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Best of LinkedIn: Venture Capital CW 39/ 40 · Best of LinkedIn: Strategy, M&A & Investments

• 0:00
  Speaker 0: Provided by Thomas Allgaier and Frennus, based on the most relevant LinkedIn posts about venture capital.
• 0:05
  Speaker 0: in CW-Thirty-Nine and Forty, Frennus specializes in BDB market research for venture capital teams, providing landscape screenings and startup segmentations with a strong focus on the tech space.
• 0:16
  Speaker 0: Welcome back.
• 0:18
  Speaker 0: Our mission for this deep dive is to really synthesize the top venture capital trends we've seen buzzing across LinkedIn over the last two calendar weeks.
• 0:26
  Speaker 0: And, well, if you had to capture the mood, it's definitely execution first.
• 0:30
  Speaker 0: Absolutely.
• 0:30
  Speaker 1: We're seeing a definite move past just the hype.
• 0:34
  Speaker 1: You know, we're digging into the mechanics.
• 0:35
  Speaker 1: Where is the capital actually going?
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  Speaker 1: How are founders adapting their strategies?
• 0:38
  Speaker 1: Because this environment is incredibly tight.
• 0:41
  Speaker 1: And then there are these structural shifts happening within the whole BC ecosystem itself.
• 0:45
  Speaker 1: And all of this, well, it's happening under the massive shadow of AI.
• 0:48
  Speaker 1: You just can't avoid it.
• 0:49
  Speaker 0: Okay, let's tackle that shadow first.
• 0:50
  Speaker 0: then, because AI dominance, it isn't just another trend, is it?
• 0:54
  Speaker 0: It feels more like a capital concentration event.
• 0:57
  Speaker 0: I mean, bigger than anything we saw with crypto or mobility tech hype cycles.
• 1:01
  Speaker 1: Oh, it absolutely dwarfs them.
• 1:03
  Speaker 1: It's structural.
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  Speaker 1: And the data, well, the data is pretty stunning.
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  Speaker 1: If you look at what SAR of S and Pitchbook shared, it's more than half, fifty three point two percent globally of all VC dollars went into AI startups this year.
• 1:15
  Speaker 1: Wow,
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  Speaker 0: over half globally.
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  Speaker 1: And get this, in the U.S.
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  Speaker 1: it's an eye-watering sixty-two point seven percent.
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  Speaker 1: That kind of concentration means, well, every other sector is basically fighting over a shrinking slice of the pie.
• 1:28
  Speaker 0: And that concentration, it creates this huge friction, right?
• 1:31
  Speaker 0: It's fundamentally reshaping the economics.
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  Speaker 0: Carded data confirms this.
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  Speaker 0: There's a widening valuation gap.
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  Speaker 0: You've got the AI haves and the non AI have nots.
• 1:40
  Speaker 1: Yeah.
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  Speaker 1: Peter Walker broke it down.
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  Speaker 1: He noted the typical C to series A step up, you know, the multiple is usually around two point five X.
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  Speaker 0: Okay, it's standard enough.
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  Speaker 1: But for non AI companies, their multiples are actually lower than they were before.
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  Speaker 0: Wait, lower.
• 1:53
  Speaker 0: So even if they're hitting milestones performing well, the market's pushing them back to like, twenty eighteen levels.
• 1:58
  Speaker 1: Exactly.
• 1:59
  Speaker 1: It sounds like, honestly, existential pressure if you're a founder outside that AI bubble right now.
• 2:04
  Speaker 0: It really does.
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  Speaker 0: Now contrast that with the AI multiples.
• 2:07
  Speaker 0: What are they seeing?
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  Speaker 1: They're seeing three point five acts as a baseline.
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  Speaker 1: and the really hot AI companies, they can command multiples closer to five X. We're talking almost back to those crazy twenty twenty one market heights.
• 2:19
  Speaker 0: So the leverage is definitely there for AI.
• 2:21
  Speaker 1: It is.
