Then by the end of Q3 2025 (Big Book of VC Q3 report), we were talking about: “Momentum Is Building — and Broadening! In short, venture isn’t back to full strength, but it’s no longer stalled. The engine is running, the wheel is turning, and momentum is returning with discipline. After the past few years, that alone is real progress.”

In short, expectations from 2024 were largely met in 2025.

The Big Book of VC - 2025 Annual

Click the image above to open the DocSend file—a 270+ page deep dive into venture and startup dynamics.

Looking ahead to 2026, I’m focused on five key trends:

1. VC Fundraising Shock: Of all my projections, this is where I missed the most. I did not expect VC fundraising to fall as sharply as it has. While the data is still partial (only until Q3) and open to debate, the magnitude of the decline was surprising. It raises an important question: why did this happen? Low DPI is the obvious explanation, yet exits, and investment activity has improved this year and points to a more constructive outlook for 2026. Against that backdrop—especially with public equities near peaks—it’s not immediately clear why LP allocations failed to at least match 2024 levels. Lookout for revival in 2026 - hopefully🤞!

   

2. Exits, but Varied: Strong performance from high-profile IPOs in the U.S. and India in 2025, coupled with a growing backlog of IPO-ready companies, suggests a meaningful supply buildup that could sustain momentum into 2026. That said, this should not be taken for granted—macro remains the hardest variable to predict, as evidenced by the unexpected Q1 volatility driven by shifting trade narratives. Down-round IPOs and post-IPO performance were a topic of discussion in 2025 and remain so in 2026. Still, the area I’m most constructive on is M&A. Strategic buyers and PE sponsors alike are well-capitalized and could be looking to deploy dry powder into fitting assets. While M&A is not necessarily easier, it is often less directly exposed to macro volatility. With U.S. M&A activity already rebounding, the key question is whether this momentum extends to other markets in 2026. Secondaries have also emerged as a vital release valve, and their role as a liquidity bridge is set to expand further within the venture ecosystem next year.

   

   

   

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3. Redefining Seed: Seed investing is at an inflection point. Competition has intensified, the number of funds has grown, and megafunds have aggressively entered the market. The market is increasingly bifurcated—AI-native startups attracting capital at scale, while non-AI companies lag. Traditional seed is being squeezed from both ends: pre-seed is encroaching upward, while “seed” rounds of $50M+ blur the definition of the stage entirely. Smaller funds are struggling to support follow-on rounds, larger seed funds are harder to raise, and LPs are actively reassessing seed exposure amid high valuations and lower deal volumes. These forces don’t neatly reconcile—creating exactly the conditions needed to redefine what seed investing actually means.

   

4. Late-Stage Renaissance: Late-stage venture reopened in 2025, with deal activity and capital deployment picking up, accelerated by strong demand for AI leaders. After being the hardest hit in the downturn, the late stage is finally back in motion, with significant dry powder seeking deployment. That said, expectations remain uneven: outside the U.S., many markets still anticipate a late-stage capital gap, prompting sovereign LPs to actively support this segment. The message is clear—the system needs the wheel to keep turning, and it is. But this will be a tale of two cities: clear winners attracting capital at scale, and a harsh reckoning for those that fail to meet the increasingly high bar on growth, quality, and AI relevance. Caution is warranted—but so is optimism.

   

5. Weakness from Within: In Q4, the dominant question has become: Is AI a bubble? History suggests that not all bubbles end the same way—some unwind quietly, while others permanently reshape markets, even as they destroy capital along the way. AI already wields outsized influence through infrastructure spending, capex cycles, and its central role in startup growth narratives. The key uncertainty lies in how this resolves: life as normal in 2026, a sharp correction, or a prolonged monetization lag. Time will tell!

Enjoy the read, and let me know your thoughts on 2026.

Disclaimer: This newsletter is for educational and informational purposes only and does not constitute financial, investment, legal, or tax advice. It is not a recommendation to buy, hold, or sell any security or financial instrument. Data and analysis are drawn from publicly available sources and provided without warranty of accuracy or completeness. Forward-looking statements reflect the author’s views at the time of writing and may not predict future outcomes. Please consult a qualified professional before making investment decisions. The author assumes no liability for any actions taken based on this content.

You are receiving this message because you subscribed to either the “All Things VC” newsletter, “TheOnePoint” podcast, or downloaded one of our “The Big Book of VC” ecosystem reports.

Hot take: Everyone crying “venture winter” has completely missed the plot.

Sure, the timeline’s still stuck on rinse-and-repeat pessimism—but here’s what Q2 2025 actually looked like:

💰 $205B in H1 global startup fundraising — climbed 32% year-on-year
🚀 $57B in global mega-rounds — U.S. captured 18.5x more than Asia
📈 Valuations? Back to 2021 highs almost across stages (for the right startups)
🤝 M&A? Up 2.7x YoY for H1 — pushed by AI
💼 Secondaries? Activity and fundraising are catching pace. Pricing is rebounding.

But let’s be clear:
This isn’t a comeback.
It’s a reshuffling.

Check out the Q2 Big Book report release HERE.

