Hot in Enterprise IT/VC - What's 🔥 in Enterprise IT/VC #264
Aloha 🍹 from the Lobby: Enterprise conference where I had the chance to hang out with a great group of enterprise founders and investors and have some fascinating discussions on the state of investing, building and scaling, and what’s next in enterprise. While we dove deep into the state of dev tools, cybersecurity, and enterprise/web3, one of the huge topics that came up repeatedly was around valuations, size of funding rounds, and the impact it can have for both investors and founders. A lot of this discussion reminded me of what Fred Wilson posted earlier this week on why entry price matters for seed funds.
And here’s some historical context on that $100B outcome… Some historical context on @fredwilson's latest.
Between 1/1/2010 - 12/31/2019, 166 tech startups went public.
Here's where their valuations sit now:
2 = $1T+ (TSLA/FB)
4 = $100B+ (SHOP/NOW/TEAM/SQ)
48 = $10B+
35 = <$1B
Median = $4.4B
Deploy wisely!
Unlikely - so this will be an interesting next year as more 💰 pours into every stage and VCs need to think through entry price and founders need to think through the impact of raising too quickly at too high a price. What this comes down to is having shared expectations and alignment around the true state of the business and how long it may take to actually scale. Without that, bad things can happen… All this VC money is great until...
1) Series A company doesn't hit their numbers
2) Board is pissed + even abusive (curses at the founder)
3) Pushes out the founder/CEO despite him controlling the equity
4) How? By sinking the bridge round
This is just the beginning😵💫 And with deals closing so fast, founders and investors rarely have a chance to really get to know one another due to timing, and unless they’ve had a long standing relationship prior, both sides are taking a huge leap of faith on the personal dynamics and fit. This post from Anu further highlights that: The average length of a marriage in the US is 8 years
The average tenure of a board member is 9 years
Yet may founders decide on a board member after meeting them for 2 hours Allison Braund-Harris @HardlyAllison Choose your board wisely: “Board of Directors, on average, last longer than marriages in the US” - @anuhariharan at @ycombinator. https://t.co/FryWeFAUD1While this is great for the companies crushing it, for those in the middle or who are taking a little longer to ripen, I do worry about the possibility of abandonment from their investor or other problems arising. It will surely be an interesting 2022 as I believe more 💰 will continue pouring into enterprise startups, and we may see some of the first signs of companies that raised at too high a price get stuck for their next round. @aweissman @albertwenger as investments become more "transactional" due to speed, it's even more important for founders to find the right partners - I fear that there will be a slew of these startups treated as such in the coming years...esp. because of super high expectations + entry prices As always, 🙏🏼 for reading and please share with your friends and colleagues. Scaling Startups
Enterprise Tech
Markets
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