Sharing five links that caught my attention this week as we all deal with information overload.
1. On staying positive and continuing to ship
Doom and gloom news attract more eyeballs, but negativity can also become a self-fulfilling prophecy. Fred Wilson of Union Square Ventures reminds us what’s good about being in tech and how important it is to keep on shipping. Check out his post ‘Staying Positive‘
2. How much VC dry powder is out there in 2022?
How much dry powder is in US VC funds? Turns out that we’re on track to surpass 2021 VC fundraising levels.
Quartz has more in “Despite their warnings, VCs are still investing‘
“venture funds have already socked in $88 billion in the first half of the year, which is already equivalent to two-thirds of last year’s fundraising”
Quartz
3. How to avoid burnout and perfectionism in your team during a downturn
“‘There are two kinds of people who don’t experience painful emotions such as anxiety or disappointment, sadness, envy,’ writes psychologist Tal Ben-Shahar. ‘The psychopaths and the dead.’”
First Round Capital
I’ve always enjoyed Tal Ben Shahar’s books, especially ‘The Pursuit of Perfect‘ (which I also previously covered on VC Cafe in “the lovemaking model for happiness“) and this post is a clear reminder of why they are important, especially in times like these. Practical and important tips for managers.
4. Dr. Michael Burry predicts that things will get much worse before they get better. Is a recession looming?
If you’ve seen or read the Big Short by Michael Lewis, you may remember Dr. Michael Burry of Scion Capital, who predicted the financial crisis in 2008 and made billions of dollars betting against the US housing market, which looked rock solid.
In a series of tweets, before deleting his account in the 21st of June, Dr Burry predicts it’s happening again. His tweets are now archived in this account.
What are the implications? the cost of capital rising will impact many sectors (like credit card debt and mortgage payments), so consumers will prefer to spend less, which increases the chances of a recession (bottom right).
5. Valuation multiples are back to 2015 Era, but the market still holds
In “How VCs Value Rainbow Foals in 2022“, Tom Tunguz confirms what we already know – valuation multiples in growth rounds have compressed massively, in line with the decline in the public markets.
Re-running the multiples math for today, return projections for the typical growth round collapsed. Series Cs dropped from 11x to 5.3x. Series Ds cratered from 5.6x to 1.9x by 66% – which is inline with the public market drop.
Tom Tunguz, Redpoint Ventures
We’re seeing similar effects in the Israeli market as well. In a mid-quarter special report by IVC online, the data suggests that investors have reduced activity (and valuations) but that the impact is more pronounced in series B and C and less so in seed and A rounds.
With that said, according to Crunchbase Series B-stage startups have received over $24B in funding so far in 2022. It pales in comparison to the $51 billion invested in series B in 202, but it’s on par with the level of series B investments in 2018, 2019 and 2020. Maybe a return to more ‘normal’ valuations, and focus on unit economics vs. growth at any price is a good thing.
Comic relief
I’m a former general partner at google ventures, head of Google for Entrepreneurs in Europe and founding head of Campus London, Google’s first physical hub for startups.
I’m also the founder of Techbikers, a non-profit bringing together the startup ecosystem on cycling challenges in support of Room to Read. Since inception in 2012 we’ve built 11 schools and 50 libraries in the developing world.