unicorns Born In July 2021

The furious pace at which venture investment was deployed globally in the first half of 2021 is not slowing down as we move into the third quarter.

Global funding came in at $61 billion in July 2021 — matching the all-time record set in June 2021, Crunchbase data shows. READ MORE