Best of LinkedIn: Venture Capital CW 47/ 48

00:00:00: Provided by Thomas Allgaier and Frennus, based on the most relevant LinkedIn posts about venture capital in CW-Forty-seven and Forty-eight, Frennus specializes in B-to-B market research for venture capital teams, providing landscape screenings and startup segmentations with a strong focus on the tech space.

00:00:17: Welcome back to the deep dive.

00:00:19: You know, our mission today is really to filter the collective signal coming from the global venture capital landscape.

00:00:25: After months of market adjustment, what we're seeing across weeks forty seven and forty eight suggests the reset is what's largely complete.

00:00:33: That's new normal.

00:00:34: It is.

00:00:35: It's a market that is.

00:00:36: far more disciplined, demanding real fundamentals, but it remains incredibly ambitious, specifically when it comes to technologies that promise massive structural disruption.

00:00:46: Absolutely.

00:00:47: We're seeing a powerful inflection point here.

00:00:49: Today, we're going to unpack the top venture capital insights we've seen, clustering them into four crucial themes that really define the state of play right

00:00:56: now.

00:00:57: And we'll start with the macro shifts.

00:00:58: Exactly.

00:00:59: We'll start with the macro shifts and the changing market pulse, then jump into the AI imperative, address the, let's call it sober reality of exits and deal mechanics, and finally, look at the updated founder playbook that's required to actually win capital today.

00:01:14: Okay, so let's jump straight in, theme AR.

00:01:17: The macro and market pulse.

00:01:19: I think the foundational narrative we keep hearing, and this affects M&A activity as well, was summarized so sharply by Neenand Karp.

00:01:27: What did he say?

00:01:27: He said, capital is getting smarter, not softer.

00:01:31: And that's not just a clever phrase.

00:01:32: It really dictates allocation.

00:01:34: Investors are no longer just buying growth.

00:01:36: They're rewarding proven fundamentals.

00:01:38: Things like real, visible revenues and defensible unit economics.

00:01:42: Precisely.

00:01:43: And that immediately dictates where the money flows.

00:01:45: We're seeing persistent strength in the early stages, where the risks are a bit smaller.

00:01:50: But for late-stage rounds, the gates are much tighter.

00:01:52: Alson Cooper and Mark Leahy both underscored that.

00:01:54: It's just extreme valuation discipline now.

00:01:57: The growth at any cost era is officially over.

00:02:00: It is.

00:02:01: And this smarter capital is also driving a diversification strategy.

00:02:05: Sindeep Balaji noted that venture activity is globally over-indexed.

00:02:09: So when concentration risk gets too high, investors have to branch out.

00:02:13: And we see that maturity playing out in Africa, for instance.

00:02:16: Brett Martucci reported the continent is moving from being seen as a frontier market to a formally investable region.

00:02:26: And what's important there is the sophistication of it all.

00:02:28: It's moving beyond just the traditional fintech concentration into these big structural sectors.

00:02:33: Right.

00:02:34: Energy, health tech, climate solutions, things that signal real ecosystem maturation.

00:02:39: It does.

00:02:40: And if you connect that geographical shift to emerging markets, you see Central Asia accelerating very quickly.

00:02:46: Vladimir Norov highlighted that region, citing over ninety-five million in VC deals in twenty-twenty-four.

00:02:52: With proven unicorns like Uzum and Higgs field.

00:02:55: So the scale and potential is real.

00:02:56: It is.

00:02:57: But if you're a VC moving into a market like that, the differentiator isn't just the size of your check.

00:03:02: It's the operational muscle, right?

00:03:04: Exactly.

00:03:04: You have to lead with hands-on support governance recruiting market entry.

00:03:09: because capability is what wins the right to allocate capital there.

00:03:12: But shifting back towards the West, we are seeing some localized caution.

00:03:16: Aaron Tunning noted that European VC fundraising hit a decade low in the first half of twenty twenty-five.

00:03:22: That's a pretty significant warning sign.

00:03:24: It is, but even there you find these pockets of resilience.

00:03:27: Paul Mage, focusing on Poland, he anticipates continued growth in pre-seed and seed deals.

00:03:33: And why is that?

00:03:35: It's largely

00:03:35: because new public backed funds are starting to become active.

00:03:39: So, you know, while the big institutional fundraising is a challenge, that foundational early stage layer is being shored up.

00:03:46: It's a very complex picture.

00:03:47: Okay, let's talk about theme two, the AI imperative.

00:03:50: Because this is where all the ambition and the massive capital is flowing.

