18 ms·

State of Private Markets: Q1 2023

151 points by tim_sw 3y ago

MuffinFlavored 3y ago
> The transformation of the venture capital industry over the past year has been stark. Total venture capital raised by startups plunged 80% from Q1 2022 to Q1 2023. Venture deal count fell 45% over the same span. Overall, Q1 was the slowest quarter for both capital raised and deal count since 2017. Does this come to a shock to anybody given the sequence of events: 1. Pandemic economic relief to offset otherwise lost wages due to restrictions is roughly equivalent to "injected money/liquidity from the sky" 2. Subsequent inflation 3. Subsequent federal reserve monetary policy in response said inflation in an attempt to stop it from spiraling How is venture capital expected to perform well in these conditions? Is the point of this article "venture capital was expected to do worse off given the change in underlying economic conditions, but not this drastically of a difference"? Federal Funds Rate is about to be 5.25% 30 year fixed mortgages are ~7% Financing a new car for 60 months is 7% I'm less interested in "how bad is the state of venture capitalism" right now and more interested in "when is it roughly expected to get better/be less bad again"?
- slap_shot 3y ago
  > How is venture capital expected to perform well in these conditions? I'm not sure that this author or Carta as a whole is trying to suggest private markets should be performing better right now. We're all painfully aware of why this is happening. These reports are usually just presenting the raw data. > I'm less interested in "how bad is the state of venture capitalism" right now and more interested in "when is it roughly expected to get better/be less bad again"? An analyst's report for any asset class (real estate, public equities, etc) has to start with the cut and dry numbers. But they do sprinkle in a bit of guidance using the data: "There are signs of a venture spring. Valuations from seed to Series C ticked up from recent lows. Median round sizes mostly stabilized. But these green shoots were overwhelmed by the decline in total rounds across all stages."
- tpankaj 3y ago
  I don't think it's fair to complain that you're not interested in reading about the state of venture capitalism on an article titled "The State of Private Markets". The article delivered exactly what it promised in the title.
  - MuffinFlavored 3y ago
    > I don't think it's fair to complain that you're not interested in reading about the state of venture capitalism Apologies, I should've tried to sound less whiny. I guess what I was trying to say is "things are bad, what did you expect?"
- nawgz 3y ago
  > 1. Pandemic economic relief to offset otherwise lost wages due to restrictions is roughly equivalent to "injected money/liquidity from the sky" > 2. Subsequent inflation I dislike this representation a LOT because I have the feeling more money was distributed to business owners under the incredibly corrupt PPP loans, and then... it turns out corporate profiteering is the real driver of inflation. People keep peddling this "giving people money in a pandemic caused all our problems" line, but it's just not true, it's not grounded in reality, and if it was a contributing factor, let's look at the other things that costed more... Citizen's tax dollars being paid back to them when you can't leave your home is not a driver of inflation Citizen's tax dollars being gifted to business owners who also proceeded to jack up their profit margins due to shocking price elasticity due to a complete lack of antitrust enforcement for 40 years is THE driver of inflation It's amazing how on an article about VC you've both managed to argue that no one should write articles about VC and then blamed citizens for corporate-driven inflation.
  - seizethecheese 3y ago
    The mainstream economics consensus is that inflation was kicked off due to excess savings and limited supply of goods (first) then services (second). The idea that business profits are driving inflation is a partisan talking point, not at all consensus.
    - nawgz 3y ago
      > The mainstream economics consensus Should be linkable from multiple sources. Care to provide some, then? > was kicked off due to excess savings That's a partisan talking point if I've ever heard one, and has largely died out in popularity in my view, since we've seen the endless lists of all-time-high corporate profits and margins > The idea that business profits are driving inflation Couldn't be more obvious. If everything costs more, and corporations are making record profit and revenue across the board, there's probably no limitation of goods or services. For instance, [0] argues my claim directly, [1] shows some details of that relationship, and there's an internet full of it. Everything supporting this "excess savings" bit is either from Republicans or 2021, care to link me something a bit more definitive? [0]: https://www.kansascityfed.org/research/economic-review/how-much-have-record-corporate-profits-contributed-to-recent-inflation/#:~:text=Firms%20raised%20markups%20during%202021,pressures%2C%20contributing%20substantially%20to%20inflation.&text=Inflation%20reached%20a%2040%2Dyear,potential%20explanation%20for%20high%20inflation https://www.kansascityfed.org/research/economic-review/how-m....