This 130+ page report is your ultimate guide to venture and startup insights. Whether you’re an investor, founder, or ecosystem enthusiast, it’s guaranteed to light up that insight bulb.

A strategic reordering—brutal and brilliant—that’s only apparent when we peel the layers.

🧊 Europe and Asia fundraising? Still timid in Q2.
😓 Emerging VC managers? Still compressed—top 30 firms raised 74% of capital in Q2.
📉 Generic startup fundraising? Struggling.
🎯 LPs? Leaning into familiar names, creative structures, or secondaries.
📊 IPOs? Increasing pace with FinTechs leading, some standout post-IPO performance, yet Downround IPOs are a thing, and Europe pushed to H1 26 recovery

Meanwhile…

🦾 AI startups and founders are having their moment in the sun.
♟️ Big Tech is playing 4D chess with acqui-hires and minority deals.
🎯 Venture debt is evolving into runway extension tools for post-Series B startups.
👥 Talent is in motion—leaner teams, surging demand for AI specialists, and senior venture talent quietly moving behind the scenes.

💡 This is no longer a game of velocity.
Neither is it about surviving the cycle.
It’s a game of positioning, perception, and power concentration.
It’s about mastering the near-term realities of venture, while aligning for the long-term.

Special thanks to the venture experts who joined TheOnePoint podcast 🙌

• Albert Azout from Level Ventures (Topic - Data Science Driven VC FoF)

• Cali Chill from OurCrowd (Topic - Democratization of Venture Capital)

• Daniel Keiper-Knorr from Speedinvest (Topic - Shifting Dynamics of Venture Fund Management)

• Larsen Jensen from Harpoon Ventures (Topic - Geopolitics in Venture Capital)

• Rob Hodgkinson from SignalRank (Topic - Indexing Venture)

• Shwetank Verma from Leo Capital (Topic - Global Indian Alpha)

And also to VC GPs who contributed ecosystem thoughts 🙌 🙌

• Ben Stein from Cartography Capital

• Jeremy Tan from Tin Men Capital

• Jessica Peltz-Zatulove from Hannah Grey VC

• Jonathan Lacoste from Space VC

• Massimiliano Magrini from United Ventures

(listed alphabetically)

Headlines from the different startup and venture areas:

Startup Fundraising

• Global startup fundraising showed positive H1 momentum in 2025. On a half-over-half (HoH) basis, startup fundraising rose by 21%, and on a year-over-year (YoY) basis, it climbed 32%.

• The U.S. continues to dominate the global startup fundraising landscape—reaching 75% of 2024’s total volume already in H1—driven by mega-rounds, growth-stage deals, and surging AI enthusiasm.

• Regionally, the recovery remains uneven and muted. Europe (-24%) and Asia (-19%) saw sharper YoY fundraising declines in Q2.

• AI continues to be the standout vertical globally, raising $47 billion in Q2 alone (second-highest quarter since 2021) and commanding a visible premium across valuation, deal size, and investor focus.

• Mega-rounds pulled in $57 billion globally in Q2, with the U.S. alone capturing 8.8x and 18.5x more capital than Europe and Asia, respectively—cementing its lead in capital concentration.

• Venture debt, while tapering off from its record 2024 levels, is becoming more strategic—used increasingly by mature startups to extend runway without dilution. AI and ML companies now account for over a third of venture debt volume.

Deal Dynamics

• H1 2025 deal count data reveals continued selectivity across the venture landscape and probably another subdued year of deal count. A key shift is the rise in late- and growth-stage deal activity, as investors increasingly favor mature companies with traction, revenue, or exit potential.

• Fundraising timelines are lengthening with a mixed outlook (stage, region).

Valuations, Performance, and Unicorns

• Valuations have rebounded sharply across funding stages in the U.S. since 2023, and continued in 2025, pushing valuations toward all-time highs and signalling renewed confidence in a certain type of startups.

• AI unicorns are commanding a striking premium in today’s market—trading at 24x revenue compared to 10x for non-AI peers—driven by their perceived scalability and defensibility.

Exits

• There are encouraging signs on the exit front in H1 2025, with global exit dollar volume already reaching 62% of 2024’s total and exit count at 50%, indicating the potential for flat or slightly improved full-year activity. The U.S. delivers an outstanding H1 exit performance, despite tariffs and other geopolitical issues in the air during the last few months.

• Latest outlook reflects cautious optimism. While most investors expect modest improvement in exit activity over the next 6–12 months, exit sentiment has softened compared to H1 2024.

• Unicorn exits today face a more complex and selective path, with only ~25% of unicorns realistically positioned for IPOs as investors demand clearer KPIs—sustainable growth, revenue scale, and profitability.

IPOs

• Downround IPOs have become common, with ~60% of listings debuting below their last private valuations and a median cut of 27%, reflecting a recalibration of expectations.

• Yet post-IPO performance tells a more nuanced story: while standouts like Circle and CoreWeave shine, overall returns remain mixed, reinforcing that not all IPOs are created equal.

• As 2025 unfolds, the year is shaping up as a potential “FinTech exit year,” with several high-profile IPOs and acquisitions on the horizon.

• Europe remains in a holding pattern, with forecasts pointing to a potential IPO revival by H1 2026. Q1 2025 offered a brief optimism window, but activity has since narrowed.

• Across APAC, IPO markets show an uneven rebound, signalling not just cyclical softening but a structural transition. Liquidity is consolidating in resilient exchanges like India’s NSE and Japan’s TSE, which are emerging as preferred venues in APAC amid volatility.

M&A’s

• Startup M&A in 2025 is gaining strong momentum, with Q2 exit volume reaching $50.5 billion—just below Q1’s standout performance driven by the Wiz acquisition—and marking the second consecutive quarter of growth. For perspective, global VC-backed M&A deal volume in H1 2025 is up 1.9x compared to H2 2024 and a staggering 2.7x over H1 2024.

• Deal count has remained relatively stable, while AI continues to dominate, with AI-related M&A more than doubling against five-year averages.

• Notably, startup-to-startup acquisitions are rising fast, now accounting for a record 36% of all U.S. VC-backed M&A activity.

• At the unicorn level, most acquisitions are still led by public companies (nearly 60%), given the scale required for billion-dollar-plus transactions.

• Big Tech's strategic retreat from full acquisitions amid regulatory scrutiny has led to an uptick in acqui-hires and minority deals. As AI continues to reshape M&A behaviour, the lines between talent acquisition, product integration, and venture exit are increasingly blurred.

Secondaries

• Secondaries are rapidly emerging. Activity has accelerated significantly, with secondary opportunities doubling from 2024 levels and fundraising gaining momentum. Yet, many GPs have yet to engage actively. Ecosystem is arguing that in Secondaries asset quality, not discounts, drives returns.

• Median H1 2025 pricing rebound and compression of bid-ask spreads are evident in secondaries—signalling renewed confidence. Demand, premiums, and liquidity are still concentrated in top names.

Talent

• Most recent data and charts on hiring trends point toward a broader slowdown in the job market across the tech and startup ecosystem. Startups are increasingly opting to build with leaner teams, delaying hiring plans in response to efficiency pressures and productivity gains enabled by AI.

• Even among the largest tech players, headcount growth has been modest, with a 23% decline in 2023–24, signaling a shift from the prior aggressive talent expansion. Meanwhile, broader market layoffs are quietly ticking upward, reinforcing the narrative of caution.

• One bright spot: AI-focused startups continue to see hiring growth due to surging demand for specialized talent.

• “The Great Venture Talent Flux,” my Crunchbase article perfectly outlines the VC industry talent reshuffle triggered by the turbulence of 2023–24, marked by misalignment, frustration, and tough decisions—yet setting the stage for a springboard effect in 2025.

Venture Business

• VC fundraising continues to decline in H1 2025 across the U.S., Europe, and other key regions, pointing toward a fourth consecutive annual dip. This contraction reflects LP caution, longer deployment cycles, and a higher bar for backing emerging managers—ushering in a more selective, disciplined capital formation phase.

• The “flight to familiarity” is stark: the top 30 firms command 74% of VC fundraising, while emerging managers capture just 11%. However, mid-sized funds ($100–250M) are gaining ground (at least in numbers), offering LPs a blend of specialization and scalability.

• In Europe, venture fundraising slowdown is hitting hard with H1 2025 shaping up to be one of the weakest years in a decade—compounding an already sluggish 2024. But the secondary fundraising is gaining momentum, reflecting a continued focus on risk-managed capital.

• Venture is also embracing structural innovation—evergreen vehicles, AI roll-up funds, and even tokenized access—part of a broader democratization push that’s opening access beyond traditional institutional investors. Strategically, VC is converging with private equity and corporate innovation models. Bigger VC firms are acting more like “full-stack investors,” adopting RIA structures, leading strategic roll-ups, and unlocking deeper operational value. Simultaneously, BigTech is embedding in venture via minority stakes in AI funds and high-profile acqui-hires.

• Corporates are doubling down—particularly in AI, DeepTech, and Sports—fuelling a CVC resurgence, albeit with turbulence. Meanwhile, the SEC is modernizing private market access rules to expand retail participation, signaling a broader policy shift toward capital market inclusivity with a renewed focus on investor safeguards.

Now, before you dive in too deep, a quick caution label: not everything in venture is sunshine. For a grounded strategic check, read my recent deep-dive, “Rethinking Venture Capital: A Strategic Lens”—a forward-looking reframing of the asset class across its full value chain. One theme runs quietly in the background but looms large: macro matters. Always. Venture doesn’t float in a vacuum—it moves (or stumbles) with the capital markets. And right now? The S&P 500 is at an all-time high while a cocktail of global uncertainties still lingers—tariffs, China, geopolitics, and conflicts… You name it. The real question: do we buckle under pressure, and if so, how deep, how fast, and for how long? A lot of “ifs,” I know—but welcome to the new normal of risk-managed optimism. And yes, I’m still ‘positively cautiously hopeful’ about 2025.

Download the Full Deck from DocSend

Disclaimer: This newsletter is for educational and informational purposes only and does not constitute financial, investment, legal, or tax advice. It is not a recommendation to buy, hold, or sell any security or financial instrument. Data and analysis are drawn from publicly available sources and provided without warranty of accuracy or completeness. Forward-looking statements reflect the author’s views at the time of writing and may not predict future outcomes. Please consult a qualified professional before making investment decisions. The author assumes no liability for any actions taken based on this content.

You are receiving this message because you subscribed to either the “All Things VC” newsletter, “TheOnePoint” podcast, or downloaded one of our “The Big Book of VC” ecosystem reports.

Checkout the teaser deck HERE

About the Report

Venture capital is no longer a niche asset class—it’s a strategic infrastructure for innovation, competitiveness, and value creation. Rethinking Venture Capital: A Strategic Lens is a comprehensive, forward-looking report that reframes how we view the asset class across its entire value chain.

As the ecosystem faces a deep phase of structural dissonance, the report offers a timely and essential lens to realign strategy with today’s reality. It’s an indispensable read for LPs, GPs, allocators, founders, and anyone seeking clear thinking amid a noisy venture landscape.

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After 3 months, 28 iterations, 11 expert interviews, and countless hours of deep analysis—I'm proud to share something different.

👉 “Rethinking Venture Capital: A Strategic Lens” is a comprehensive forward-looking report that reframes how we understand, allocate, and operate in venture—across the entire value chain.

🧠 First, let’s address the elephant in the room: Venture’s Dissonance Phase.
The model we still rely on was built for a different era. Meanwhile:
⚡Innovation cycles are accelerating (AI advancement is measured in months or quarters)
🌐 Liquidity is constrained by being macro-dependant and unpredictable
🔁 Capital structures are still stuck in rigid decade+ lock-ins

On top of this, have a look at the venture value chain data and it will give you pause:
💰 $848B in available capital (dry powder + fundraising)
🚀 $377B deployed into startups
📉 $323B in exits
For years, exits outpaced investments. Now?
Capital is stuck. Liquidity is tight. Reinvestment is delayed.

📢 Zooming out, venture capital isn’t just evolving. It’s being re-engineered.
We’re not just facing tough markets. We’re witnessing a system-level disruption.

And now, we find ourselves at a strategic crossroads having entered the Venture 3.0 era—a dual transformation where Institutional rigor meets Democratized access.

So, how should LPs respond?
✅ Adopt the Four-Lens Framework
Venture = Innovation engine + Asset class + Geopolitical strategy + Cultural force
✅ Use the Venture Spread Model
Segment by stage, geography, structure, and sector—not instinct. Build intentional portfolios.
✅ Think in systems. Institutionalize discipline.
Avoid the three sins: Random timing, over-concentration, and gut-based bets.

This is how we future-proof venture—not with hype, but with rethink, redesign, and realignment.

Special Thanks

Special thanks to the 11 experts across the U.S., Europe, and India—your insights validated key shifts and grounded the report in a global context 🙏🏼

Aarti Gupta - CIO–Family Office DM Gupta & Anikarth Ventures LLP
Christoph Junge, CAIA - Former Head of Alternatives at Velliv
David Clark - Chief Investment Officer at VenCap International plc
Eric Woo, CFA - CEO at Revere
Frank Tanner - Director at Morgan Creek Capital Management, LLC
Jamie Rhode, CFA - Partner at Screendoor
Joel Sandhu - Managing Partner at Top Tier Access
Michael Motschmann - Managing Partner at MIG Capital
🌱🤝🌍 Nicolas Sauvage - President at TDK Ventures
Rando Rannus - General Partner at Siena Secondary Fund
Sim Desai - CEO at Hiive

What Makes This Report Stand Out

• A 360° Strategic Lens on Venture: Offers a comprehensive, end-to-end view of the entire venture capital value chain—capital inputs to exit outcomes—framed for today’s complex investment environment.

• Insights from 11 Global Experts: Features perspectives from leading voices across the U.S., Europe, and Asia on critical themes such as Family Offices, Allocations, Fund-of-Funds, Secondaries, CVC, Democratization, and Technology in Venture.

• Decoded the 'Venture Dissonance' Phase: Unpacked the structural and temporal misalignments currently challenging the venture model—and what they mean for investors today.

• Introduced the 'Four-Lens' Framework: A new mental model to understand venture’s evolving role—as an innovation driver, financial asset, strategic tool, and cultural force.

• Proposed the 'Venture Spread' Model: A modern allocation framework designed to help LPs reimagine venture exposure across structure, sector, stage, and geography.

• Mapped the 'Venture 3.0' Era: Deconstructed the transition from boutique craft to institutional-grade venture—offering a blueprint for the next era of firm-building.

• Scenario Planning for What’s Next: Presented two macro-informed venture scenarios—‘Weakness Scare’ (bear case) and ‘Uptick Cycle’ (growth case)—to guide strategic thinking for LPs and GPs alike.

• Cross-Asset Comparisons for Clarity: Strategic parallels with other asset classes help LPs benchmark, stress-test, and contextualize their venture theses with greater confidence.

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🌐 Web | 📺 YouTube | 🌐 LinkedIn | 🗞️ Newsletter | 🎧 Spotify | Apple

Disclaimer: This newsletter is for educational and informational purposes only and does not constitute financial, investment, legal, or tax advice. It is not a recommendation to buy, hold, or sell any security or financial instrument. Data and analysis are drawn from publicly available sources and provided without warranty of accuracy or completeness. Forward-looking statements reflect the author’s views at the time of writing and may not predict future outcomes. Please consult a qualified professional before making investment decisions. The author assumes no liability for any actions taken based on this content.

You are receiving this message because you subscribed to either the “All Things VC” newsletter, “The Big Book of VC” ecosystem reports, or “TheOnePoint” podcast.

Check the post and teaser deck HERE

🚨 The Big Book of Venture Capital - Q1 2025 Edition 🚀

It’s here. This 150+ page book is your ultimate guide to venture and startup insights. Whether you’re an investor, founder, or ecosystem enthusiast, it’s guaranteed to light up that insight bulb.

📉 2023 and 2024 were rough.
Capital dried up. IPOs froze. Talent scattered. LPs got nervous.
The vibe? Survival.
Now? The vibe is of Comeback.

Here’s what’s really happened in Q1 2025:

• 📉 Exits are still the biggest bottleneck in the system

• 📈 AI is dominating VC like never before

• 💸 Late-stage U.S. funding surge

• 🔥Deal sizes and valuations are inflating

• 🦄Unicorns are forming faster than ever

• 💥 Mega-deals are back

• 👥 Venture Talent Flux is real—some launching new firms, others leaving VC entirely

• 📊 IPOs? On pause. Klarna, StubHub—both stepped back after early signals

• 🤞🏼M&As: Wiz deal gives hope. HUGE potential here to unravel

• 💨 Secondaries are in the news all over

But while headlines are focused on hype or doom, here’s the actual opportunity:
Founders are being more intentional. Teams are leaner, smarter. LPs are demanding more from managers. VCs are being forced to focus.
And that’s all a good thing.

2023–24 was a hard reset. 2025 is the recalibration.

If you’re an investor, this is your window to lean in to capture alpha.
If you’re a founder, this is the moment to build.
The next wave isn’t coming tomorrow—but it’s forming.

Despite the tariff noise, I’m still ‘positively hopeful’ about 2025, ‘with an undertone of skepticism’ about the venture ecosystem.

Special thanks to the startup founders and venture experts who joined TheOnePoint podcast 🙌
While ‘The Big Book’ covers the strategic aspects of venture business, TheOnePoint delves deep into niche startup topics.

• Agata Leliwa Nowicka (Female Foundry)

• Albane Dersy (inbolt)

• Clare Zhang (Playfair Capital)

• Dan Gray (Equidam)

• Lawrence Lundy-Bryan (Lunar Ventures)

• Matt Curtolo

• Oliver Kahl (MIG Capital)

• Parithi Govindaraju (Okulo Aerospace)

• Ramakrishna Nanjundaiah (Phantasma Labs)

• Roxane Sanguinetti (Alma Angels)

• Sagar Chandna (RunwayFBU)

• Santosh Rao (MVP)

• Trine Young (Rodinia)

(listed alphabetically)

🌐 Web | 📺 YouTube | 🌐 LinkedIn | 🗞️ Newsletter | 🎧 Spotify | Apple

You are receiving this message because you subscribed to either the “All Things VC” newsletter, “The Big Book of VC” ecosystem reports, or “TheOnePoint” podcast.

Checkout slides on Docsend here

This 260+ page powerhouse is your ultimate guide to venture and startup insights. Whether you’re an investor, founder, or ecosystem enthusiast, it’s guaranteed to light up that insight bulb.

As the year-end draws closer, it's time to reflect, rethink, and plan for 2025. What better way than a strategic overview of our dynamic landscape to help you connect the dots?

𝗧𝗵𝗲 𝗣𝗮𝘀𝘁, 𝘁𝗵𝗲 𝗣𝗿𝗲𝘀𝗲𝗻𝘁, 𝗮𝗻𝗱 𝘁𝗵𝗲 𝗙𝘂𝘁𝘂𝗿𝗲

💡What’s inside?
This isn’t just a recap—it’s thoughtful analysis, insightful trends, and intriguing predictions for our dynamic VC world.

Here’s what makes this edition a must-read:

— 101 venture trends revealed. Not just the "top 10," but a structured, multi-layered deep dive into the insights you NEED to see.
— Predictions so that you understand the trends shaping 2025 and explore select impactful shifts with clear rationales behind them.
— 275+ charts offering the most detailed and nuanced view of the VC world globally, not just from the U.S. but also from Europe and Asia.
— Data from top sources including Crunchbase, PitchBook, Carta, Dealroom, and more—plus expert thoughts/opinions to layer in human perspective.

