What a wild world we’re living through. I wrote about the Series A squeeze recently. Here’s what else I’m seeing from my seat on the investing side..
1) VC has effectively fully become vibes capital. The market reality at the early-mid stage is completely divorced from fundamentals. I can go longer with even a resemblance of a straight face predict what happens to a company when they go to fund raise.
Some rounds are insanely wild with nothing to show, some rounds that seem like a sure shot are struggling to raise the capital they need. If you’re the “in vogue sector”, you’ll be just fine. This has been happening for some while but it’s fully banana town now. And unlike most who think a correction happens I think this continues for 12-18 months (dry powder, AI tailwind) minimum. The most common phrase in VC land right now is “you gotta play the game on the field”. This is a spiral that continues to keep the volatility and prices high.
2) Whereas on the public markets it’s also equally bananas. It used to be in the meme stock era that you’d see daily swings of >5% (+-). But now even trillion dollar stocks are not immune to swinging that much based on vibes and model releases. Memory and the KOSPI index are recent examples and this will happen to other sectors soon. Rotations are getting faster and faster.
In the long run, the same fundamentals of building a great company with control of your own destiny (profitable, clean cap table etc) will end up just working out fine. But in the short term, in this vortex of hyper competition where capital is needed as a weapon, you should make sure you understand what’s going on before you dip your toes in the capital markets.
No matter what it’ll be interesting to see how this shakes out when we look back in this era. Obligatory happy to chat if helpful!