- sbierwagen 3y ago
  >I'm less interested in "how bad is the state of venture capitalism" right now and more interested in "when is it roughly expected to get better/be less bad again"? This rounds up to "how long do recessions usually last" and the answer is an unsatisfying "it depends" https://cdn.statcdn.com/Infographic/images/normal/25364.jpeg https://cdn.statcdn.com/Infographic/images/normal/25364.jpeg
- somewhereoutth 3y ago
  I'd suggest that ~5% is monetarily neutral and roughly the correct rate for pricing time/risk, it only seems high compared to the zero rates we've had recently. It may have to go (much?) higher for a (long?) period to fix the current inflation situation.
slap_shot 3y ago
Fascinating. Jumping up to public markets, I thought this was an interesting insight yesterday from Jamin Ball at Altimeter: > There's now only 3 cloud software companies trading >10x NTM rev. Snowflake at 15.2x, Veeva at 10.8x and Cloudflare at 10.5x [0] :O [0] https://twitter.com/jaminball/status/1653482586054987776 https://twitter.com/jaminball/status/1653482586054987776
- claytonjy 3y ago
  How does this compare to private companies? I don't see anything in the article about revenue multiples, but I was on the market recently and anecdotally everyone is trying to justify much higher multiples for early stage (pre-C) private SaaS right now.
  - JumpCrisscross 3y ago
    > everyone is trying to justify much higher multiples for early stage (pre-C) private SaaS right now Growth adjusting à la PEG [1] might help normalise the data. Pre-C businesses should grow faster than public ones. That said, these are all heuristics—details like churn, margins and customer acquisition cost matter. [1] https://en.m.wikipedia.org/wiki/PEG_ratio https://en.m.wikipedia.org/wiki/PEG_ratio
    - claytonjy 3y ago
      I checked my notes and 20-30x seems was the target next-round multiple for the A's and B's I talked to. I get that earlier companies get a higher multiple based on growth, but I don't know if 2-3x the multiple for top public co's is reasonable or not.
      - Retric 3y ago
        It’s not worth investing in private companies unless their long term growth outlook is significantly outperforming public ones. PEG on the other hand is by necessity a backward looking metric. That self selection means they really should have a higher multiple even if you judge them using the same metrics. IE if you have a public company growing by 20% per year and a private one growing by 20% per year you should only invest in the private one of it’s at a significant discount or it’s growth will likely continue for significantly longer than the public one.
monero-xmr 3y ago
Most post-seed rounds happening now are existing investors doubling down on their winners. Losers will get acquired or shut down. Revenue is king, promises and future growth and TAM hand-waving is in the graveyard. If you need VC money to survive within the next 12 months and aren’t already trying to raise it you are probably dead.
- sroussey 3y ago
  Acquisitions are not really happening.
  - nuclearnice1 3y ago
    The article disagrees. But my sense is you are right in relative terms. Much more failing than acquiring. Article: > Startup M&A bounced back: The number of venture-backed companies that were acquired or merged with another company increased by 20% in Q1 compared to Q4 2022, with 57% of those M&A deals valued at $10 million or less.
    - ryanSrich 3y ago
      Yeah $10m for a lot of startups is equivalent to shutting down. Essentially asset/fire sales.
      - foobiekr 3y ago
        I think a lot of people who entered the industry post 2004 are about to learn how unreal the last 20-ish years were.
        ryanSrich 3y ago
        It’ll be interesting. I’m not entirely sure what to make of it to be honest. We have a massive shortage of software. Even with the low cost of software development compared to manufacturing you still need operating capital. Especially for hard problems. Without high risk VC dumping billions into the private market I could see the US drastically falling behind other countries. The entire reason why the US has been so far ahead in the tech sector is because of how much high risk capital we’re willing to invest.
choppaface 3y ago
> The percentage of employees who exercised their vested options before expiration has now declined for five straight quarters, with the rate falling from 46% to 28% over that span. This is key to Carta’s business model, as they want to be the next SecondMarket / private market that flips employee stock in liquidity rounds for a hefty premium. Carta needs high employee engagement with stock compensation. It’s remarkable that they spend so little of this report on the topic.. if engagement stays low they’d need VC deal making to 10x to grow themselves. Why might engagement be low? Well besides the current economic environment, the implosion of SVB et al took with it a lot of venture debt, which may result in unusual dilution down the road. Also, employees are mostly just trying to get their jobs done versus VCs who were aware of the unusual bank fragility. Overall, employee stock-based comp has taken a huge downturn in real value (if not paper value). The top start-ups need to innovate new compensation packages when the bull market returns.
