Latest / Best of LinkedIn: Strategy, M&A & Investments / Best of LinkedIn: Venture Capital CW 05/ 06

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Best of LinkedIn: Venture Capital CW 05/ 06 · Best of LinkedIn: Strategy, M&A & Investments

• 0:00
  Speaker 0: provided by Thomas Allgaier and Frennis, based on the most relevant LinkedIn posts about venture capital from CW five-and-six.
• 0:07
  Speaker 0: Frennis 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 1: so today we're looking at the top venture capital trends that really stood out on linkedin.
• 0:19
  Speaker 1: this is calendar weeks five six of twenty twenty six
• 0:23
  Speaker 0: And you know usually when we do these it's a mix of different signals, but this time It feels like the message is incredibly consistent.
• 0:31
  Speaker 0: The entire industry seems to have moved on from that Adjustment phase.
• 0:34
  Speaker 1: yeah We're in a new normal now.
• 0:36
  Speaker 1: It's less about Waiting for the market come back
• 0:39
  Speaker 0: and more about optimizing for the mark You actually have
• 0:42
  Speaker 1: exactly?
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  Speaker 1: We're seeing a huge focus on deal discipline A total rethink of fundraising mechanics Pretty surprising geographical shifts.
• 0:50
  Speaker 1: I think anyone still thinking Silicon Valley is the center of the universe might be in for a shock.
• 0:55
  Speaker 0: Let's start with money then or maybe more accurately The terms attached to that money this whole cluster of insights we saw around deal discipline.
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  Speaker 0: It honestly reads like a warning label.
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  Speaker 0: it
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  Speaker 1: absolutely Is a warning level?
• 1:08
  Speaker 1: I mean, the most compelling piece on this came from Itamar Novik.
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  Speaker 1: He framed it around something he calls valuation ego.
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  Speaker 0: The classic trap where a founder thinks the higher valuation equals success, right?
• 1:19
  Speaker 0: Yeah I'm worth one hundred million.
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  Speaker 0: therefore i've made
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  Speaker 1: it Right.
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  Speaker 1: but Novik just cuts through that with really brutal example.
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  Speaker 1: He lays out this scenario A seed stage founder With two term sheets.
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  Speaker 0: Okay
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  Speaker 1: Offer A is ten million dollar investment at forty million dollar valuation Offer B Is the same Ten Million But At One Hundred Million Valuation.
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  Speaker 0: So on paper B looks like the clear winner.
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  Speaker 0: You take the higher number, you get less dilution.
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  Speaker 0: we're talking ten percent versus what?
• 1:48
  Speaker 0: twenty-twenty five.
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  Speaker 0: That's
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  Speaker 1: the trap.
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  Speaker 1: that's the valuation ego kicking in.
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  Speaker 1: so The founder and his example took offer be minimize Dilution but then you fast forward say Twenty four months.
• 1:59
  Speaker 1: the company is doing okay not amazing But ok.
• 2:03
  Speaker 1: they've hit three million an ARR.
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  Speaker 1: now They need to raise a series
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  Speaker 0: A And this is where the math just completely breaks down.
• 2:09
  Speaker 1: This Is Where The Valuation Overhang Kills Them.
• 2:11
  Speaker 1: To Raise A Healthy Series A You Really Need An Up Round, you know?
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  Speaker 1: Evaluation Higher Than Your Last One.
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  Speaker 0: But No One Is Paying Over a Hundred Million For A Company With Only Three Million In Revenue.
• 2:22
  Speaker 0: in This Market.
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  Speaker 0: That Multiple Just Doesn't Exist
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  Speaker 1: It Doesn'T.
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  Speaker 1: So They're Stuck they Can't Race Flat.
• 2:27
  Speaker 1: They Definitely Can't Raise Up.
• 2:29
  Speaker 1: so Their only Real Option Isn't Down
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  Speaker 0: Round Which Feels Embarrassing.
• 2:33
  Speaker 0: but...is it Fatal?
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  Speaker 0: I mean, does it actually kill the company?
• 2:36
  Speaker 1: It often does.
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  Speaker 1: And this is part people miss that Novik highlights—it's the anti-dilution clauses.
• 2:42
  Speaker 1: When you do a down round those clauses from previous rounds kick in to protect early investors.
