Hi all,
Please forgive the long hiatus, I have two big announcements:
I transitioned from running deals through the DVC syndicate to working as a venture partner for Asymmetry Ventures, which also has a syndicate on AngelList under the fund GP’s name, Rob Ness. I’m an LP in Asymmetry Fund I, and this is a great opportunity for me to more quickly deploy investment capital from a closed fund to startups that I’d like to support. Also, when I work on a syndicate deal with Rob, I’ll frequently be co-syndicating from my own syndicate, so please check it out if you’re an accredited investor.
I’m on the core team helping to set up a new syndicate called Day One, aimed at backing founders who are former Amazon employees.
And now, for some observations in no particular order:
I’m seeing some startup trends that are particuarly hot right now AND get less press than the usual suspects (i.e. crypto, no-code B2B SaaS for ML, COVID-driven B2C e-commerce, video conferencing, autonomous cars, Clubhouse clones):
Pakistan supply chain
India edtech and accounting/bookkeeping SaaS
Nigeria fintech infrastructure (Plaid for X, Stripe for Y)
LATAM neo-banks
B2B lending services for marketplace sellers
B2B agriculture SaaS with drones
Marketing SaaS built on top of social networks
Anything remotely related to mRNA treatments
Space analytics/data services
Airplane tech that either disrupts supply chain or reduces climate change
Autonomous trucks
Anything that moves money faster/cheaper than VISA/Mastercard and ACH
Robots that make food or houses
Fundamental R&D (basic materials science) that either makes more efficient chips for ML or more efficient batteries
There are five key functions of an AngelList syndicate, and it’s challenging to do all of them well at the same time:
Build up a deal sourcing pipeline
Due diligence and memo writing
Build up an LP base
Post-deal support of the portfolio companies
Build community between deal partners, founders and backers
Now that crowdfunding sites can raise up to $5M in an offering, there is a very real possiblity that the larger base of non-accredited investors start to disrupt VCs on deals as late as Series A stage. There’s also the potential for adverse selection on pricing; I’ve already heard a few founders say they can get a higher valuation (less dilution) on crowdfunding sites than they can get from VCs or AngelList syndicates.
Exit size matters. When IPOs are more frequently getting into the tens of billions in market cap, that means a Series C or D in the $100M-$500M valuation range may still hold out the possiblity of a 100X return. These types of mid-stage deals, which are not frequently available on AngelList, fill extremely fast now as compared to a few years ago from my anecdotal observation. (note - SPAC dynamics further complicate this, but I’m not going to spill more ink on SPACs)
Secondary market liquidity for startup equity is moving much slower than I expected - AngelList and Carta are doing limited experiments, but nothing is avialable at scale yet. This will be such a game changer one day.
I’ll close by noting that a majority of the investments I made in my first two years have made it to the next round in the last year, and less than 5% have failed. Here are a few with particuarly good markups (and the stage when I invested):
TVPI > 3: Players’ Lounge (seed), Restream (seed), Farmstead (seed), NorthOne (seed), Axiom Space (Series A)