- ryanSrich 3y ago
  It also can’t be overstated just how expensive things have gotten. I’d wager a large percentage of the exercise decline is due to employees having less cash.
  - choppaface 3y ago
    Yeah I’m trying to allude to that, but the bank failures make the probability of “my options round down to zero or less than that (via taxes)” significantly higher. In the 2008 financial crisis the problem was in an adjacent industry, but here in the SVB case the banks are failing at basic compliance as well as trying to juggle crypto fraud. The information disparity between VCs (whose job it is to convince banks that the venture asset class is worthwhile) and employees is bigger than ever. Right now, like maybe Stripe is worth taking the risk to exercise, and Clubhouse borderline because they have $100m in funding. But most other early stage companies, there’s much bigger risk that the company’s projections look ok to the employee so they exercise. But then the existing funding busts and then the employee ends up paying taxes on something that’s worthless. And the bankers / VCs likely had the info to know it was worthless at the time of exercise.
- 3y ago
corry 3y ago
The decline in employee option exercise... is that the canary in the mine? If the team itself is saying less and less that their company's equity is worth taking a risk on -- and they are in a good position to be optimistic, rightly or wrong -- then that's a pretty bearish signal. Of course there are other pressures on peoples' personal finances that makes money dearer... but still. Or perhaps with layoffs there is just a lot of people who could be exercising vested options, but won't because (1) they no longer work there and won't be able to contribute or have an insider advantage, and/or (2) they now don't have a job so won't risk the capital in buying out their options.
- adoxyz 3y ago
  It doesn't necessarily signal that the company's equity is in a bad position. I'd venture to think a lot of people would rather keep cash on hand in these times than locked up in a private company.
  - persedes 3y ago
    plus for a lot of companies an IPO might be not in the near future due to the stock market being what it is (even though who knows anymore...). So why buy options if you don't know when you'll get to sell it.
- cj 3y ago
  Are 409a valuations coming down for companies who raised at crazy valuations? Are startups repricing their employee stock option strike prices (highly unlikely?) I think the most obvious explanation is a lot of people were hired during a time of inflated valuations and those employees received stock option grants with incredibly high strike prices. Now valuations have tanked over 50%. If this happened in the public markets, you would simply let the options expire rather than acquire the stock at a 100% premium (for example). For similar reasons, it’s probably not advisable to exercise options granted in the last couple of years in most cases, but that’s because valuations are likely down below the strike price for a lot of people.
  - 3y ago
cassonmars 3y ago
Seeing the Midwest figures is unsurprising and still disappointing. As someone pitching a startup, the number of big name investors that have asked where I’m calling from and have this look of “why?” or even outright asking it really shows some extreme bias. Given the world is moving more towards remote work, it’s strange that VCs still have this belief that only coastal areas can innovate.
- esafak 3y ago
  Tell 'em you're a remote company, if you are. State it in your pitch so they don't ask.
  - thomasjb 3y ago
    Confusion ensues when you are 'remote first' and also manufacturing the latest in vertical lathes in your multi-dozen square foot shed
- smabie 3y ago
  So what's the why?
- kaesar14 3y ago
  I don't think it's such an unreasonable question when VCs are trying to maximize their investment, and being in a hot tech market has shown to be an accelerator in finding talent and growing a startup
  - brazzy 3y ago
    How much of that "has shown to be" is just confirmation bias, though? Seems to me as likely to be a dampener on "finding talent" when you have to compete with FAANG (or MANGA, or whatever).
    - kaesar14 3y ago
      If you're in a market with 100k high quality devs and 80k choose to work at FAANG vs a market with 20k high quality devs where 10k choose to work at high paying regional companies, you're still winning on the talent pool. And I'm guessing the numbers are even more skewed than that. Additionally, the talent pool skews much younger in hot markets who are on average much more likely to be willing to take a risk and work really hard to make a startup take off. Obligatory disclaimer that I'm not saying non-hot markets are not filled with great devs and that older people cannot make a startup take off, just the odds are better in one vs. the other.