00:03:53: Agatha theory reported that close to fifty percent of recent European rounds were AI related.

00:03:57: Half of them.

00:03:59: And that concentration is why Q three AI VC deal value hit.

00:04:04: what was it, fifty-four point eight billion dollars, according to Richie Putnam and Demetri Zablin.

00:04:09: And this is where it gets really interesting for anyone modeling these companies.

00:04:12: How so?

00:04:13: This level of activity means the bar for funding has moved dramatically upward, basically overnight.

00:04:18: Okay, so let's unpack that.

00:04:19: For someone running diligence right now, what does that elevated bar actually look like in cold hard metrics?

00:04:27: Well, John Mech's analysis found that the metrics that secured a seed round in twenty twenty one would just get you rejected today.

00:04:34: For seed rounds now, VCs want to see a minimum.

00:04:37: of half a million to a million dollars in annual recurring revenue.

00:04:40: Wow.

00:04:41: And for Series A?

00:04:42: For Series A, they're demanding two to six million in ARR.

00:04:44: That is a

00:04:45: brutal acceleration.

00:04:46: What's driving that huge

00:04:48: jump?

00:04:48: It's the complexity and the competition.

00:04:50: As Ryan Ellis stresses, AI has to be the strategic foundational part of the product, not just some tacked on feature.

00:04:56: And building that requires heavy capital and proprietary gate emotes just to compete.

00:05:01: So money alone isn't enough.

00:05:03: VCs demand structural defensibility.

00:05:05: Sunchoy insisted the investment logic is about backing systems that can scale without just collapsing.

00:05:11: Right.

00:05:12: And Itamar Novik points out.

00:05:13: they're looking for proprietary data, unique IP, and real, measurable efficiency gains for the customer.

00:05:20: It's moved way beyond the height.

00:05:22: This naturally leads us to the AI bubble question.

00:05:25: Andre Brodsky analyzed this, and he notes that tech revolutions tend to follow a pattern, right?

00:05:30: Installation, bubble, crash, deployment.

00:05:32: We might be approaching that frenzy peak phase.

00:05:34: But

00:05:35: the case against a traditional dot com style crash?

00:05:38: where all the value just vanishes, it seems incredibly strong here, doesn't

00:05:42: it?

00:05:42: It is.

00:05:43: Unlike the dot-com era, today's AI leaders are massively profitable.

00:05:47: I mean, look at NVIDIA, they're boasting fifty-three percent net margins, and the scaling rates are unprecedented.

00:05:52: Startups hitting a hundred million ARR in a year and a half.

00:05:55: Compared to seven years for cloud companies?

00:05:57: Exactly.

00:05:58: So Bradesky's thesis is that a crash won't destroy value, it'll just redistribute it based on utility.

00:06:04: The real challenge for investors is figuring out which business models survive the inevitable repricing of risk.

00:06:10: And that dominance is also reshaping the talent market.

00:06:13: Right.

00:06:13: Michi Putnam highlighted a talent bifurcation.

00:06:16: Yes.

00:06:17: One lane for the elite researchers building horizontal platforms think open AI and a whole other lane for domain experts who are deploying AI into specific vertical use cases.

00:06:28: Hiring strategy is now a critical part of the defensibility thesis.

00:06:32: All right, let's shift focus.

00:06:33: Theme three, liquidity, exits, and deal mechanics.

00:06:37: For anyone in M&A or private equity, this is the necessary reality check.

00:06:41: It is.

00:06:42: Greg had pointed out a really powerful statistic.

00:06:45: Ninety percent of software company exits are under a hundred million dollars, and often there's sub fifty million.

00:06:50: That

00:06:51: single data point is just so crucial.

00:06:52: It challenges the whole singular focus on building unicorns.

00:06:55: So if nine out of ten don't get there, where does the liquidity for investors come from, especially with IPOs being so slow?

00:07:01: It comes from the secondary market.

00:07:03: It's the release valve.

00:07:04: Kevin Dowd noted that VC secondaries are hotter than ever.

00:07:08: They topped sixty-one billion in transaction value over twelve months.

00:07:12: That's more than all the VC-backed IPOs in that same period.

00:07:16: Right.

00:07:17: LPs and funds are thirsty for distributions and secondaries are providing that systemic relief.

00:07:22: What's fascinating is how delicate these transactions are.

00:07:25: Camilla Molina-Nysim demonstrated how just publicly signaling you want to buy shares in a pre-IPO company can instantly inflate the price by twenty percent.

