_______ __ _______
| | |.---.-..----.| |--..-----..----. | | |.-----..--.--.--..-----.
| || _ || __|| < | -__|| _| | || -__|| | | ||__ --|
|___|___||___._||____||__|__||_____||__| |__|____||_____||________||_____|
on Gopher (inofficial)
URI Visit Hacker News on the Web
COMMENT PAGE FOR:
URI Charting Form Ds to roughly see the state of venture capital âfundâ raising
bix6 wrote 1 hour 14 min ago:
This is pretty cool for a simple analysis. Would love to see v2 with
some of the suggestions others have made regarding filtering, catching
SPVs or non-âfundâ etc.
Can you query based on exemption used?
dang wrote 3 hours 35 min ago:
Oof that title. Particularly when the site design is so substantive!
I've edited it to use what I think is representative language from the
article itself. (This is to allow it to spend more time on HN's
frontpage, because the article itself deserves it.)
lemonlym wrote 3 hours 12 min ago:
Hey, thanks for this! Prompted me to take a look at the HN guidelines
:).
pringularity wrote 3 hours 42 min ago:
(I don't think this would change the overall message of the analysis),
but one reason why the "Fund I" bump might be so pronounced compared to
other reports is because of the "SPV as a service" data that was hinted
at in the takeaways.
It's very common for these single-asset SPVs to be titled,
"[Abbreviation] Fund I" -- but these aren't really the same type of
"Fund I" as a multi-security venture fund run by a professional
manager.
E.g.:
(1) These are entities that are sort of arbitrarily titled "Fund I" as
part of a template naming convention, but there's not as much of a
direct expectation that they'll have a corresponding Fund II, III, etc.
(2) Whether they do is more of a function of the underlying portfolio
company raising a subsequent financing and giving the same SPV manager
an allocation (which small time SPV managers often don't get pro rata
for), rather than the fund manager's ability to raise a subsequent
blind pool fund II.
lemonlym wrote 3 hours 14 min ago:
One hack to find a lot of these SPV as a service filings is to search
"a series of". They do have a formulaic filing process, but from
looking into it, adding "fund I" is not part of that. It usually does
indicate that its the first syndicate of the parent promoter, but
they don't do it for every filing. Here is a search query where you
can kind of see the variance:
URI [1]: https://www.sec.gov/edgar/search/#/q=a%2520series%2520of&cat...
pringularity wrote 1 hour 25 min ago:
Yeah I think basically all the ones here with letter/number combos
are SPVs. (A lot of the time, they're actually the first two
letters of the portfolio company -- would be cool to attempt
analysis there!)
URI [1]: https://www.sec.gov/edgar/search/#/q=Fund%2520I%252C%2520a...
TuringNYC wrote 4 hours 23 min ago:
Perhaps financing is also dropping off because COGS is near zero now.
Anyone with a vibe-coding LLM, some basic knowledge to correct the
code, and a bit of common sense product management can launch a
product. OpEx is cheap and aligned to usage. Gold age for builders.
monero-xmr wrote 4 hours 17 min ago:
Not many successful vibe coded products
TuringNYC wrote 4 hours 8 min ago:
People dont really state their product has been vibe coded. Also %
vibe coded is a spectrum. I feel pretty confident in saying I could
knock out a PoC in a day now by virtue of code assist. It still
requires work, but not VC $.
monero-xmr wrote 4 hours 0 min ago:
Not many products built in a day have any value
heyitsguay wrote 4 hours 13 min ago:
Are there any? Concretely. Genuinely curious.
noodlescb wrote 4 hours 35 min ago:
Not to be too ageist but the author appears to be a Stanford college
student? Interesting thoughts but also feels kind of naive in that it
is using a lot of assumption of a logical market, which is kind of
adorable in a world where investing has devolved into a hype gambling
market where Tesla has become a meme stock.
lemonlym wrote 4 hours 30 min ago:
On the topic of "logical markets", it's not so much how logical a
market is and more how much liquidity and available funds exist in
the market. It doesn't matter if the market is logical or not, if
there is a relative scarcity of funds there is bound to be a
contraction.
ajhit406 wrote 4 hours 51 min ago:
i'm an early-stage vc - the author's analysis on "number of funds"
(specifically VC funds) is accurate. the overall volume of venture
allocation has also slowed considerably if not decreased (which is
totally expected in a higher interest rate environment).
