4 ms·

This is a great article, especially because the solution is right there in the text: > forcing everyone to chase the same set of SaaS companies > everyone can

This is a great article, especially because the solution is right there in the text: > forcing everyone to chase the same set of SaaS companies > everyone can read the gridiron of SaaS metrics There was a perfect storm: huge seed rounds leading traditional firms to move upmarket, VCs raising larger funds and so needing to hit the winners hard, which caused Series A metrics to swell, and so VCs are all chasing the same deals. Of course those deals don't need them: those companies are already winning and don't need their expertise, just their money, which is commoditized by the swelling of funds. The answer is simple: chase less successful. Stop just trying to get into the big SaaS deals, and target smaller companies, lower metrics, earlier stage companies. Of course, if the firm staffed up and raised a larger fund as the article says, then it may be structurally impossible to survive. Innovator's dilemma in action.

ryanSrich 7y ago
Yeah I generally agree. There’s a lot of risk averse investors it seems. I don’t have the data so I can’t say for certain, but it feels like VC is just betting on companies that already have product, revenue, a solid customer base, and almost zero chance of completely failing. a16z, benchmark, SV angles (when they were around), etc. only got where they are by taking massive risk - on founders with no track record and often just a prototype of demo. Now, just to get a seed round, you need a fully featured product, with distribution and revenue. It just feels like the wonder and risk of creating world changing tech without worrying about financial outcome is dead. Which, honestly makes sense from an investment thesis standpoint. You minimize risk by following the leader or investing later stage. It’s growth equity, not true or traditional VC that requires a 10x return. Most VCs are happy with 1.5-3x now (relatively happy).

ryanSrich 7y ago

Yeah I generally agree. There’s a lot of risk averse investors it seems. I don’t have the data so I can’t say for certain, but it feels like VC is just betting on companies that already have product, revenue, a solid customer base, and almost zero chance of completely failing. a16z, benchmark, SV angles (when they were around), etc. only got where they are by taking massive risk - on founders with no track record and often just a prototype of demo. Now, just to get a seed round, you need a fully featured product, with distribution and revenue. It just feels like the wonder and risk of creating world changing tech without worrying about financial outcome is dead. Which, honestly makes sense from an investment thesis standpoint. You minimize risk by following the leader or investing later stage. It’s growth equity, not true or traditional VC that requires a 10x return. Most VCs are happy with 1.5-3x now (relatively happy).