• 2:47
  Speaker 1: They get issued tons of additional shares To make them whole
• 2:51
  Speaker 0: So they can more stock Which has come form somewhere.
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  Speaker 0: It
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  Speaker 1: comes with common stock pool.
• 2:56
  Speaker 1: The founders and employees In Novik example just wiped out founder & employee equity.
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  Speaker 1: the cap table was destroyed.
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  Speaker 0: And morale collapses because everyone's options are worthless,
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  Speaker 1: The company just spiraled and died so that better deal.
• 3:10
  Speaker 1: offered B. it was actually a poison pill whereas
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  Speaker 0: if they'd taken offer A the forty million valuation That three million in revenue would have easily supported a healthy upround.
• 3:21
  Speaker 0: They'd still be alive!
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  Speaker 1: The lesson is so clear survivability Is much more important metric than minimizing dilution.
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  Speaker 0: And speaking of dilutions, scared Maul was talking about this too.
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  Speaker 0: He made the point that founders just look at a headline number and they completely ignore these clauses.
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  Speaker 0: it seemed minor.
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  Speaker 0: You'd have
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  Speaker 1: huge cash implications!
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  Speaker 1: Maul actually did them math Something as simple as the difference between say ten percent versus fifteen percent dilution in a series A
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  Speaker 0: Right
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  Speaker 1: On a forty million euro exit.
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  Speaker 1: That tiny difference translates to two million euros.
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  Speaker 0: Two?
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  Speaker 0: Million Euros.
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  Speaker 0: That's life-changing money you just lost because you didn't model out a clause that took thirty seconds to read.
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  Speaker 0: It really
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  Speaker 1: shows that legal terms are mathematical formulas, they're not just text and you have run the math against what market actually requires.
• 4:09
  Speaker 1: now We saw some new data on this from Sepsilimi and Jose Escarramero.
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  Speaker 0: This was the SVB report The graduation data.
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  Speaker 1: Yeah it highlights power law in action.
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  Speaker 1: Top one percent of deals is getting third.
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  Speaker 1: The metric that really jumped out at me was the revenue jump needed.
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  Speaker 0: Okay, what are we talking about?
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  Speaker 1: Median Revenue At Seed is about two hundred and twenty thousand dollars To graduate to Series A... ...the median is now two point five million.
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  Speaker 0: Wait!
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  Speaker 0: That's an eleven X increase?
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  Speaker 1: Eleven point three X to be precise.
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  Speaker 0: That feels almost impossible.
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  Speaker 0: If you're a seed founder You have hit grand slam.
• 4:45
  Speaker 0: just get into next stage
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  Speaker 1: Which explains why failure rate so high.
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  Speaker 1: Peter Walker shared data showing that no seed cohort since the third quarter of twenty-twenty one has seen a graduation rate to series A of thirty percent or higher.
• 4:58
  Speaker 0: So everyone's getting stuck in that messy middle, a
• 5:00
  Speaker 1: massive bottleneck
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  Speaker 0: which I guess leads to the question how should founders change their thinking?
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  Speaker 0: I thought Alejandro Crimmins had a really useful framework for this right.
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  Speaker 1: he says you need to shift your mindset away from raising money and towards removing risk.
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  Speaker 0: unpacked out it
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  Speaker 1: well.
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  Speaker 1: instead of just saying i need five million dollars you map the money to a specific risk.
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  Speaker 1: Pre-seed capital is for removing market
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  Speaker 1: risks.".
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  Speaker 0: Is there problem to solve?
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  Speaker 1: Exactly!
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  Speaker 1: Seed Capital is For Removing Usage Risk.
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  Speaker 1: Will Anyone Actually Use My Solution?
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  Speaker 1: And then Series A is for Business Risk.
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  Speaker 1: Can This Thing Actually Make Money
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  Speaker 0: At Scale?
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  Speaker 0: So if You haven't proven people will use your product, don't even bother trying raise a series A.
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  Speaker 1: You got it.
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  Speaker 1: Investors aren't paying for potential anymore.
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  Speaker 1: They are paying for the verified removal of risk.
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  Speaker 1: You try to skip a step, you just hit that wall that Pierre Walker described
• 5:51
  Speaker 0: Which brings us to how even get in the room To make this case.
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  Speaker 0: We saw whole cluster Of posts on fundraise mechanics And big takeaway seems be The old spray and pray method is dead.
• 6:04
  Speaker 1: It's worse than dead.
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  Speaker 1: it actually counterproductive.
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  Speaker 1: now Prage Saxena had This brutal statistic.
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  Speaker 0: I saw one
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  Speaker 1: Founders spend about eighty percent of their fundraising time on cold outreach, but only that ten-percent of deals actually come from it.
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  Speaker 0: That's just a staggering inefficiency.
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  Speaker 0: spending eighty percent your energy to chase ten percent the results.
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  Speaker 1: So Sxena advice is to qualify harder.
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  Speaker 1: she suggests A really strict scoring system.
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  Speaker 1: you rate investors On a scale of one two three?
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  Speaker 1: One Is a perfect fit.
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  Speaker 1: they're active.
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  Speaker 1: Your sector no competitors in The portfolio.
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  Speaker 1: A three is a total long shot.
• 6:38
  Speaker 0: And you only email the ones first?
• 6:40
  Speaker 1: Exactly, focus on them!
• 6:42
  Speaker 1: She claims it cuts your outreach volume by half but doubles your response rate.
• 6:46
  Speaker 1: It's about doing research before you hit send.
• 6:48
  Speaker 0: But even if that happens there was warning from Kevin Jang.
• 6:52
  Speaker 0: You need to reset your internal clock.
• 6:55
  Speaker 0: He said fundraising takes two-three times longer than founders expect.
• 6:58
  Speaker 1: That's a huge psychological point right?
• 7:00
  Speaker 1: A long process used be a red flag sign of bad deal.
• 7:04
  Speaker 1: Now it's just the new timeline.
• 7:05
  Speaker 1: It's structural, committees are digging deeper LPs have more questions.
• 7:09
  Speaker 1: So
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  Speaker 0: a six-month process isn't a failure?
• 7:11
  Speaker 0: It's just The process.
• 7:13
  Speaker 1: Right.
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  Speaker 1: and while you're in that slog You're pitching constantly.
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  Speaker 1: And Chris Topman brought up this concept That I have to say...it terrified me A little bit..the invisible scorecard!
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  Speaker 0: It is the Scorecard you never get To see.
• 7:26
  Speaker 0: Topmans point Is that investors aren't Just listening to your story.
• 7:30
  Speaker 0: They Are mentally checking off specific boxes And he says they'll often tick three boxes that kill the deal before you've even left the room.
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  Speaker 1: What's an example?
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  Speaker 1: Like what kind of box are you failing?
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  Speaker 0: it could be anything cap cables too messy sounder doesn't know their cat market size is just to niche.
• 7:46
  Speaker 0: and You're still talking about your five-year vision, but in there head They marked you as a no three minutes ago.
• 7:51
  Speaker 1: Wow So you need to address those invisible objections up front.
• 7:55
  Speaker 1: But let's whip it around.
• 7:56
  Speaker 1: we talk a lot about investors judging founders.
• 7:59
  Speaker 1: Sharon Maroon argues founders need to be judging investors just as harshly, especially on what she calls crisis character.
• 8:06
  Speaker 1: Ah
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  Speaker 0: the reverse diligence!
• 8:08
  Speaker 0: I like this.
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  Speaker 0: her argument is that any investor looks good when things are going up and to the right.
• 8:13
  Speaker 0: The real product you're buying with VC money Is how that partner acts When Things Go Wrong.
• 8:16
  Speaker 1: So What Does Bad Crisis Character Look Like?
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  Speaker 0: Panic Forcing defensive moves Just To Protect Their Own Optics Blocking Bridge Rounds Unless They Get Predatory Terms.
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  Speaker 0: Maroon's Point Is That Staying Power Just the ability to be stable and supportive in a crisis is the most important value add an investor has.
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  Speaker 1: So you should ask them, tell me about a portfolio company that almost failed?
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  Speaker 1: What do you
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  Speaker 1: do?".
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  Speaker 0: And if they give you some generic vague answer... That's huge red flag!
• 8:43
  Speaker 1: Definitely Let's shift a bit into tools because AI really starts rewire the actual workflow of VC.
