Pre-Money: Jan 29th, 2024

New liquidity paths, Fintech's fall, more layoffs and the toughest pitch

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The Vibe

The week’s most important happenings

Already a month into ‘24, and the radar screen is full:

  • New paths to liquidity for investors

  • The fall (and rise?) of Fintech

  • Why tech layoffs keep coming

  • VC’s toughest pitch critic

  • A 99% valuation haircut

  • and more


The week’s top performance indicators


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Dots & Lines

The week’s top takeaways

  • A new path to liquidity: The IPO pipeline may still be cold and M&A is at its lowest level in a decade thanks to factors like regulatory concerns, rising rates and buyer uncertainty. But Limited Partners (LPs) still demand distributions from their venture investments, many of which are now a bit long in the tooth after 10 years or more. Top venture firm Lightspeed, which manages more than $25B, is reportedly exploring a $1B continuation fund to liquidate at least 10 of its investments. This vehicle, more established in Private Equity but also being tried in venture recently, purchases secondary stakes at a discount, providing liquidity to LPs that need it while keeping the investments (and future fees, of course) within the firm’s remit. Many investors dislike the concept as it forces them to re-underwrite for a potentially longer term, or sell at a discount, but tough times call for tough measures.

  • Fintech’s fall (and rise?): Financial technology, or “fintech”, which promises to disrupt outdated, tired, and customer-unfriendly old guard banks and servicer providers, has been a popular investment sector for the past decade. Its allure has fallen over the past couple years, however, as lower margins and higher acquisition costs dulled the perceived advantages held by upstarts. Incumbent providers also showed that they can innovate and implement tech, complicating things further. Brex, a corporate credit and cash management startup and one of the poster children of fintech, announced 20% layoffs this week and came under fire for a reported cash burn in the range of $50M per quarter, out of whack with its $279M annualized revenue. Other top fintech companies like Klarna and Stripe have reported layoffs and down rounds in past quarters as well, with investment volume dropping off massively in the past two years. But looking ahead, up may be the only way to go. Public market fintech multiples have improved. Private markets have cultivated a robust herd of fintech unicorns like Stripe, Addepar and Rippling, that have weathered recent storms. Several could soon be ready to lead the next class of IPOs.

  • New year, same old layoffs: One month into 2024, and last year’s pattern of job cuts from tech companies and startups unfortunately persists despite the confidence shown in public markets. This year has already seen more than 24,500 cuts from 93 companies, including giant Microsoft, Tencent acquiree Riot Games, accelerator Techstars, and unicorn Flexport, according to Some fear that the dystopian narrative of AI coming for all jobs is already here, but that seems dubious. After all, a recent paper from MIT recently concluded that “only” 23% of roles merit replacement based on costs and benefits. Others suggest companies are rotating personnel into promising areas like AI and out of functions with less upside, which requires cuts in some areas and hiring elsewhere. There is a contagion idea, positing that as markets cheered layoffs last year and found new highs, the behavior spread and and continues to reinforce itself. Of course, it could be the simplest explanation - that the industry is normalizing to a healthy state after low interest rate funding frenzies and pandemic over-hiring created an unsustainable situation.


Smart Humans explores alternative investments

In this episode, Slava Rubin talks with The Riverside Company's Stewart Kohl about managing $15B AUM, doing 900 transactions in Private Equity, and scaling globally.

Deal Points

A few items of interest

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Bloomberg on the Information War between Investors & Founders

The Forecast

Looking ahead to this week

During the week of January 29th, look out for:

  • Earnings from SoFi ($SOFI), Alphabet ($GOOG), Microsoft ($MSFT), Mastercard ($MA), Apple ($APPL) and Meta($META)

  • The Fed’s January meeting Tuesday and Wednesday

  • January nonfarm payrolls (jobs) report on Friday

  • The launch of Apple’s Vision Pro headset on Friday

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