PodcastsThe Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch20VC: NEW FORMAT: Mega Funds Will Come Back, Why Markups Have Corrupted VC, Why RIFs Should Always Be An Embarrassment To SaaS Founders and Why Pitching is BS and Fake with Jason Lemkin and Rick Zullo

20VC: NEW FORMAT: Mega Funds Will Come Back, Why Markups Have Corrupted VC, Why RIFs Should Always Be An Embarrassment To SaaS Founders and Why Pitching is BS and Fake with Jason Lemkin and Rick Zullo
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The PitchTue Aug 22 2023
Venture Capital Needs Its "Jerry Maguire" Moment:
- Rick believes that VC needs a "Jerry Maguire" moment, where there is a shift in the industry and certain practices change.
- Jason believes that there will be a resurgence of mega funds in late 2024 and 2025, despite current challenges in raising funds.
- It's easier to stair step from 15 to 45 or 10 to 30 rather than looking for markups. Founders should raise rounds only if they are confident they can triple the value.
- Stair stepping deals can lead to building unicorns and large funds.
Unicorn Investing is Mostly Dead for Bigger Funds:
- Jason believes that unicorn investing is mostly dead for bigger funds, as they are no longer looking for billion-dollar outcomes.
- Rick agrees and states that multi-stage fund investing at seed simply does not make sense.
Efficiency and Growth: We Need it All:
- Jason believes that founders should be embarrassed if they ever had to do a reduction in force (RIF).
- Last year, many founders got a pass on growth due to efficiency, but now they need to focus on getting back to growth.
- The most common reason companies don't scale from seed to A is having good but not great growth.
Entering the World of LPs:
- If Jason and Rick were advising LPs today on how much to discount the value of their venture books, they would suggest considering factors such as market corrections and realistic valuations based on public comps.
- They discuss how markups have corrupted the venture ecosystem and created misalignments between GPs and LPs.
- There may be consolidation of capital going into AI investments, with big money seeking new areas for investment.