2021-2022 was a total blip on the screen zero interest rate era thing.
i'm not seeing considerable slowing of new startup development, quite
the opposite actually w/ AI. this is for a few reasons:
- accelerators are filling the gap; the accelerator model is actually
quite efficient in the early-stage spectrum (it needs some further
innovation). there are a huge number of AI accelerators and programs
now; and further
- most of the capital going into VC is just being further concentrated
into the large Multistage firms like A16Z, Accel, Sequoia, General
Catalyst, etc... all of these firms are realizing they need to win
deals as early as possible so have multiple seed programs:
accelerators, incubations, scouts, fund-of-fund allocation, geographic
funds, university focused sub funds, etc...
- overall great founders & startups are truly just exceptional so
statistically there just won't ever be that many. venture will always
be a cottage industry of sorts. in this form - "venture" equates with
"growth"; there can only be 1 category leader by definition and venture
is meant to capture this. 2021-2022 overall venture market was too big.
- AI is making startup creation many multiples more efficient. we saw
this w/ the advent of the cloud, where startups used to need $2-3M "to
buy servers" and 2-3 years to ship a product in 2010, by 2015-2020,
they really only needed $3-500k to get a product to market. we're going
to see that number come down considerably (unsure if it will be 30-50k,
but definitely a lot lower).
- we're also seeing the new wave of the 10-person unicorn (billion $
company); these companies will raise a lot less cash, so will result in
higher multiples on the original investment.
- i think the overall distribution of returns will look different on a
portfolio basis in 2025-onwards. with power law, we expect to see super
long-tail concentration on the 1-2 companies that yield 99% of the
return to a portfolio, but i suspect we'll start to see some mitigation
of that effect with more companies yielding positive outcomes. this
might mean that there's less of a reliance on portfolio construction to
generate risk-adjusted returns and that there could be more of a
democratization of early-stage investing where we see 10-100x the
number of startups and founders. that warrants a longer analysis, but
as someone just bullish on startups and everyone being a founder that
possibility is very exciting to me.
makestuff wrote 4 hours 5 min ago:
With so much money flowing into the massive funds, do you think more
and more unicorn startups will just stay private? It seems like there
are liquidity opportunities for employees/founders via tender offers,
secondaries, etc.
If you are a profitable unicorn who can raise money in the private
markets when needed, is there really a benefit to going public? Maybe
I am missing something, but going public doesn't really seem to be as
important as it used to be.
BlandDuck wrote 5 hours 10 min ago:
It is a concern that this could simply reflect changing naming
conventions for private funds. There is nothing that requires a fund to
use the "Fund I" convention.
Would it be possible to confirm the trend using Form ADV instead of
Form D filings?
lemonlym wrote 4 hours 59 min ago:
Form ADV is the form used to register an investment advisor, which is
fundamentally different than disclosing a fundraising event. It could
definitely be interested to look into. The SEC presents its data in a
relatively simple format. Here is the link for Form ADV historical
filing data:
URI [1]: https://www.sec.gov/foia-services/frequently-requested-docum...
topaz0 wrote 6 hours 58 min ago:
Not that it would drastically change the conclusions, but do the
numbers for "fund i" include the forms that say "fund ii" etc (by
virtue of the fact that "fund i" is a substring of "fund ii" etc)?
lemonlym wrote 6 hours 29 min ago:
You were actually right. I went and checked to see that some (not
all) values were double counted. I've updated the graph to reflect
this, and added a note. The trend remains identical, despite this
change. Thanks for inspiring me to double check.
