Managing Partner Welt & Marktlink Capital | Investing in Venture Capital & Private Equity funds
I spent a fantastic week in the US, meeting with 50+ top tier funds and emerging managers in NY, LA and SF. Here are my 12 takeaways on the Venture Capital market based on the meetings: 𝐀𝐫𝐭𝐢𝐟𝐢𝐜𝐢𝐚𝐥 𝐈𝐧𝐭𝐞𝐥𝐥𝐢𝐠𝐞𝐧𝐜𝐞 1) 𝘈𝘐: AI is seen as the fifth most significant technological advancement in human history (after the wheel, steam engine, combustion engine and the internet). 🧠 2) 𝘝𝘢𝘭𝘶𝘦: There is some consensus that most LLMs will not create value, but that value accrues at the stack's top (application layer) and bottom (chips). 📊 3) 𝘊𝘰𝘮𝘱𝘶𝘵𝘦: In the world of AI, there is a growing scarcity of H100s and VCs that can find proprietary access, have a deal-winning advantage with hot startups. 💾 𝐒𝐭𝐫𝐚𝐭𝐞𝐠𝐢𝐜 𝐔𝐩𝐝𝐚𝐭𝐞𝐬 4) 𝘚𝘦𝘤𝘵𝘰𝘳𝘴: Biotech (especially in relationship to AI), crypto (the winter is over), and deeptech (mainly climate tech and robotics) are sectors to watch over the next years. 👨🔬 5) 𝘔𝘰𝘥𝘦𝘭𝘴: More PE-like models are being pioneered in ventures (e.g., buying assets in niche industries that can be easily optimized but hardly penetrated by software). 👩💻 6) 𝘗𝘳𝘦-𝘱𝘳𝘦-𝘴𝘦𝘦𝘥: Seed funds are going earlier and earlier to find the best founders by building sector-specific residencies, incubation programs, and people equity schemes. 👨🎓 𝐅𝐮𝐧𝐝 𝐃𝐲𝐧𝐚𝐦𝐢𝐜𝐬 7) 𝘝𝘊 𝘧𝘶𝘯𝘥𝘴: >90% of established funds are going 'back to their core' (i.e., smaller funds, minor focus, minor team) after the 2021-2022 bubble burst. There are a few brand names going bigger, and the consensus is that they can best evolve and grow. 🔍 8) 𝘚𝘱𝘪𝘯𝘰𝘶𝘵𝘴: there is an increasing number of spinouts of successful (especially Gen Z) investors from top-tier funds (both solo GPs and new multi-partner firms), creating new investment opportunities; 🕷 9) 𝘠 𝘤𝘰𝘮𝘣𝘪𝘯𝘢𝘵𝘰𝘳: YC's hegemony is still rising (also due to a return to old strategy and new leadership). It's the #1 place to start or boost a young founder across the US. 🏆 𝐌𝐚𝐫𝐤𝐞𝐭 𝐔𝐩𝐝𝐚𝐭𝐞𝐬 10) 𝘝𝘰𝘭𝘶𝘮𝘦: The volume of deals is picking up significantly after a quiet 2023, not only seed and early but also growth (incl. down rounds, structured deals, etc.) where much of the 2021 pain still needs to be taken. 🔊 11) 𝘗𝘳𝘪𝘤𝘦: Price at seed is two sided story: for 'normal' companies, it's back to pre-2021 ranges, but for AI talent (e.g., Google Deepmind, FAIR, OpenAI), there is a (very) steep AI bonus. 💵 12) 𝘝𝘪𝘯𝘵𝘢𝘨𝘦: The 2023-2024 vintages will be great for VC with (on average) lower entry prices, technological tailwinds (e.g., AI), and fewer but more experienced VC investors ('the tourists have left'). 📈 * Also, great to be in a driverless taxi for the first time in my life.
Thanks for sharing! Any specific application layer AI startups that investors were raving about?
Yoram Wijngaarde
2mo
Which city and which app was the driverless taxi? :)
ManyMangoes 🥭
2mo
Impressive insights! To multiply your strategic impact, consider integrating a multi-variable testing approach beyond the conventional, like A/B/C/D/E/F/G testing, to truly understand varying investor behaviors and preferences. This can unlock new growth levers and optimize your outreach methodologies innovatively.
Marcel Burger
2mo
Thanks for sharing your insights. Would love to learn more about why you think crypto is a sector to watch over the next years and what you think about the combination of crypto and AI. If you’re around in Amsterdam, pls ping me, so we can share views.
Anke Huiskes
2mo
Thanks for taking the time to share the insights Jaap 🙏
the driverless taxi got me!
Learco Finck
2mo
thanks for sharing, nice and informative summary
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Internist | Impact-Driven Health & Tech Executive | Entrepreneur | Board Member
2moThanks for sharing and I believe A16Z deserves a mention between pts 8 and 9, for raising the largest AI - VC fund to date in excess of $7B.