• 8:51
  Speaker 0: It is moving past the hype and into utility.
• 8:54
  Speaker 0: Greg Bappy highlighted a tool called Deep Flows that's trying to solve the warm intro problem we were just talking about.
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  Speaker 1: How does it work?
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  Speaker 1: Is is more than just database?
• 9:02
  Speaker 0: It's deeper, it maps affirms entire network linked in emails calendars and creates live-intro engine.
• 9:10
  Speaker 0: so instead of guessing who knows who system tells you best path to founder makes relationships a queryable asset.
• 9:16
  Speaker 1: That smart!
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  Speaker 1: And Val Bikanov is seeing a similar thing with how portfolio companies are reporting back to their investors.
• 9:22
  Speaker 0: This is fascinating, usually investor updates or just you know a static PDF sitting in an inbox.
• 9:29
  Speaker 1: Right!
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  Speaker 1: Bikanoff says AI is now parsing those updates to automatically extract the hard data revenue burn runway and structuring it.
• 9:37
  Speaker 0: So no more manually entering data into a spreadsheet for the VC.
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  Speaker 1: Exactly, and it lets them do instant benchmarking across the whole portfolio.
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  Speaker 1: You can see right away if one company's CAC is spiking compared to others.
• 9:49
  Speaker 1: It turns narrative in intelligence.
• 9:51
  Speaker 0: Before we hand keys over to robots Destiny Iguche had an important counterpoint.
• 9:57
  Speaker 0: She cites data from seven percent ventures showing that eighty percent investments still come from trusted networks.
• 10:03
  Speaker 1: It's a good reality check.
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  Speaker 1: The tools make the process more efficient, but you can't automate trust.
• 10:08
  Speaker 1: not yet.
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  Speaker 1: anyway You can use AI to find the path But a human still has to walk it.
• 10:13
  Speaker 0: and there's another AI angle here.
• 10:15
  Speaker 0: It's not about the investors It's about the companies they invest in.
• 10:19
  Speaker 0: Paul Press introduced this term that I think every PE and VC pro needs to know Architectural debt.
• 10:25
  Speaker 1: This is so critical.
• 10:27
  Speaker 1: we all know about technical debt.
• 10:28
  Speaker 1: you know, messy code.
• 10:29
  Speaker 1: This is different.
• 10:30
  Speaker 1: Architectural debt today is about being AI embedded versus AI native.
• 10:35
  Speaker 0: Okay what's the difference?
• 10:37
  Speaker 1: AI Embedded is when a legacy SaaS company just bolts a co-pilot onto their old software.
• 10:43
  Speaker 1: AI Native Is A Company Built From The Ground Up With AI As Its Core.
• 10:47
  Speaker 0: So You're Buying A House That Looks Nice But The Foundation Is Made Of Wood While All The New Houses Are Being Built On Steel.
• 10:54
  Speaker 1: Perfect analogy and press warns that investors are buying these companies with massive architectural debt not realizing their foundation is obsolete.
• 11:01
  Speaker 1: The cost to fix.
• 11:02
  Speaker 1: That it's so high the company might just be a zombie.
• 11:05
  Speaker 0: Let's move to our last cluster then regional momentum Because the map of where all this capital was flowing is changing really, really fast.
• 11:13
  Speaker 1: It's a global reshuffling.
• 11:15
  Speaker 1: I mean look at Europe.
• 11:16
  Speaker 1: Glen waters pointed out total dominance of the UK.
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  Speaker 1: right now they raised twenty three point six billion dollars in twenty-twenty five
• 11:24
  Speaker 0: to put that into context.
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  Speaker 0: That's more than Germany, France Switzerland and the Netherlands combined
• 11:29
  Speaker 1: it is.
• 11:29
  Speaker 1: but Waheed Raheem notes that Germany is closing that gap fast.
• 11:34
  Speaker 1: And Sophia C pointed a really specific driver for this European momentum
• 11:38
  Speaker 0: US immigration policy
• 11:40
  Speaker 1: the restrictions.
• 11:41
  Speaker 1: The new U.S.
• 11:42
  Speaker 1: rules in twenty-twenty six are acting as a repellent for global talent, so founders who would have gone straight to San Francisco or now?