pentamassiv wrote 6 hours 56 min ago:
It doesn't look like it does since "fund I" >> "fund II"
FabHK wrote 6 hours 47 min ago:
As we'd expect if the numbers for "fund I" include both "fund
I[^I]" and "fund II"?
tryitnow wrote 7 hours 0 min ago:
As someone else mentioned just looking Fund+Number doesn't exclude
non-VC funds. However, the 2024 NVCA report supports the OP's thesis:
see page 17:
URI [1]: https://nvca.org/wp-content/uploads/2024/05/2024-NVCA-Yearbook...
arthurjj wrote 5 hours 0 min ago:
That graph doesn't perfectly match the OP's but is definitely close
enough to be worrying if you were raising or looking to join a
startup
kerblang wrote 7 hours 2 min ago:
Bubbles are largely a function of finance, not tech; if there is a lot
of easy money available, it wants somewhere to go, and any tech will do
(recall XML startups...).
Interest rates are one of the biggest factors, because of how they
create indirect pressure on cash availability (which is the whole point
of raising interest rates).
Everyone is bracing for tariff recession as well, which may cause a lot
of investment capital flight.
indoordin0saur wrote 3 hours 52 min ago:
I wanted to know what an "XML startup" was so I googled the term and
the first result that seems relevant was actually this exact comment
lol. I guess this is a phrase of your own invention?
kerblang wrote 42 min ago:
I swear it was a thing
But I find this terribly funny, so, thanks
novok wrote 2 hours 29 min ago:
It was definitely a thing during the dot com bubble. It was just
so stupid that most probably don't talk about it much nowadays to
be indexed. You'd need to somehow restrict your search history to
pre 2002
throwaway31131 wrote 3 hours 32 min ago:
That seemed amazing to me because it wouldâve meant Google found
the comment, integrated it into thier index, and then made that
index available, all within three hours. I know Google is good but
are they that good?
I googled âxml startup business exampleâ their AI summarized an
âxml startupâ as âa business using XML as a core
technologyâ and gave the business below as an example startup.
[1] I didnât see any reference to the hacker news comment.
Most of the links google provided below the AI summary were about
how to configure various XML tools to⦠startup. Standard link
farm stuff. :)
URI [1]: https://databridgesolutions.io/
romanhn wrote 1 hour 12 min ago:
Google is usually pretty on top of fast-changing sources like HN.
My mind was blown more when I saw that ChatGPT seemed to ingest
and regurgitate an HN comment of mine as an answer within 10-15
minutes of my posting (see the thread in [1] ). Sadly this is no
longer verifiable as the answer does not match my comment, but at
least it correctly answers the original request, which it did not
prior to my response.
URI [1]: https://news.ycombinator.com/item?id=42649774
ewoodrich wrote 2 hours 54 min ago:
I routinely see Google indexed HN comments within one or two
hours of posting so not at all surprised by this.
EDIT: In fact I see your comment as the 5th result or so
searching "XML Startup" in quotes haha.
throwaway31131 wrote 1 hour 56 min ago:
How interesting. I also tried âXML Startupâ with and
without personalization and got nothing from hacker news on the
first three pages of links. I had no idea there was so much
variance on returned results.
programjames wrote 5 hours 25 min ago:
Bracing for tariffs starting two years ago?
Havoc wrote 7 hours 33 min ago:
I'm in an adjacent space so quite interesting to me. Couple of
concerns:
1) This Fund+Roman Numeral notation is universal among funds. Meaning
this data isn't VC. It's use of fund structures. Real estate, PE,
private credit maybe bit of hedge funds etc...and yes also VC.
2) Filling trends are affected by jurisdiction fashions so to speak.
One of the big fund jurisdiction makes a small rule tweak and
everything pivots there. Or away. The funds we're setting up today are
structured differently and in different jurisdictions than 2 years ago.
Same for regional focus. Think about what that does to a single
jurisdiction trend analysis like this.
