Pre-Money: June 10, 2024

KPIs

The week’s top performance indicators

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Dots & Lines

The week’s top takeaways

• Everything they touch turns to gold: The asset class has not been celebrated much of late, but Forbes’ 23rd annual Midas List, rating the top 100 venture capitalists, does just that. The list ranks VCs by evaluating their portfolio value increases, acquisitions and IPOs. The usual names can be found, like Mickey Malka of Ribbit (#2), Fred Wilson of USV (#7) and Keith Rabois of Khosla (#26). King Midas is Alfred Lin of Sequoia (#1), thanks in large part to his conviction in AirBNB, Reddit and OpenAI. The 2024 list contains a record-tying 13 female VCs. It’s led by Bay Area practitioners, with China, London and New York coming in next. It’s good to be reminded that while many firms face headwinds, there are still quite a few spinning gold.

• Software under threat: For decades we’ve been hearing that software is the ultimate exponential growth tool and that it’s still early. All of a sudden, there’s increasing chatter that the software era may have peaked. A manifesto titled “The End of Software” proclaimed that LLMs will make software go the way of the media businesses of the 90s, with all of their margin quickly chiseled away. These concerns are overblown, some say, noting that top public companies are long in the tooth and their growth naturally plateaus, pointing at private markets for the high-flyers. It’s more likely that software has quite a few innings left to run, but this is a sentiment worth keeping an eye on as AI continues to drive down costs for many tech businesses.

• It’s shakeout time: VC thought leader and Vincent podcast guest Frank Rotman of QED (Midas List #77) was back with part II of his ecosystem thread, “Landing the plane.” In it he encourages startups and funds to partner up to find exits, hard as they may be to find and disappointing as the terms may prove to be. His words seem prophetic, as this week saw Stepstone close on a record $3.3B to hunt for discounted secondary stakes in startups. Also, a survey found that the percent of GPs who given this reality will not raise their next fund at all had doubled to 13%. The shakeout is afoot, and likely to play out for another few quarters, teeing the ecosystem up for a brighter ‘25.

• Naysaying private markets: Carta founder Henry Ward launched a LinkedIn diatribe pointing out why he believes secondary share marketplaces will never work. Of course, his attempt was CartaX, the business he hyped for years and then scuttled earlier this year after being accused of leveraging private customer data to try and drum up share sales. The resulting comment thread was illuminating, and was won by operators of secondary marketplaces insisting that it does work, just come to their site and see. Perhaps Ward was just trying to distract attention from the company’s own valuation cut in its upcoming secondary sale, reported to be up to $6.5B.

• Healthcare payments company Waystar joined the IPO club as it began trading on Nasdaq Friday, slipping 3% from its open price but maintaining a $3.45B market cap

• Tempus, the diagnostics company focused on AI founded by Groupon’s creator, is set to go public next week, pricing at a $6B valuation

• Life360, which provides location-based mobile services for families and previously traded on the Australian stock exchange, listed in the US ($LIF) in a $155M IPO with a $1.8B market cap

• An anticipated announcement at Apple’s WWDC conference will involve an integration with OpenAI

• As climate challenges grow alongside dollars invested, pressure is building for a recent wave of climate startups to deliver more than prior waves did

• OpenAI’s Sam Altman holds no equity and draws a modest $65K salary, but he manages 400+ private investments worth $2.8B, like Stripe and an assortment of the firm’s potential business partners

• Data analytics unicorn Databricks is buying Tabular, a data optimization startup, for $1B

• Xcimer Energy, a fusion energy startup based in Denver, raised a $100M Series A led by Hedosophia

• Virtual musculoskeletal health provider Sword Health based in Utah, raised $130M - including primary capital and employee secondaries - at a $3B valuation and said it tripled revenues

• Private Equity standout Cerberus Capital, which manages $65B, is said to be raising its first venture fund to focus on early stage Defense Tech and Hardware

• Amid an era of B2B enthusiasm, this thoughtful piece makes the case that a consumer tech renaissance is coming

• Join 500+ GPs, LP, Family Offices, and studios to talk VC, PE & FO trends in 2024 on June 20th at the Fund of Funds & Family Office Online Conference