• 11:49
  Speaker 1: setting up and Berlin or London or Paris was
• 11:51
  Speaker 0: like a talent donation from us Europe it
• 11:53
  Speaker 1: is.
• 11:54
  Speaker 1: but the most aggressive growth we're seeing isn't the meaner region?
• 11:57
  Speaker 0: absolutely Mohammed Nwido and Jonas anchor both had data on this.
• 12:01
  Speaker 0: Saudi Arabia captured forty percent of all means easy funding in twenty twenty four.
• 12:05
  Speaker 0: But they key phrase that stood out to me was deployment urgency.
• 12:09
  Speaker 1: It's not just that they have the money, it is that they HAVE TO SPEND
• 12:12
  Speaker 0: IT.
• 12:13
  Speaker 0: Right.
• 12:13
  Speaker 0: Jonas Anker says these funds have mandates to deploy sixty-to seventy percent of their capital in three or four years!
• 12:20
  Speaker 0: They're under pressure to put money into work – this isn't patient capital….
• 12:24
  Speaker 1: …it's active urgent capital and its going into tech.
• 12:28
  Speaker 1: Farah El Nalawi noted over eight hundred million went into AI
• 12:32
  Speaker 0: which tells you there buying future infrastructure.
• 12:36
  Speaker 0: And speaking of new regions, Viktor Orlovsky put a spotlight on Uzbekistan.
• 12:41
  Speaker 1: I have to admit i've not been tracking the Uzbek VC market that closely...I
• 12:44
  Speaker 0: don't think most people have.
• 12:45
  Speaker 0: That's why it is so interesting.
• 12:46
  Speaker 0: They went from four funds To eleven funds almost overnight and they got one-point-one billion dollar.
• 12:52
  Speaker 0: fintech unicorn It just proves model is decentralizing.
• 12:55
  Speaker 0: You can build a unicorn in Tashkent now.
• 12:57
  Speaker 1: So let's wrap with structural change to industry itself.
• 13:01
  Speaker 1: Julie Kynes had this take On.
• 13:03
  Speaker 1: bifurcation of VC firms feels really important.
• 13:07
  Speaker 1: The hollowing out of the middle, it's a great observation kind sees the market splitting in two on one end.
• 13:13
  Speaker 1: you have to big platforms.
• 13:15
  Speaker 1: your Sequoias Your A-Six Teens is huge funds,
• 13:18
  Speaker 0: huge teams and On the other hand
• 13:20
  Speaker 1: media brand investors the solo GPs podcasters operators who Have massive personal brand niche expertise.
• 13:28
  Speaker 0: so what happens?
• 13:29
  Speaker 0: To that generic fund?
• 13:30
  Speaker 0: In the Middle?
• 13:31
  Speaker 0: we invest in series AB to B SAS Fund with no brand and No huge balance sheet.
• 13:37
  Speaker 1: They get squeezed out, they can't compete With the big guys on capital And they can' t compete The Brand Guys On deal access.
• 13:42
  Speaker 0: And Myrtle Alaco says Even angels are reacting to this right?
• 13:45
  Speaker 1: Yeah she's seeing Angels shift To just becoming LPs in funds.
• 13:49
  Speaker 1: Because of the math Of doing two or three angel deals a year It doesn't work.
• 13:53
  Speaker 1: for Hitting those power law returns You need A big portfolio.
• 13:56
  Speaker 1: So instead of picking stocks Their picking funds.
• 13:58
  Speaker 0: If we bring This all together if you're Founder Fundraising takes twice as long and you better audit your architectural debt.
• 14:08
  Speaker 1: And if you're an investor, You need to decide If you are a platform or brand and should probably be looking for deals in Riyadh Or Tashkent Not just San Francisco.
• 14:18
  Speaker 0: And above all For everyone It comes down to discipline.
• 14:22
  Speaker 0: The era of easy money covering up mistakes is just over.
• 14:25
  Speaker 1: That's the clear message, a sobering one but necessary one.
• 14:29
  Speaker 0: If you enjoyed this episode.
• 14:30
  Speaker 0: new episodes drop every two weeks.
• 14:32
  Speaker 0: Also check out our other additions on private equity M&A and strategy in consulting.
• 14:37
  Speaker 1: Thanks for listening.
• 14:37
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