151 points by tim_sw 3y ago

> The transformation of the venture capital industry over the past year has been stark. Total venture capital raised by startups plunged 80% from Q1 2022 to Q1 2023. Venture deal count fell 45% over the same span. Overall, Q1 was the slowest quarter for both capital raised and deal count since 2017. Does this come to a shock to anybody given the sequence of events: 1. Pandemic economic relief to offset otherwise lost wages due to restrictions is roughly equivalent to "injected money/liquidity from the sky" 2. Subsequent inflation 3. Subsequent federal reserve monetary policy in response said inflation in an attempt to stop it from spiraling How is venture capital expected to perform well in these conditions? Is the point of this article "venture capital was expected to do worse off given the change in underlying economic conditions, but not this drastically of a difference"? Federal Funds Rate is about to be 5.25% 30 year fixed mortgages are ~7% Financing a new car for 60 months is 7% I'm less interested in "how bad is the state of venture capitalism" right now and more interested in "when is it roughly expected to get better/be less bad again"?

slap_shot 3y ago
> How is venture capital expected to perform well in these conditions? I'm not sure that this author or Carta as a whole is trying to suggest private markets should be performing better right now. We're all painfully aware of why this is happening. These reports are usually just presenting the raw data. > I'm less interested in "how bad is the state of venture capitalism" right now and more interested in "when is it roughly expected to get better/be less bad again"? An analyst's report for any asset class (real estate, public equities, etc) has to start with the cut and dry numbers. But they do sprinkle in a bit of guidance using the data: "There are signs of a venture spring. Valuations from seed to Series C ticked up from recent lows. Median round sizes mostly stabilized. But these green shoots were overwhelmed by the decline in total rounds across all stages."
tpankaj 3y ago
I don't think it's fair to complain that you're not interested in reading about the state of venture capitalism on an article titled "The State of Private Markets". The article delivered exactly what it promised in the title.
- MuffinFlavored 3y ago
  > I don't think it's fair to complain that you're not interested in reading about the state of venture capitalism Apologies, I should've tried to sound less whiny. I guess what I was trying to say is "things are bad, what did you expect?"
nawgz 3y ago
> 1. Pandemic economic relief to offset otherwise lost wages due to restrictions is roughly equivalent to "injected money/liquidity from the sky" > 2. Subsequent inflation I dislike this representation a LOT because I have the feeling more money was distributed to business owners under the incredibly corrupt PPP loans, and then... it turns out corporate profiteering is the real driver of inflation. People keep peddling this "giving people money in a pandemic caused all our problems" line, but it's just not true, it's not grounded in reality, and if it was a contributing factor, let's look at the other things that costed more... Citizen's tax dollars being paid back to them when you can't leave your home is not a driver of inflation Citizen's tax dollars being gifted to business owners who also proceeded to jack up their profit margins due to shocking price elasticity due to a complete lack of antitrust enforcement for 40 years is THE driver of inflation It's amazing how on an article about VC you've both managed to argue that no one should write articles about VC and then blamed citizens for corporate-driven inflation.
- seizethecheese 3y ago
  The mainstream economics consensus is that inflation was kicked off due to excess savings and limited supply of goods (first) then services (second). The idea that business profits are driving inflation is a partisan talking point, not at all consensus.
  - nawgz 3y ago
    > The mainstream economics consensus Should be linkable from multiple sources. Care to provide some, then? > was kicked off due to excess savings That's a partisan talking point if I've ever heard one, and has largely died out in popularity in my view, since we've seen the endless lists of all-time-high corporate profits and margins > The idea that business profits are driving inflation Couldn't be more obvious. If everything costs more, and corporations are making record profit and revenue across the board, there's probably no limitation of goods or services. For instance, [0] argues my claim directly, [1] shows some details of that relationship, and there's an internet full of it. Everything supporting this "excess savings" bit is either from Republicans or 2021, care to link me something a bit more definitive? [0]: https://www.kansascityfed.org/research/economic-review/how-much-have-record-corporate-profits-contributed-to-recent-inflation/#:~:text=Firms%20raised%20markups%20during%202021,pressures%2C%20contributing%20substantially%20to%20inflation.&text=Inflation%20reached%20a%2040%2Dyear,potential%20explanation%20for%20high%20inflation https://www.kansascityfed.org/research/economic-review/how-m....
sbierwagen 3y ago
>I'm less interested in "how bad is the state of venture capitalism" right now and more interested in "when is it roughly expected to get better/be less bad again"? This rounds up to "how long do recessions usually last" and the answer is an unsatisfying "it depends" https://cdn.statcdn.com/Infographic/images/normal/25364.jpeg https://cdn.statcdn.com/Infographic/images/normal/25364.jpeg
somewhereoutth 3y ago
I'd suggest that ~5% is monetarily neutral and roughly the correct rate for pricing time/risk, it only seems high compared to the zero rates we've had recently. It may have to go (much?) higher for a (long?) period to fix the current inflation situation.

