Peter Bookman’s Post

That’s very accurate. PE Buyout Funds. Publicly traded parent companies with corporate VC arms scooping up the most profitable sector-specific subsidiaries. Fund of Funds get more popular and much more strategic. Family Offices dominate the landscape. Not investment advice.

Successful ventures that have achieved Product-Market Fit and have scaled their operations will probably face this new reality: 𝗧𝗵𝗲 𝗻𝗲𝗲𝗱 𝗳𝗼𝗿 𝗹𝗶𝗾𝘂𝗶𝗱𝗶𝘁𝘆 𝗳𝗿𝗼𝗺 𝗽𝗿𝗼𝗳𝗲𝘀𝘀𝗶𝗼𝗻𝗮𝗹 𝗶𝗻𝘃𝗲𝘀𝘁𝗼𝗿𝘀. As explained by Mark Suster, this liquidity is most likely to come from Private Equity firms, who have the expertise to evaluate companies based on long-term fundamentals, much like the approach taken by Warren Buffett (rather than the speculative one from crypto-traders 😉). Valuation is not a one-time event but a dynamic process that follows a chain-like logic, where each link is interconnected. An irrational (high) valuation early in the chain can have significant repercussions later on, leading to fewer financing or liquidity options - as professional investors will not accept it. You may avoid this by establishing a clear valuation roadmap that demonstrates a consistent risk/return rationale for each type of investor, from business angels and venture capitalists to Private Equity firms and the Public Market, spanning from the first funding round to the eventual public offering. #EntryPriceMatters #ValuationRoadmap #PrivateEquity

The new norm condensed in one short clip by the always insightful Mark Suster Key implications for founders: * Build for profitability with an extremely lean team * Don’t take VC funding to build a product. Only take it to scale something that is starting to work * Generate enough revenue to pay yourself a decent salary * Assume that your best exit option will be at around 5x ARR. Be prepared for 2-4X, hope for 7-8X

VC exits next 10 years - much fewer IPOs - much smaller strategic M&A - PE will become the norm I explain in this clip how it will affect VC Full episode: https://lnkd.in/gaJ-TWZE

Great insights about exits the next few years

If there are fewer opportunities, you need better insights to get the investment right. Like thorough software due diligence to provide at least one thing you can rely on. #technology #investing #duediligence

Stock exchanges, like NYSE, may disagree on the IPO attraction … what do founders, esp in the G20 countries, want? Is it aligned to key investors? Entry price function of the Froth of the market and, if led by tech sector, will have bias towards IPO… listing also creates currency for acquisitions, enticing value add people, etc…

If you're a startup employee or founder, it's important to try to get a sense for where VC and financing trends are going. If you're a creative or if finance terminology may feel a bit intimidating, but it does affect how startups hire and manage their people resources. AND what it means if you're evaluating start-up equity for future growth. Here's my translated TLDR: *Chances of IPO is much less, and this is likely going to influence how start-ups are resourced as well. *Most start-ups are likely to leverage acquisitions as their exit strategy. *PE means private equity...translation: (I think) this could stifle "blue ocean" markets and tech disruption, since there's a magnified focus on profitability and ops efficiency. That's different from traditional VC funding, where they're willing to assume more risk in exchange for disruptive market opportunities.

Interesting summary

Paying rational prices in venture capital matters (now)! Here is a good explanation on why: