What's 🔥 in Enterprise IT/VC #266

How I stay sane in an insane world - hint, it's hard 😃

Dec 4

The pace is only accelerating for startup funding, and it’s hard to keep up with the deal flow, private valuations, FOMO, events, crypto madness and everything else in between. Looking at my Twitter feed, chatting with investors about each new insane round of funding after another, and watching the sky fall 📉 for lots of SaaS stocks can be enough to drive one absolutely insane.

Fortunately for now, as I look at my current portfolio and talk to other investors what’s happening in the public markets is still divorced from the private markets. Valuations continue to be incredibly robust and there seems to be no slowing down. To that end, I was meeting with an emerging manager the other day, and he asked me what’s next for boldstart especially as it relates to $400M seed funds and intense competition at every stage.

And my answer was this:

Ed Sim @edsim

Staying disciplined in frothy markets for investors is super hard A good rule of 👍🏼, never take so much 💰 that you wake up feeling pressure to put it to work. Constraints lead to patience + discipline. Helps u stay in your swim lane + partner with right founders at right time

While the advice sounds basic, it does allow me and boldstart to focus on the signal from the noise. By knowing what you love to do, you can easily say NO to everything else that does not fit your focus. This means you can really focus on the 5-10% of founders and new opportunities that really matter, the ones who equally want to partner with you on their journey. I’ve always told our LPs, I never want to wake up feeling pressure to put money to work and only want to take enough to execute on our strategy. Here’s a slide from our annual meeting which was held a couple of months ago with respect to every VC investing in seed and how we stay focused and calm:

In addition, as one raises more capital it becomes easier and easier to start paying higher valuations upfront, to write bigger checks upfront, and fall into the trap of as long as I own X% and if this is huge, it doesn’t matter what entry price I pay. Yes, for now it’s working for many but in the long run things will adjust.

You will also F*^# up and miss out on some opportunities but by staying focused, you should hope that you will partner with more winners than ones you missed out on. Just from this past week alone I can name 2 companies we passed on by staying in our swim lane but at the same time, we are incredibly 🔥 up for the founders we did partner with. You can’t win them all and you can’t invest in everything so constraints force you to focus.

Before you raise your next fund as an emerging manager, think long and hard about what your swim lane is. It’s different for everyone and should take into account understanding your own super powers, what you love to do every single day, how you like to work with founders, focus, strategy on leading vs. co-leading, firm building - solo vs. partners, etc. But one common theme is to not take too much money as it can cause lots of bad habits.

As always, 🙏🏼 for reading and please share with your friends and colleagues.

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