#65: WTF is Going On in VC (+ New Fund Model Data)

April 25, 2023

Hi Everyone! 👋 Welcome to the new members of @TheFundCFO crew! Appreciate you reading and sharing #60 Emerging VC Fund Tech Stacks, our most-read post in 2023. Check it out!

Every Tuesday/Thursday, we bring you actionable tools, real-world experiences, and insider insights for #VC CFOs/Finance Pros and fund managers, #LP investors, and general industry enthusiasts/people who want to learn :).

“The best way to predict the future is to create it.” -Alan Kay

WTF is Going On in VC (+ More Fund Model Data)

We’re through four months of the year and people are still trying to figure out what is going on in venture capital in 2023! We tried to tackle this in our recent post, #62: VC Market Data for Fund Model Updates, but the story keeps getting more nuanced as we get more data and insights.

If incorporated correctly, the data shared in this post should help you update your fund models and make better decisions in 2023. Read on my friends!

Today’s post includes insights from a number of data sources, articles, and recent podcasts. It aggregates some of of the top takeaways for VC CFOs/Finance Pros and fund managers. Our friend Harry Stebbings recently interviewed the CEO of AngelList, Avlok K.. Avlok shared AngelList insights from thousands of VC fund vehicles and portfolio companies on their platform, many of which are included below.

Resource: The State of U.S. Early-Stage Venture: 1Q23 (AngelList)

Top Takeaways, Insights, Data Points for Fund Model Updates

Average pre-money valuation by round (Q1’23): $10m pre-seed, $18m seed, $57m Series A, $150m Series B
Venture is in The Depth of the Bear Market Right Now: Deal volume in Series B down 50%+, Series C has dropped off a cliff
Pre-seed and seed prices remain “the same”
Anecdotally, later stage investors are moving up-market from B/C to Seed/A. “Check writers coming down to Seed/A from multi-stage funds are often principals/associates. Partners are saying I’m underwater/fighting fires w/ my board positions, go be active in earlier stage markets w/ smaller checks. These check writers are less price sensitive and more excited than ever.”
Time to raise pre-seed/seed: increasing, as well as time to mark-up (33% less than expected - there’s a freeze in the market)
Outlook for the next six months: not much changing. You can earn ~5% risk-free right now. Need lower interest rates and lower inflation, better macro for VC
Institutions slowed commitments in second half of 2022 but are coming back in 2023, likely driven by macro stability and technology cycle potential
AI, technology giving rise to a new class of venture capitalists - the 10x VCs