📊 Which questions spark your curiosity?
— Is the Bay Area still leading in early-stage investments?
— Are European VCs more likely to invest in manufacturing startups?
— Are U.S. valuations becoming more dispersed?
— Did the UK lead the 2024 European VC fundraising?
— Are private companies still commanding a premium over public ones?

The answers to these and so many more are inside the deck.
What are you waiting for? Go dive in now!

Special thanks to the venture experts who contributed their wisdom. 🙌
Bhargavi Vijayakumar, Brandon Hoffman, Dan Gray, Doerte Hirschberg, Eric Woo, CFA, Gopi Rangan, Jonathan Hollis, Marc Penkala, Oliver Oster, Valerie Bures (listed alphabetically)

If you found this newsletter valuable, please consider sharing it with other investors and founders. “We grow together, better!” As always, feel free to reach out - I’m here to brainstorm and provide support.

Share

Rohit 👋🏼

Get in touch with me:

🌐 Web | 📺 YouTube | 🌐 LinkedIn | 🗞️ Newsletter | 🎧 Spotify | Apple Podcast

Checkout slides on Docsend here

Geopolitics, elections, inflation, rates, consumption, and more - our startup and venture capital ecosystem is increasingly shaped by macro factors, directly or obliquely.

We often say that venture is a decade+ game, though we forget that short-term trends compound into long-term outcomes.

𝗪𝗵𝘆 𝘁𝗵𝗶𝘀 𝗱𝗲𝗰𝗸? To build:
- Context on the current macro landscape
- Short-term scenarios: 'RRR' - Roll, Recession, and Rebound
- Essential interconnections bw. venture capital value chain and macro elements

𝗪𝗵𝗶𝗰𝗵 𝗸𝗲𝘆 𝘁𝗼𝗽𝗶𝗰𝘀 𝗮𝗿𝗲 𝗰𝗼𝘃𝗲𝗿𝗲𝗱?

🔄 Venture capital is a circular flow business.
🔑 Inflation remains a key short-term variable, and ‘Roll’ is the anticipated short-term scenario
➡️ Venture inflows - bump, but not a roadblock!
🏢 Venture business - suffering, but striving for an upgrade!
↩️ Venture outflows - down, but not disappeared!
⁉️ Enough short-term macro risks to keep us on our toes in 2024

Overall: The macro environment isn't indicating a slam-dunk year for venture capital and startups in 2024. However, the long-term growth of the venture industry is beneficial and essential for the economies globally.

𝗦𝗮𝘃𝗶𝗻𝗴 𝘁𝗵𝗲 𝗯𝗲𝘀𝘁 𝗳𝗼𝗿 𝗹𝗮𝘀𝘁!

I humbly appreciate venture experts who contributed their thoughts to this deck. (in alphabetical order)
Ashish Kumar, Brandon Hoffman, Carolin Wais, Christophe Aumaître, Eric Woo, CFA, Jeremy Tan, Marc Penkala, Mark Harré (he/him), Niklas Benesch, Pratibha Vuppuluri, Rohit Mathur, Triin Linamagi

If you found this newsletter valuable, please consider sharing it with other investors and founders. “We grow together, better!” As always, feel free to reach out - I’m here to brainstorm and provide support.

Share

Rohit 👋🏼

Get in touch with me:

🌐 Web | 📺 YouTube | 🌐 LinkedIn | 🗞️ Newsletter | 🎧 Spotify | Apple Podcast

Checkout slides on Docsend here

This mammoth 300-page deck is a treasure trove of vital venture and startup insights. It has something for everyone and will undoubtedly spark the 'insight' bulb in your brains.

“𝐓𝐡𝐞 𝐆𝐨𝐨𝐝, 𝐓𝐡𝐞 𝐁𝐚𝐝, 𝐚𝐧𝐝 𝐄𝐯𝐞𝐫𝐲𝐭𝐡𝐢𝐧𝐠 𝐈𝐧-𝐁𝐞𝐭𝐰𝐞𝐞𝐧”
With just two months left in 2024—or really 1.5, given the holiday lull—I dug into Q3’s data to categorize breakout trends in the Big Book. The verdict? Not much has radically changed. Most patterns from Q1 and Q2 continue: a bit of the Good, a bit of the Bad, and almost Everything In-Between.

Key strategic headlines are below. Though ‘alpha lies in the nuances’ - so delve deeper into the deck.

THE GOOD
- For 2024, the U.S. and European exit volume is bouncing back and on track to beat 2023 numbers
- In the Secondaries, the median discount to the last primary round has shrunk, with continuous upward movement.
- Startup-to-startup acquisitions now dominate U.S. VC-backed M&A

THE BAD
- In Q3, global startup funding saw its first dip in an otherwise upward streak, with most regions experiencing declines to varying degrees
- Experienced investors claimed nearly 60%+ of Europe’s VC capital—the highest in a decade—as the number of funds raised has halved.

