#88 Latest CFO Takes on the State of VC

Hi Everyone! 👋 Welcome to the new members of @TheFundCFO crew! We recently released our VC Fund Playbook + Models @ Streamlined.Fund! Re-linking our top 2023 posts: #67 Top VC CFO Posts & References & #65: WTF is Going On in VC (+ New Fund Model Data).

Every Tuesday/Thursday, we bring you actionable tools, real-world experiences, and insider insights for #VC CFOs/Finance Pros and fund managers, #LP investors, and industry enthusiasts/people who want to learn :). As a reminder:

• Tuesday: insights + interviews. Free for everybody.

• Thursday: deeper dives on VC GPs, CFO/COO strategy, more insights from LPs/GPs, and our take on what it all means (from 15+ yrs of experience). Exclusive to Paid subscribers (most of whom expense these insights).

“There are no failures - just experiences and your reactions to them.” -Tom Krause

Picture of the Day: Bozeman, MT

State of Private Markets in Q2’23

Venture capital firms and industry providers have reported Q2’23 valuations and portfolio updates at this point. Pitchbook released the Q2’23 Venture Monitor. CB Insights shared the State of Venture Q2’23. Carta released the State of Private Markets: Q2 2023 report.

Industry participants such as Tom Tunguz shared Surprising Data Points about the VC Market. Notable VC investor Bill Gurley and Brad Gerstner joined the The All-In Podcast, E141 to discuss Q2 in detail with David Sacks. Notable topics covered included the State of Series A’s, Dry Powder Misconceptions, VC Market Update, the IPO Window Opening, Incentives to Go Public Soon, and Macro. Highly recommend checking this episode out for great insights.

What’s the CFO take on the State of Private Markets: Q2 2023 and how it relates to VC? Here are some of our top takes in the context of updating your valuations, fund models, and adjusting your go-forward investment strategy. First, key data points:

• $15b raised in Q2'23 (vs. $60b+ peak in Q4'21); up from $12b in Q1'23

• Down rounds represent 20% of total 

• Seed-stage valuations (pre-money): $13.7m

• Series A valuations (pre): $40m

• Series B valuations (pre): $100m

• Series C valuations (pre): $250m

• Median dilution, seed: 20%

• Series A: 19%

• Series B: 17.5%

• Series C: 12.1%

Top CFO Takes in Words & Chart Format

Public markets matter. Green is good. When markets go up, LPs have more dollars to invest in VC (denominator effect). VC portfolio companies are more likely to go public or be acquired in stronger economic environments. From a macro perspective, there’s hope we’ll achieve an economic soft-landing this year:

Total Capital Invested in VC, by Stage

This chart looks at total capital raised in VC relative to Q1’21. Q1’21 was at the height of investor exuberance, so down ~50% is actually a healthy place to be for later stages. Pre-seed and seed markets are still resilient as these funds are looking to fund the most talented entrepreneurs at company formation.

Time capital raised slightly from Q1 to Q2

• $15b raised in Q2'23 (vs. $60b+ peak in Q4'21); up from $12b in Q1'23

• Deal count normalizing at around 1200 deals per quarter

Time between primary rounds appears to be normalizing:

• Seed to Series A: 628 days (21 months)

• Series A to Series B: 720 days (24 months)

• Series B to Series C (25 months)

That’s all for today folks! Thanks for your support and spreading the word! Share this on Twitter or LinkedIn to help grow “the crew!”