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What's 🔥 in Enterprise IT/VC #308
Seed market on 🔥 as round sizes & valuations adjusted faster than ever, 🪃 effect in venture
Delian captures what’s happening well…I would add that this is the busiest fundraising season I’ve seen in 26 years of investing, yes 26 years!
While we (boldstart) took a number of pitch meetings this summer and have our largest fund ever at $192,168,111 to lead rounds at company formation, to date we have only written two checks, one $400k and the other $600k! That has all changed the past couple of weeks as we are more 🔥 up than ever with 3 term sheets in action in new categories of dev tooling, crypto infra & SaaS. I can’t wait to share these with all of you!
So what has changed? IMO while valuations still have more to fall in the public markets, the long lag factor effect between public market pricing and early stage pricing has finally adjusted and taken hold. When public markets get 🔨, late stage valuations are the first to go. That adjusted almost instantaneously as there is very little growth investing these days. What usually takes much longer is for this to trickle down to seed and A rounds. Well guess what? It’s happened faster than ever as the smart founders understand the that raising too much capital at too high a price can impact their future.
$5M-8M seed rounds used to be the norm pre-crash and in the last few weeks, most of what we saw was in the to $2-4M range which makes sense as downward pressure on round sizes and valuations have trickled down from the publics to A rounds and now seed. As founders at the earliest stages have now internalized what a great round today can look like, we are all busier than ever. While no one knows where the bottom is when it comes to valuations and many believe that there is more pain to come, I do believe we are at the bottom for seed round sizing and pricing. Also, if you believe what Jon Sakoda from Decibel has to say, this is going to be an interesting finish to 2022 as a wall of 💰 is waiting to be unleashed over the next couple of years.
One other reflection I had this past week was around the importance of thinking LT versus ST when it comes to partnering with founders. Read 🧵 and comments.
2 of the 3 term sheets we currently have in play are all heavily influenced by relationships we established in Fund II dating back to 2012! Both are cofounders of new companies, both had some early struggles where we had to step up and lead internal bridge rounds, and now we have had the privilege and honor to get the first look at their next startups. When it comes to both Snyk and Superhuman, both of those relationships were also started in Fund II and in those situations, each founder sold early before raising an A round (to Akamai and LinkedIn respectively). While we did make a nice return, it certainly wasn’t the 20x outcome we were hoping for. That being said, this is something the founders wanted, and we did all that we could to help them realize their initial exits. Fast forward, and I am truly 🙏🏼 that we had the opportunity to not only brainstorm on the initial ideas for Snyk and Superhuman, but also lead their initial rounds at company formation. This is just a reminder for investors that the first check you write with a new founder relationship is hopefully the beginning of a much longer journey. Make decisions with that framework and the 🪃 will come back many times over. Founders, please also choose your initial investors carefully as if done right, it will hopefully be the beginning of a many company partnership and friendship.
As always, 🙏🏼 for reading and please share with your friends and colleagues.
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What is ARR vs. CARR vs. Revenue? lots of founders get confused
Enjoy every second you can with your kids before 18 as it goes by fast!
Speaking of devtools, super excited for Steadybit to come out of stealth- shift ⬅️ chaos testing and resiliency engineering - more here from my partner Eliot Durbin and here’s the why we invested post
Web3 cos drowning under their own data - wallets, txs, DeFi + other data sources 📈 yet all managed through spreadsheets. 🔥 up to lead the intiial round of funding from day one in Tres - building 1st Web3 financial data lake. Here’s more on why we invested from the first outreach
😲 Crypto infra + security is for real as Fireblocks on 🔥 (a boldstart port co) and also great to have founder Michael Shaulov as angel in Tres.finance round 👆🏼
Tomasz Tunguz from Redpoint shares slides on The State of Web3 in 2022 through Data
Developers push about 300,000 smart contracts to Ethereum every month, a figure that has been flat for the last five months.
Roughly 5,000 developers push code to web3 every week, down 20% from the beginning of the year. This number needs to increase significantly for the ecosystem to thrive.
The power of community as a moat in enterprise software - Github’s influence on new tools like Figma - more to come…(from Ron Miller TC+)
“Mostly, it was Dylan and Evan, their confidence and their love of design,” Lilly told TechCrunch. “They were so design-native, they could take lessons [about building] community that we’d learned over the last 20 years on the internet. My background is from Mozilla, before Greylock, and it’s all about community and community growth, and Dylan could see that stuff and see those patterns and how to think about those in design.”
He said they began discussing how to take the notion of the developer community built around Github and apply that social coding idea to design. That collaborative and community element turned out to be a real differentiator for Figma.
Great read from Kyle Harrison - How an investor overestimated Figma’s value in the early days and why it ended up being conservative
Salesforce Investor Day all about Profitable Growth at Scale (full deck here). Collaboration will be front and center at Dreamforce coming up with Quip being built into Slack as Slack Canvas (more at Protocol)
Nate Botwick, formerly VP of product with Quip, oversaw the process of building Quip’s software into Slack. The fruition of that project is Slack canvas. Canvases will be collaborative documents within channels that compile files, checklists and other important information that could previously just be pinned as messages by users. They’ll link to workflows like requesting a work phone, and pull data from Salesforce Sales Cloud.
How will JP Morgan spend its $14B IT Budget - watch this video with Lori Beer, CIO on WSJ CIO Summit - will spend more on moving more workloads to public cloud and AI/ML - industrializing data
*More focused on hybrid environments, now 30% of workloads on public cloud, pivoting harder in public cloud workloads - better security, global, getting better - speed, scale, security - more modernization $$$ means more public cloud spend
*Accelerating AI/ML - data as a product, industrializing data, label and tag data for use in AI, develop models 70% faster today
AI app layer just getting warmed up - lots more cos in 🧵
State of Cloud Security from Snyk - it’s a team sport where engineering and security own it and for different reasons - get the full report here
Let’s go Miami 🌴 - great to be on this great list with my partner Eliot Durbin - if you’re down here and interested in dev tools, crypto infra and enterprise please say 👋🏼