and EVERYTHING IN-BETWEEN
- Startup Fundraising: One in three VC dollars now flows into AI, with Silicon Valley capturing 41% of U.S. AI funding. AI startups are hitting unicorn status faster. Deal sizes continue growing across the U.S. and Europe. Active investor numbers have steadily declined, and 2024 down rounds mirror last year, varying by stage.
- Performance: Valuations are either holding steady or climbing. However, half of Europe’s unicorns have stalled since 2021, sparking concerns about potential devaluations
- LPs: Global VC fundraising in 2024 is on track to last year’s volume
- Venture Performance: Record-high dry powder remains mostly untapped, while distributions linger at decade lows. Loss ratios for sub-1x deals are nearly identical between top quartile and average. venture funds
- Talent: Layoffs are lower than in 2023 but still happening. Venture talent is still transitioning/churning

As we head into November, major shifts in trends seem unlikely for 2024. All eyes are on the U.S. Presidential Election to ease market anxiety. The industry is hopeful for a 2025 rebound, with everyone keen to avoid a repeat of the last few quarters. Here’s to better days ahead!

Also, I’m glad to include conversation snapshots from TheOnePoint podcast in the Q3 version.
Thanks to Ashish Kumar, Gabriel Shin, Guy Conway, Ihar Mahaniok, Johanna Broell, Laura Laringe, Manu Pillai, Matias Machado, Paul Miller OBE, Shila Nieves Burney 🇵🇷, Til Klein 🏳️‍🌈 🇪🇺 (alphabetically).

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Rohit 👋🏼

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Checkout slides on Docsend here

This 212-page deck is a treasure trove of vital venture and startup insights. It has something for everyone in the ecosystem and will undoubtedly spark the 'insight' bulb in your brains. It’s Bigger, Better, and Bolder.

𝐆𝐥𝐚𝐬𝐬 𝐡𝐚𝐥𝐟 𝐟𝐮𝐥𝐥 𝐨𝐫 𝐡𝐚𝐥𝐟 𝐞𝐦𝐩𝐭𝐲? 𝐖𝐡𝐢𝐜𝐡 𝐬𝐢𝐝𝐞 𝐚𝐫𝐞 𝐲𝐨𝐮 𝐨𝐧?

In the Q1 ‘24 report, I mentioned the venture sector being ‘in the woods,’ though we could see the sunlight. A quarter down the line, it feels like it will take us some time to bounce back fully. Stuck in this situation, we can either be optimists or not!

Key strategic headlines are below. Though ‘alpha lies in the nuances’ - so read and delve deeper into the deck.

🆙 Startup fundraising has grown for two consecutive quarters for the first time since 2021.

↕️ Valuations and deal size per round are up for most stages in the U.S. and Europe. However, the number of deals happening is down.

✅ AI investments continue to rise, reaching new highs and dominating the startup scene with higher valuations and larger rounds

💡Secondaries are booming. Most funded startups trade at a median discount of around 30%, and a quarter of startups trade at a premium. New secondary VC funds are coming up to capture this opportunity.

🆙 Corporations worldwide are increasing their involvement in the startup space. Many are also setting up CVCs to invest in hot areas like AI.

↘️ Global exit data isn’t inspiring, and exit volume will likely fall short of '23 numbers. Global M&A is picking up but has yet to influence Tech M&A fully. H2 ’24 could hold the key to recovery.

⚠️ VC fundraising is still strained and lopsided. Emerging managers consistently raise less than half of the total U.S. VC funds. Established managers dominate the U.S., with the top 5 funds raising 45% of the total in the first four months of 2024.

↕️ Tech layoffs in big tech and startups continue globally, but the number will decrease in '24. In the current downturn, senior VC talent is leaving established funds to start their own VC firms.


Saving the best for the last.

Special thanks to 🌱🤝🌍 Nicolas Sauvage from TDK Ventures for writing an insightful piece on Corporate Venture Capital (CVC) 3.0. His initiative to bring CVC knowledge and insights together through the CV-Insider platform is an enormous value-add for our startup and venture community.

I also humbly appreciate venture experts who contributed their thoughts to this deck. (in alphabetical order)
Bhargavi Vijayakumar, Dan Gray, Eric Woo, CFA, Frank Tanner, Jeremy Tan, Joel Sandhu, Simon Lancaster 🇺🇸🇨🇦🇵🇹, Utpal Doshi

If you found this newsletter valuable, please consider sharing it with other investors and founders. “We grow together, better!” As always, feel free to reach out - I’m here to brainstorm and provide support.

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Rohit 👋🏼

Get in touch with me:

🌐 Web | 📺 YouTube | 🌐 LinkedIn | 🗞️ Newsletter | 🎧 Spotify | Apple Podcast

Checkout slides on Docsend here

This 170+ page deck is a treasure trove of vital venture and startup insights. It has something for everyone in the ecosystem and will undoubtedly spark the 'insight' bulb in your brains.

"𝙄𝙛 𝙮𝙤𝙪 𝙝𝙖𝙫𝙚 𝙩𝙤 𝙥𝙞𝙘𝙠 𝙖 𝙢𝙤𝙢𝙚𝙣𝙩 𝙤𝙛 𝙪𝙣𝙘𝙚𝙧𝙩𝙖𝙞𝙣𝙩𝙮 𝙬𝙞𝙩𝙝 𝙖 𝙨𝙥𝙧𝙞𝙣𝙠𝙡𝙚 𝙤𝙛 𝙤𝙥𝙥𝙤𝙧𝙩𝙪𝙣𝙞𝙩𝙮, 𝙞𝙩 𝙬𝙤𝙪𝙡𝙙 𝙗𝙚 2024."