3) The spike coincides pretty neatly with covid, lockdown and that
sudden injection of cash trillions into the financial system. So a
spike in fund entities registered makes sense. Haven't looked at who
got those trillions, but I'd wager it was bigger institutions not young
VC operations starting their first fund.
Still the core hypothesis seems sound for funds overall. Regardless of
type a lot of these funds will indeed be on a 2-4 year investment
period. So it does broadly check out that there might be a softening of
funding supply coming up.
JumpCrisscross wrote 3 hours 23 min ago:
I am in this space. Most funds donât have âfundâ in the name.
(And VCs have, anecdotally, tended to use Arabic over Roman numerals,
the latter being the domain of PE and RE.) Also, there is multiple
counting with this method because you will have collections of GPs,
funds, SPVs, co-invests, feeders, et cetera, all with the same fund +
[Roman numeral] format.
What you may be measuring is the formation of naïve funds. And yes,
anecdotally, we saw a lot of novice managers emerge in '21 and '22.
(Many of whom are now winding down.) But that doesn't mean they're
concentrated in VC. In my experience, RE and--novelly--crypto, lead
the charge.
If you want to prosecute this question, better data will be found in
Pitchbook and the VCFA.
lemonlym wrote 6 hours 59 min ago:
Great points! Obviously this analysis is not unconfounded as the
methodology is pretty scrappy.
On point 3, I think both large and small investment groups saw large
growth. This is lightly supported by the spike in filings related to
SPV as a service companies like Angellist.
dadrian wrote 7 hours 34 min ago:
Most Fund Iâs are going to be smaller funds, often $9.99MM to allow
for a larger number of smaller LPs due to the $10MM threshold from the
SEC. Whereas Fund II-IV are going to be considerably bigger, often
hundreds of millions of dollars. So a large number of smaller funds
falling off wonât make that big of a dent in the total dollars
available, but may make it harder to get the smaller initial checks.
pringularity wrote 1 hour 22 min ago:
The threshold is actually $12M now! There are some proposals floating
around to actually change it to $50M with a 500 LP cap
URI [1]: https://www.congress.gov/bill/119th-congress/house-bill/4431
vonneumannstan wrote 3 hours 56 min ago:
What could a fund like this even write checks for? Even the most
basic SaaS companies are getting multiple of the entire fund as seed
or pre-seed...
dadrian wrote 2 hours 2 min ago:
The most basic SaaS companies are not raising $10MM at pre-seed,
theyâre raising $1-3MM at $10-30MM post.
ghc wrote 3 hours 15 min ago:
Typically $250K-500K checks as a follow on. From what I'm seeing,
lots of companies are still out there raising sub-$3M pre-seeds and
sub-$10M seed rounds. You might only get 1-2% of the company but
you can always try to buy up in later rounds through an SPV or your
next fund, which can be a marketing strategy for raising fund 2.
drdrek wrote 8 hours 51 min ago:
Good, many bad companies will release good developers to work on more
productive things. It's healthy for everyone.
macintux wrote 5 hours 7 min ago:
That assumes the good developers can find work. May not be so healthy
for all of them.
nine_k wrote 6 hours 6 min ago:
Maybe healthy, but will likely depress developer salaries even more.
whoiskevin wrote 7 hours 50 min ago:
This assumes that these startups had good developers.
JCM9 wrote 9 hours 11 min ago:
VCs were literally pitching to startups to take their money during the
pandemic (there were several articles about that at the time). That
nonsense will now come home to roost as companies that took money at
those hyper-inflated valuations will now need to face reality.
LPs that let their money get tied up in such nonsense are also about to
head into a world of pain. I fear the present AI bubble will only
exacerbate the pain as both sets of bad investment decisions come
crashing down around the same time.
grogenaut wrote 7 hours 39 min ago:
I had some VCs try and pitch me on joining a few companies as an
advisor. When I didn't bite they pivoted to me just making a company.