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  Speaker 1: VCs see these AI solutions, especially B to B, as having, you know, built-in defensibility, incredible speed to market.
• 2:29
  Speaker 1: But we have to inject a note of caution here.
• 2:32
  Speaker 1: OK.
• 2:33
  Speaker 1: Francesco Berticarari offered a strong counter narrative.
• 2:36
  Speaker 1: He's warning about potential overvaluation, maybe even trillions evaporating down the line.
• 2:40
  Speaker 1: Trillions?
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  Speaker 0: Why such a stark warning?
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  Speaker 1: Well, he points to this extreme concentration.
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  Speaker 1: Just nine U.S.
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  Speaker 1: firms controlling half of all VC raised created a kind of FOMO driven gold rush.
• 2:51
  Speaker 1: Plus, concerns about potentially circular revenue models that might not hold up if, you know, the mythical AGI doesn't materialize as promised.
• 3:00
  Speaker 1: That sustainability question is very real.
• 3:02
  Speaker 1: That
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  Speaker 0: whole valuation divergence fueled by both massive opportunity and maybe some fear that leads us right to the source of the money.
• 3:08
  Speaker 0: How are LPs, the limited partners, viewing all this?
• 3:11
  Speaker 0: How is it shaping where they put their cash?
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  Speaker 1: LP psychology, it seems, has really shifted.
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  Speaker 1: It's all about discipline now.
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  Speaker 1: They're laser focused on entry pricing, controlled pacing, and they want managers who can really prove a differentiated strategy.
• 3:25
  Speaker 1: It's less about the broad narratives now.
• 3:27
  Speaker 1: Right.
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  Speaker 0: More brass tacks.
• 3:29
  Speaker 1: Exactly.
• 3:30
  Speaker 1: And with liquidity expectations tightening everywhere, secondaries have become, well, a really practical tool for optimizing portfolios.
• 3:37
  Speaker 0: And when we look at the actual performance, the cash returns, what's the picture there?
• 3:41
  Speaker 1: It's a bit mixed, but improving.
• 3:44
  Speaker 1: Chris Harvey and Ruben Dominguez-Ibar reported that median IRRs and TVPIs, that's total value to pay it in capital, basically your cash on cash return, they're trending up for the earlier vintages.
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  Speaker 0: Okay, like which ones?
• 3:56
  Speaker 1: The twenty seventeen vintage, for example, hit a median TVPI of two point zero X. So that signaling healthier returns are starting to come through.
• 4:03
  Speaker 1: That's
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  Speaker 0: positive.
• 4:04
  Speaker 1: It is.
• 4:05
  Speaker 1: But dry powder overall is thinning out pretty fast.
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  Speaker 1: That suggests aggressive deployment.
• 4:09
  Speaker 1: mostly by the mega funds.
• 4:11
  Speaker 1: But here's something fascinating.
• 4:12
  Speaker 1: The European paradox that Pavel Prada highlighted.
• 4:15
  Speaker 1: The
• 4:16
  Speaker 0: European paradox.
• 4:17
  Speaker 0: Tell me more.
• 4:18
  Speaker 1: So European VC is actually having its worst year in a decade in terms of total capital raised about six point nine billion across eighty seven funds.
• 4:27
  Speaker 1: Yet something like a dozen funds just closed in September alone.
• 4:31
  Speaker 0: OK, so fundraising is down overall, but deals are still closing.
• 4:35
  Speaker 0: Why that contradiction?
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  Speaker 1: Well, the interpretation is that LP spent the last couple of years concentrating capital with the big established mega brands.
• 4:45
  Speaker 1: Now they're realizing maybe some of those managers struggled with the high entry prices from twenty twenty one.
• 4:49
  Speaker 1: So now they seem to be hunting for returns with smaller, perhaps hungrier, more disciplined managers.
• 4:55
  Speaker 1: Managers who have dry powder now and the ability to capture potentially better enterprises in today's market.
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  Speaker 0: Makes sense.
• 5:01
  Speaker 1: Yeah, the median European fund size actually dropped from sixty six point six million down to forty eight point seven million.
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  Speaker 1: It feels like a deliberate move by LPs to kind of de-risk and diversify away from that high-cost exposure.
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  Speaker 0: And we're seeing other liquidity mechanisms mature too, right?
• 5:16
  Speaker 0: Like with corporate venture capital.
• 5:18
  Speaker 1: Definitely.
• 5:18
  Speaker 1: George Lange noted that fifty-seven percent of CVCs are either interested in or already using secondaries.
• 5:24
  Speaker 1: For CVCs, that's a really crucial tool, you know, for managing older assets and keeping the portfolio aligned with the parent company strategy.
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  Speaker 0: And beyond CVCs, there's this push for more access, more democratization.
• 5:36
  Speaker 1: Exactly.
• 5:37
  Speaker 1: Kevin Withing pointed out the London Stock Exchange and Crowdcube partnership.
• 5:41
  Speaker 1: That could potentially open up access for retail investors into later stage private companies.
• 5:46
  Speaker 0: Which could really reshape liquidity expectations.
• 5:48
  Speaker 0: Totally.
• 5:49
  Speaker 1: It might allow VCs to recycle capital sooner.
• 5:51
  Speaker 1: It feels like another big step towards private market maturity.
• 5:54
  Speaker 0: Okay, let's flip the perspective now.
• 5:56
  Speaker 0: Let's talk about the founders, the people actually trying to win a check in this super competitive execution focused world.
• 6:03
  Speaker 0: Kritika Verma just laid out the stark reality.
• 6:05
  Speaker 0: Less than one percent of startups actually secure VC funding.
• 6:09
  Speaker 1: It's brutal.
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  Speaker 1: Less than one percent.
• 6:11
  Speaker 1: And the fix, as Sutan Yang and Paul Maj pointed out, isn't just about grit or hustle anymore.
• 6:16
  Speaker 1: It's about process.
• 6:17
  Speaker 0: Process.
• 6:17
  Speaker 0: Okay.
• 6:18
  Speaker 0: Yeah.
• 6:18
  Speaker 0: How so?
• 6:19
  Speaker 1: Well, Paul Maj really emphasized the preparation is like, eighty percent of the success here.
• 6:24
  Speaker 1: He detailed the essential materials.
• 6:26
  Speaker 1: A sharp pitch deck, obviously, but also a robust financial model, a properly researched investor pipeline.
• 6:32
  Speaker 0: Right.
• 6:32
  Speaker 0: The homework has to be done.
• 6:34
  Speaker 1: Totally.
• 6:35
  Speaker 1: And Sutan Yang stressed treating fundraising exactly like a BDB sales funnel.
• 6:39
  Speaker 1: You need to build a long list, tier your targets, and critically start pitching your C-list investors first.
• 6:46
  Speaker 1: Get the practice reps in.
• 6:47
  Speaker 1: Okay,
• 6:48
  Speaker 0: like address rehearsal before the main performance, makes sense.
• 6:51
  Speaker 0: And what about reaching out?
• 6:52
  Speaker 0: Cold emails.
• 6:53
  Speaker 1: Forget about it.
• 6:54
  Speaker 1: Sophie Shapiro put it really bluntly.
• 6:56
  Speaker 1: Cold outreach to investors is basically founder failure.
• 7:01
  Speaker 1: Warm intros are non-negotiable.
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  Speaker 1: They're almost like competency tests.
• 7:04
  Speaker 1: Can you build the relationships needed?
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  Speaker 1: Got
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  Speaker 0: it.
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  Speaker 0: So assuming you get the meeting, what about ownership?
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  Speaker 0: That's always a huge point of negotiation.
• 7:10
  Speaker 1: It's the ultimate metric, right?
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  Speaker 1: Nicole de Tomaso gave some median targets to A&M for.
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  Speaker 1: Founders should look to own around fifty-six percent after their seed round and maybe thirty-six percent after series A.