Overall, the startup and venture industry is definitely in a state of evolution and undergoing a business cycle reset. The setting in Q1 2024 is the ‘same old 2023’ but with a hint of improvement. We are not yet out of the woods, but we can see the sunlight.

Key headlines are below, though ‘alpha lies in the nuances’ - so read and delve deeper into the deck.

🆙 Valuation trends in 2023 indicated a critical correction, but 2024 gives hope for recovery. Q1 data showed a rebound in valuations.

✅ Uptick in the global startup investments. Overall, VCs anticipate increased investment in 2024. Investments in top startup ecosystems are rising, albeit with varying regional trends.

⁉️ VC fundraising is still strained. Compared to the five-year average, it experienced a significant decline in 2023. Analysis indicates we are approximately halfway through this fundraising downturn.

↕️ Q1 remained slow w.r.t exits, but there is much to hope for in 2024. M&A volume declined globally in 2023, but VCs foresee M&A playing a significant role in 2024. Although there was an uptick in IPO exit values, declaring a complete IPO resurgence is premature. Secondaries (and related instruments like Strip sales and continuation funds) are gaining popularity among the VC community to gain liquidity.

💡 On the limited partner side, the picture is complex. Family offices are increasing investments in alternative assets, potentially strengthening the VC asset class in the long term. CVC's participation in U.S. startup deals has steadily risen in 2023. Secondaries (and related instruments like Strip sales and continuation funds) are gaining popularity among the VC community to gain liquidity.

⚙️ Venture asset class performance remains an issue w.r.t DPIs. VC cash flows are negative due to higher fund contributions than distributions.


Saving the best for the last.

Special thanks to Ashish Kumar for writing the India Spotlight article and giving it a personal touch with words from his journey.

I humbly appreciate venture experts who contributed their thoughts to this deck. (in alphabetical order)
Brandon Hoffman, Eric Woo, CFA, Frank Tanner, Jan Voss, Jeremy Tan, Jonathan Hollis, Peter Walker, Pratibha Vuppuluri, Triin Linamagi

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Rohit 👋🏼

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Checkout slides on Docsend here

2023 will be etched in the memories of everyone.

A decade down the line, there will be investors who will boost their credibility of having lived through 2023. It’s that significant! Like in equities, we reminisce over the Great Financial Crisis (GFC) and divide the investors between those who survived the 2008-09 period and those who have only seen the boom phase.

Nevertheless, 2023 can be summarised in three words - Low, Limited, Lopsided ('LLL' environment)

• Low: Valuations of startups in most stages went through their lowest levels.

• Limited: Capital availability and deployment became limited to only the best opportunities.

• Lopsided: The power remained in the investor’s corner in 2023. It was lopsided towards the capital providers.

Another reason that makes 2023 unforgettable is that we saw it all - the advent of AI in almost everything, fundraising pain for founders, the failures of SVB and Signature Banks, SEC regulations changes, AI-regulation discussion uptick, failure of FTX, startup closures, the Twitter takeover saga, growth of hard-tech, calls for more diversity, the Fearless Fund lawsuit, VC fund pauses/closures, and much more.

What else can you ask for from such a transformational period?

An LLL environment begets a downward push on returns. Public markets were flat (except top tech stocks) for most of 2023, and interest rates were running high, creating a competitive environment for VC investments. Slowdowns in public markets pushed down the valuations of startups. Consequently, VCs started seeking lower price points for entry into startups.

Nevertheless, the startup environment wasn’t the only one to suffer in 2023. Plus, we shouldn’t look at 2023 as one year but rather as a phase in a long-drawn change spanning multiple years. For some of those changes, 2023 represented a culmination (like COVID-19); for others, it’s just a start (like AI-boom), and yet, for others, it’s in the middle of a prolonged change (like geopolitics-based restructuring).

Investors typically pause when the external market environment is incomprehensible. VCs were no different in 2023, and there were many reasons for them to pause or to slow down. Despite the pause, the pace of global transformation, fueled by tech progress in both the ‘atoms’ and ‘bits’ sectors, is still strong.

This LLL environment, in the end, is likely to benefit the larger ecosystem. The argument lies in the theory of ‘booms and busts.’ Without going into the nuances, the ecosystem needed a reset, and 2023 provided just the same. Moving into 2024, I’m sure we have adapted to the realities and will scale up energetically in a newer set of circumstances.

If you found this newsletter valuable, please consider sharing it with other investors and founders. “We grow together, better!” As always, feel free to reach out - I’m here to brainstorm and provide support.

Share

Rohit 👋🏼

Get in touch with me:

🌐 Web | 📺 YouTube | 🌐 LinkedIn | 🗞️ Newsletter | 🎧 Spotify | Apple Podcast