"What idea" I asked. "I'm sure you have some good ones, let us know."
They said. "Money is cheap right now, ideas aren't".
I doubt they'd return my call today.
AlienRobot wrote 4 hours 2 min ago:
>"Money is cheap right now, ideas aren't"
Decades of programmers scoffing at the "idea man" with his new app
idea and now this...
cantor_S_drug wrote 7 hours 27 min ago:
Money was so cheap then, I remember a VC fund which would match
ideas to founders and get them to success because of how versatile
and multifaceted the VC team was. :D
CalRobert wrote 8 hours 39 min ago:
Geeze, I had a product with real users and a path to monetisation and
I got ignored⦠is it because I was in Europe?
PhantomHour wrote 6 hours 41 min ago:
In part it'll be Europe, though VC in the "throw money into a fire"
style does/did exist.
But VCs, especially in those days, bordered on antipathy for
sensible business plans. They didn't want small businesses that
would turn profitable quickly and grow sustainably. They wanted
something with infinite growth ASAP that they could pump-and-dump
on Big Tech or IPO suckers.
barbazoo wrote 8 hours 27 min ago:
> and I got ignored
Socializing our losses here, arenât we? If it works out you did
it, if it doesnât, itâs the others that didnât see the value
:)
CalRobert wrote 5 hours 50 min ago:
Hah, fair enough! Also youâre more likely to hear about
startups that get funded vs not.
JCM9 wrote 8 hours 29 min ago:
Yes
moralestapia wrote 8 hours 59 min ago:
>VCs were literally pitching to startups to take their money
LMAO, true. A "friend" from that space was making money introducing
VCs to "entrepreneurs", lol. He was fully booked!
FirmwareBurner wrote 9 hours 14 min ago:
I think everyone knew, even without looking at any data, that startups
were in a bubble thanks to Covid, when every "shoeshine boy" was
studying to be a webdev at a start-up.
Like how many food delivery apps that are actually profitable can the
economy handle?
dsr_ wrote 7 hours 42 min ago:
The problem is usually not "there are 300 food delivery services" but
"there are three food delivery services and they control the market".
PhantomHour wrote 6 hours 36 min ago:
It's a business model problem; The "Uber" business model relies on
a monopoly.
The business model is 1) "Have artificially low prices to push all
competing business into bankrupty", 2) "Now that we're a monopoly,
raise prices massively", 3) Massive profit, so long as no
government starts doing anything about the fact that both steps #1
and #2 are illegal.
That business model fails the moment you have multiple startups
dumping the market, none can move to step #2 because they'd bleed
all their users to whichever competitor is still in step #1.
dheera wrote 7 hours 2 min ago:
It's restaurants that don't want to deal with 300 apps. They will
pick the top 3 and call it a day.
dsr_ wrote 4 hours 39 min ago:
.. and that's also a problem.
TylerE wrote 9 hours 3 min ago:
I think the real real giveaway is that like 90% there's a big exit,
it's an aquihire and the "product" is quickly dumped.
JCM9 wrote 9 hours 0 min ago:
Yep. Many / most aquihires are pretty ugly financially. While the
headline sounds impressive (âX startup acquired for $250Mâ) the
reality is that with preferred cap tables and terms most folks see
nothing and investors are merely trying to recoup some losses or
make a modest (less than S&P500 index fund return) return on
investment. Itâs basically a fire sale to salvage whatâs left
from the wreckage.
Founders might get a little something and most shareholder
employees get nothing.
nkingsy wrote 8 hours 29 min ago:
Donât they usually get a better stock package than the average
new hire?
mandevil wrote 5 hours 45 min ago:
The employees along for the ride on an acquihire? Sometimes
yes, sometimes no. Depends a lot on how generous the
founder/target of the acquihire is.
gdbsjjdn wrote 6 hours 16 min ago:
In my experience what the founders usually get is a bigger
locked up retention package. The investors want the cash, and
the acquirer wants the founders to stay.
DIR <- back to front page