• 7:20
  Speaker 0: Okay, benchmarks are helpful.
• 7:21
  Speaker 1: But interestingly, Alejandro Cremades noted that dilution rates are actually declining in AI-driven companies, especially at later stages.
• 7:30
  Speaker 1: It suggests that AI founders who have traction are managing to command better leverage.
• 7:35
  Speaker 0: Which brings us nicely to a specific tool for those negotiations.
• 7:39
  Speaker 0: One that helps protect that founder leverage, the reverse VC method.
• 7:43
  Speaker 0: Brian Ortiz champions this.
• 7:45
  Speaker 0: I like the sound of it.
• 7:46
  Speaker 0: It feels like a necessary counterbalance.
• 7:48
  Speaker 1: It really is.
• 7:49
  Speaker 1: The traditional VC method is usually driven entirely by the investor.
• 7:52
  Speaker 1: They start with their target IRR work backward, justify the valuation.
• 7:56
  Speaker 1: The reverse VC method flips that script.
• 7:59
  Speaker 1: It starts with the founder's specific capital needs and their desired ownership retention.
• 8:04
  Speaker 1: Then you work backward to see if that implied valuation still makes sense for an investor.
• 8:08
  Speaker 0: So it anchors the negotiation around the founder's needs first.
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  Speaker 1: Exactly.
• 8:12
  Speaker 1: It's a crucial strategy, especially now, to guard against giving up too much equity too early, particularly when the market is hitting non-AI valuations so hard.
• 8:21
  Speaker 0: Okay, one more tactical tip on the pitching itself.
• 8:24
  Speaker 1: James
• 8:24
  Speaker 0: Hickson shared some pretty startling box-end data.
• 8:28
  Speaker 0: VC spend, on average, just a hundred and sixty-two seconds reviewing a pre-seed deck.
• 8:34
  Speaker 0: Wow.
• 8:34
  Speaker 1: A hundred and sixty-two seconds.
• 8:36
  Speaker 1: Two
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  Speaker 0: minutes and forty-two seconds.
• 8:39
  Speaker 0: It completely changes the game, doesn't it?
• 8:40
  Speaker 0: You basically have those first three slides, maybe four, to land the entire story.
• 8:47
  Speaker 0: the clarity, the credibility, the conviction.
• 8:49
  Speaker 1: Absolutely.
• 8:50
  Speaker 1: No time for a slow buildup.
• 8:51
  Speaker 1: Yeah.
• 8:51
  Speaker 1: And how do you hook them instantly?
• 8:53
  Speaker 1: Leon Eisen has a great recommendation.
• 8:55
  Speaker 1: Yeah.
• 8:55
  Speaker 1: Lead with a capital gravity hook.
• 8:56
  Speaker 1: Capital gravity hook.
• 8:57
  Speaker 1: Yeah.
• 8:58
  Speaker 1: Basically, immediately associate your story with big money.
• 9:01
  Speaker 1: Start with a market size well over a billion dollars right there on slide one.
• 9:04
  Speaker 1: You need to instantly pull the VC's attention into that big potential return zone.
• 9:08
  Speaker 1: So
• 9:09
  Speaker 0: all this focus on execution, discipline, the AI concentration.
• 9:13
  Speaker 0: It seems to be leading to a bit of a contraction across the wider ecosystem.
• 9:17
  Speaker 0: Yeah,
• 9:17
  Speaker 1: Jackie DeMonte pointed out there are roughly half as many active venture firms today compared to five years ago.
• 9:22
  Speaker 1: Half.
• 9:22
  Speaker 0: That's significant.
• 9:24
  Speaker 1: It is.
• 9:24
  Speaker 1: And that contraction really impacts the non-obvious founders, the earliest stage, maybe non-consensus ideas.
• 9:32
  Speaker 1: Meanwhile, though, on the CVC side, that maturity we talked about, it's driving serious professionalization.
• 9:38
  Speaker 1: George Lanch highlighted this again.
