Earlier today, the news leaked that Visa was to acquire fintech startup Plaid for $5.3B. Plaid is known within the startup and VC community as a strong company, but it is also a relatively quiet company in terms of its own PR and social media chatter. Startup exits are rare, and as the number of startups increase, large exits will become even more rare percentage-wise. So, when a major public financial services company plunks down over $5B to acquire an asset, everyone in startup land takes notice. Windfall events are almost required to extend one’s lifespan in the Bay Area these days, and this acquisition certainly qualified as one for those involved. It’s late tonight and this armchair correspondent hasn’t eaten dinner yet, so let’s briefly unpack the key takeaways from this event:
1/ The FinTech is already red-hot. Now it’s scorching. By now, folks realize how hot the Continue reading “Quickly Unpacking Visa’s $5.3B Acquisition Of Plaid”
For those following this blog and the seed market over the past decade, you may have noticed that every year, we see increases across the board — more investors, newer funds, and funds that get larger. Much has been written about the fact that traditional seed stage funds have grown in size and dollars under management. Here, I wanted to step back and consider “why” this has happened from my vantage point. If you’re reading this looking for data and hard numbers, charts, and footnotes, you’ll be disappointed. Rather, this short blog is filled only with my own observations from being in the middle of the evolving seed market since 2013. So, with that Disclaimer, here are the main reasons seed stage firms have grown in size over the past decade, along with some risks and opportunities these conditions create:
1/ Catching Ambition – When some seed stage funds started, Continue reading “Why Seed Funds Have Scaled”
A topic that’s been on my mind a lot in 2019 is “time diversity” in venture capital funds. There’s more about this topic all over the web, but the basic gist is — when building a VC portfolio, many investors prefer to have some “time diversity” baked into the mix because 1) prices can fluctuate and a longer time period can increase the odds that a portfolio is built when prices are lower and 2) it can help the investors “pace” their initial capital deployment and reduce the risk of investing too quickly and too loosely.
From what I’ve gathered from LPs and VC mentors, in previous eras, the initial deployment period of a VC fund (not including reserves for follow-ons, etc.) used to be around 5 years. Today, it’s rare to find a 5-year fund. I know of one. I can name a few 4-year funds on one Continue reading “Time Diversity In VC Portfolios”