00:07:34: And kill the deal.

00:07:35: Yeah.

00:07:36: Exactly.

00:07:36: This dynamic is driving intense interest in confidential matching and dark pool environments.

00:07:42: Which

00:07:42: are essentially just non-public negotiated transactions.

00:07:45: to prevent that signaling effect.

00:07:47: A necessary tool for large secondary deals today.

00:07:51: But shifting to primary deal mechanics, founders need to be extremely careful with term sheets.

00:07:56: Alex Turnbull highlighted the risk in participating preferred clauses.

00:07:59: And this is so critical.

00:08:01: What makes that clause so dangerous?

00:08:03: Participating preferred means the investor gets their money back, sometimes with a multiplier, before the remaining equity gets split among everyone else.

00:08:11: Including

00:08:11: the founders.

00:08:12: Including the founders.

00:08:14: Turnbull cited a real example where a company had a celebrated a hundred million dollar exit.

00:08:19: but the founding team ended up splitting only five million dollars.

00:08:22: That's a terrifying scenario.

00:08:24: The headline number means nothing if the term sheet isn't clean.

00:08:27: Exactly.

00:08:28: For a baseline, Peter Walker's benchmarks on Cardiff's show, a series A today, means selling about eighteen to twenty percent of the business.

00:08:36: And research from Nathan Beckord suggests there's a sweet spot for raising capital.

00:08:40: What's that?

00:08:41: Unicorn probability actually peaks when founders raise between one hundred eighty and two hundred million dollars.

00:08:47: If you raise too much, you create this valuation overhang that can make the next round impossible.

00:08:53: Less is often more.

00:08:54: That brings us to our final theme.

00:08:56: The founder playbook and strategic alignment.

00:08:59: The message here seems to be all about operational rigor.

00:09:02: It is.

00:09:03: Patrick Casey put it very plainly.

00:09:05: Investors don't invest in pitches.

00:09:07: They invest in founders who can operate.

00:09:10: Calls always turn into systems conversations.

00:09:13: You know, testing unit economics, stress testing pricing.

00:09:16: The story and the system have to be perfectly in sync.

00:09:19: Jorian Hoover advises founders with rapid ARR growth, say, three and a half million in ten months, that they have enormous leverage.

00:09:27: So they shouldn't rush into the first inbound offer.

00:09:29: No.

00:09:29: They need to run a high-quality structured process to secure the right long-term partner, not just the fastest

00:09:36: check.

00:09:36: And that process quality is directly linked to communication.

00:09:39: Nicole DiTomasso insists that the founders who communicate best raise the fastest, using these short structured updates as an operating system.

00:09:47: It builds continuous trust and unlocks support long before a check is even on the table.

00:09:52: But this raises a question.

00:09:54: If you have leverage, should you always take the highest valuation?

00:09:57: Dr.

00:09:58: Frederick de Boiremon argues strongly against it.

00:10:01: He stresses the best deal isn't always the highest price, citing the famous benchmark bay deal where trust and guidance outweighed valuation.

00:10:08: And on the flick side, Vili Ilchev warns that a VC making a super quick decision without much diligence can be a red flag.

00:10:15: A very bad sign.

00:10:17: It might signal the investment is immaterial to them, which leads to misalignment.

00:10:21: and no support later on.

00:10:23: That's a powerful thought.

00:10:24: Lastly, on corporate VC, Alejandra Cremades emphasizes that CVC success hinges on strategic alignment, not just financial returns.

00:10:33: Which is why Alberto Onetti argues CVC should report to R&D or the CTO, not the CFO.

00:10:39: The CFO's focus will always default to financial returns, which can jeopardize the whole strategic mandate.

00:10:45: And at the end of the day, as Sharon Maroon reminds us, we have to keep it all in perspective.

00:10:49: Founders are the real engine here.

00:10:51: Investors are contributors, but the credit belongs to the builders.

00:10:54: If you enjoy this deep dive, new additions drop every two weeks.

00:10:58: Also check out our other additions on private equity, M&A, and strategy and consulting.

00:11:02: So a final thought for you to consider.

00:11:04: Given that this AI era demands unparalleled capital efficiency and defensibility, how should professionals in M&A or consulting adjust their diligence models when they're reviewing AI companies that scale that, as Andrei Brodsky noted, the fastest rate in tech history, yet still face this impending reality of risk repricing and the end of the valuation frenzy?

00:11:24: Thank you for joining us for this deep dive into the latest VC market signals.

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