• 9:39
  Speaker 1: How
• 9:40
  Speaker 0: so beyond secondary?
• 9:41
  Speaker 1: Well, CVCs are focusing heavily on governance, on decision-making speed.
• 9:45
  Speaker 1: They're becoming much more sophisticated portfolio managers.
• 9:48
  Speaker 1: We mentioned the twenty-two percent using secondaries.
• 9:51
  Speaker 1: But many are also seriously considering moving off the corporate balance sheet entirely.
• 9:55
  Speaker 0: To gain more independence from the parent company.
• 9:57
  Speaker 1: Exactly.
• 9:58
  Speaker 1: Gain independence, maybe attract outside LPs eventually.
• 10:01
  Speaker 1: And unsurprisingly, AI is dominant there too.
• 10:05
  Speaker 1: Sixty-nine percent of CVCs are now actively targeting AI investments.
• 10:09
  Speaker 0: Okay, so CVCs are professionalizing.
• 10:11
  Speaker 0: What about the traditional VCs?
• 10:13
  Speaker 0: Any shifts there?
• 10:14
  Speaker 0: Huge
• 10:14
  Speaker 1: shifts.
• 10:15
  Speaker 1: Suzanne Hahn argues that VCs are evolving into what she calls full-stack platforms.
• 10:20
  Speaker 1: They're increasingly acting more like private equity firms.
• 10:22
  Speaker 0: How do you mean like PE?
• 10:24
  Speaker 0: Well,
• 10:24
  Speaker 1: more firms are registering as RIAs registered investment advisors, which brings stricter financial regulation.
• 10:31
  Speaker 1: And they're executing more PE style buyouts, aiming for control, not just minority stakes.
• 10:37
  Speaker 0: Interesting.
• 10:38
  Speaker 0: So they're moving away from the classic sort of spray and pray model of early stage investing, less about just writing checks.
• 10:45
  Speaker 1: Precisely.
• 10:45
  Speaker 1: The focus is shifting towards owning outcomes.
• 10:48
  Speaker 1: really getting involved, demanding control, acting more like operators.
• 10:53
  Speaker 1: It signals capital becoming much more strategic, less purely speculative.
• 10:58
  Speaker 1: It's a move towards institutional maturity.
• 11:00
  Speaker 1: Definitely.
• 11:00
  Speaker 1: When
• 11:00
  Speaker 0: we're seeing regional markets reflect this maturity too, right?
• 11:03
  Speaker 0: Setting new standards.
• 11:04
  Speaker 1: Yeah, Maria Mollendorf reported that New York's venture market, for example, now hosts over one hundred active VC firms.
• 11:11
  Speaker 1: But the key thing is this growth is paired with a really strong demand for financial discipline from those firms.
• 11:17
  Speaker 0: High growth, but with discipline.
• 11:18
  Speaker 1: Exactly, which in theory lowers execution risk.
• 11:22
  Speaker 1: and that dual focus high growth plus operational efficiency that really defines this new execution first era of venture capital we're seeing.
• 11:29
  Speaker 0: If you enjoyed this deep dive, new episodes drop every two weeks.
• 11:32
  Speaker 0: Also check out our other editions on private equity, M&A, and strategy and consulting.
• 11:36
  Speaker 1: And maybe a final thought to leave you with.
• 11:38
  Speaker 1: As we see this structural move toward professionalism, toward control, like Suzanne Hahn described, It really does raise a key question.
• 11:46
  Speaker 1: Leslie Finezeg posted it recently.
• 11:48
  Speaker 1: If VC starts looking and acting more like Wall Street, you know, with large funds chasing consensus A ideals based on discipline, is it still real VC?
• 11:57
  Speaker 1: Yeah.
• 11:58
  Speaker 1: She defines real VC as investing in the crazy, non-consensus ideas, the ones that seem too early, too weird, maybe too risky for the mainstream.
• 12:07
  Speaker 1: So something to consider as you navigate this rapidly professionalizing market.
• 12:10
  Speaker 1: Thank you for joining us today.