slap_shot 3y ago

Fascinating. Jumping up to public markets, I thought this was an interesting insight yesterday from Jamin Ball at Altimeter: > There's now only 3 cloud software companies trading >10x NTM rev. Snowflake at 15.2x, Veeva at 10.8x and Cloudflare at 10.5x [0] :O [0] https://twitter.com/jaminball/status/1653482586054987776 https://twitter.com/jaminball/status/1653482586054987776

claytonjy 3y ago
How does this compare to private companies? I don't see anything in the article about revenue multiples, but I was on the market recently and anecdotally everyone is trying to justify much higher multiples for early stage (pre-C) private SaaS right now.
- JumpCrisscross 3y ago
  > everyone is trying to justify much higher multiples for early stage (pre-C) private SaaS right now Growth adjusting à la PEG [1] might help normalise the data. Pre-C businesses should grow faster than public ones. That said, these are all heuristics—details like churn, margins and customer acquisition cost matter. [1] https://en.m.wikipedia.org/wiki/PEG_ratio https://en.m.wikipedia.org/wiki/PEG_ratio
  - claytonjy 3y ago
    I checked my notes and 20-30x seems was the target next-round multiple for the A's and B's I talked to. I get that earlier companies get a higher multiple based on growth, but I don't know if 2-3x the multiple for top public co's is reasonable or not.
    - Retric 3y ago
      It’s not worth investing in private companies unless their long term growth outlook is significantly outperforming public ones. PEG on the other hand is by necessity a backward looking metric. That self selection means they really should have a higher multiple even if you judge them using the same metrics. IE if you have a public company growing by 20% per year and a private one growing by 20% per year you should only invest in the private one of it’s at a significant discount or it’s growth will likely continue for significantly longer than the public one.

monero-xmr 3y ago

Most post-seed rounds happening now are existing investors doubling down on their winners. Losers will get acquired or shut down. Revenue is king, promises and future growth and TAM hand-waving is in the graveyard. If you need VC money to survive within the next 12 months and aren’t already trying to raise it you are probably dead.

sroussey 3y ago
Acquisitions are not really happening.
- nuclearnice1 3y ago
  The article disagrees. But my sense is you are right in relative terms. Much more failing than acquiring. Article: > Startup M&A bounced back: The number of venture-backed companies that were acquired or merged with another company increased by 20% in Q1 compared to Q4 2022, with 57% of those M&A deals valued at $10 million or less.
  - ryanSrich 3y ago
    Yeah $10m for a lot of startups is equivalent to shutting down. Essentially asset/fire sales.
    - foobiekr 3y ago
      I think a lot of people who entered the industry post 2004 are about to learn how unreal the last 20-ish years were.
      - ryanSrich 3y ago
        It’ll be interesting. I’m not entirely sure what to make of it to be honest. We have a massive shortage of software. Even with the low cost of software development compared to manufacturing you still need operating capital. Especially for hard problems. Without high risk VC dumping billions into the private market I could see the US drastically falling behind other countries. The entire reason why the US has been so far ahead in the tech sector is because of how much high risk capital we’re willing to invest.

choppaface 3y ago

> The percentage of employees who exercised their vested options before expiration has now declined for five straight quarters, with the rate falling from 46% to 28% over that span. This is key to Carta’s business model, as they want to be the next SecondMarket / private market that flips employee stock in liquidity rounds for a hefty premium. Carta needs high employee engagement with stock compensation. It’s remarkable that they spend so little of this report on the topic.. if engagement stays low they’d need VC deal making to 10x to grow themselves. Why might engagement be low? Well besides the current economic environment, the implosion of SVB et al took with it a lot of venture debt, which may result in unusual dilution down the road. Also, employees are mostly just trying to get their jobs done versus VCs who were aware of the unusual bank fragility. Overall, employee stock-based comp has taken a huge downturn in real value (if not paper value). The top start-ups need to innovate new compensation packages when the bull market returns.

ryanSrich 3y ago
It also can’t be overstated just how expensive things have gotten. I’d wager a large percentage of the exercise decline is due to employees having less cash.
- choppaface 3y ago
  Yeah I’m trying to allude to that, but the bank failures make the probability of “my options round down to zero or less than that (via taxes)” significantly higher. In the 2008 financial crisis the problem was in an adjacent industry, but here in the SVB case the banks are failing at basic compliance as well as trying to juggle crypto fraud. The information disparity between VCs (whose job it is to convince banks that the venture asset class is worthwhile) and employees is bigger than ever. Right now, like maybe Stripe is worth taking the risk to exercise, and Clubhouse borderline because they have $100m in funding. But most other early stage companies, there’s much bigger risk that the company’s projections look ok to the employee so they exercise. But then the existing funding busts and then the employee ends up paying taxes on something that’s worthless. And the bankers / VCs likely had the info to know it was worthless at the time of exercise.
3y ago

corry 3y ago

The decline in employee option exercise... is that the canary in the mine? If the team itself is saying less and less that their company's equity is worth taking a risk on -- and they are in a good position to be optimistic, rightly or wrong -- then that's a pretty bearish signal. Of course there are other pressures on peoples' personal finances that makes money dearer... but still. Or perhaps with layoffs there is just a lot of people who could be exercising vested options, but won't because (1) they no longer work there and won't be able to contribute or have an insider advantage, and/or (2) they now don't have a job so won't risk the capital in buying out their options.

adoxyz 3y ago
It doesn't necessarily signal that the company's equity is in a bad position. I'd venture to think a lot of people would rather keep cash on hand in these times than locked up in a private company.
- persedes 3y ago
  plus for a lot of companies an IPO might be not in the near future due to the stock market being what it is (even though who knows anymore...). So why buy options if you don't know when you'll get to sell it.
cj 3y ago
Are 409a valuations coming down for companies who raised at crazy valuations? Are startups repricing their employee stock option strike prices (highly unlikely?) I think the most obvious explanation is a lot of people were hired during a time of inflated valuations and those employees received stock option grants with incredibly high strike prices. Now valuations have tanked over 50%. If this happened in the public markets, you would simply let the options expire rather than acquire the stock at a 100% premium (for example). For similar reasons, it’s probably not advisable to exercise options granted in the last couple of years in most cases, but that’s because valuations are likely down below the strike price for a lot of people.
- 3y ago

cassonmars 3y ago

Seeing the Midwest figures is unsurprising and still disappointing. As someone pitching a startup, the number of big name investors that have asked where I’m calling from and have this look of “why?” or even outright asking it really shows some extreme bias. Given the world is moving more towards remote work, it’s strange that VCs still have this belief that only coastal areas can innovate.

esafak 3y ago
Tell 'em you're a remote company, if you are. State it in your pitch so they don't ask.
- thomasjb 3y ago
  Confusion ensues when you are 'remote first' and also manufacturing the latest in vertical lathes in your multi-dozen square foot shed
smabie 3y ago
So what's the why?
kaesar14 3y ago
I don't think it's such an unreasonable question when VCs are trying to maximize their investment, and being in a hot tech market has shown to be an accelerator in finding talent and growing a startup
- brazzy 3y ago
  How much of that "has shown to be" is just confirmation bias, though? Seems to me as likely to be a dampener on "finding talent" when you have to compete with FAANG (or MANGA, or whatever).
  - kaesar14 3y ago
    If you're in a market with 100k high quality devs and 80k choose to work at FAANG vs a market with 20k high quality devs where 10k choose to work at high paying regional companies, you're still winning on the talent pool. And I'm guessing the numbers are even more skewed than that. Additionally, the talent pool skews much younger in hot markets who are on average much more likely to be willing to take a risk and work really hard to make a startup take off. Obligatory disclaimer that I'm not saying non-hot markets are not filled with great devs and that older people cannot make a startup take off, just the odds are better in one vs. the other.