The tide has turned for solo GPs
Welcome to Startups Weekly, a nuanced take on this week’s startup news and trends from Senior Reporter and co-host of Equity Natacha Mascarenhas. To receive it in your inbox, subscribe here.
It’s hard to be proactive after the tide has already changed. However, this is what we see happening in the world of solo GPs, where investors, hearing about the changing risk appetite of institutional investors, extend fundraising times, reduce objectives of investment vehicles or are considering exiting the business altogether. Some have learned this the hard way, while others, like Sahil Lavingia, tell LPs to literally write off their checks if they feel guilty investing in venture capital as the market turns and interest rates rise.
It’s a shift from the fund-of-funds mentality that seemed common last year, in which investment firms cut checks to early-stage experimental investors to reduce risk and even direct early checks to a generation of new startups. Now, the idea of only supporting one seems a tougher sell – depending on which institution you go to.
For my full take on this emerging tension in the venture capital world, read my TC+ column: “Are Solo GPs Screwed?”
I know some of us are still reeling from the SVB mess, which is still ongoing. My hope with this article is to offer some nuance on how the market moves from here for a very specific subset of check writers. In other words, yes, there is a dark, dreary cloud that is now more visible than before. But umbrellas do exist. Somewhere.
In the rest of this newsletter we talk about AI, icons and demo days. As always, you can follow me on Twitter or Instagram to continue the conversation. You can also email me tips at firstname.lastname@example.org or on Report to +1 925 271 0912. No pitches please.
It’s never GM; it’s only AI
Now that I apparently live in Cerebral Valley, it’s pretty easy to find investors, founders, or my great friends in the middle of a heated conversation about artificial intelligence. Heck, we even filmed ChatGPT trying to explain SVB during the wine party recently.
Despite the hyperactive news scene, thanks to ChatGPT plugins, Google input, and the magic of Canva, the best article I’ve read all week came from our very own Devin Coldeway. In this analysis, Coldeway published a head-to-head comparison of the best generative AI tools – asking them to create everything from a phishing email to code.
Here’s what you need to know: In the world of AI, the cumulative effect is almost impossible to encapsulate. Technology continues to fight, and advancement should only be celebrated with a hopeful grain of salt. But, see it yourself if you don’t believe me!
Heard at Techstars Demo Day
I went to an in-person demo day for the first time since 2019 this week, courtesy of 500 Global. There was a special, earnest energy in the room, in part because, as 500 CEO Christine Tsai said, the 19 companies share their vision for the future “around one of the most shadows of Silicon Valley”. More to come on specific learnings, but below I thought I’d highlight some of the tidbits I heard during the Accelerator Pitch Session.
- “I find it very insightful to compare your revenue growth with your team’s growth – personally I don’t like ops heavy companies, I really want to see more investment in R&D and product [teams]“, Cindy BI, partner at CapitalX.
- “We are officially teenagers,” Tsai said on the accelerator’s 13th anniversary.
- “When you think of a brand, you probably think of something like Nike. But for Gen Z, some of the biggest brands are people,” said Detoure founder and CEO Meghan Russell.
- “We know how to do the exits”, Peter Wachira, CEO of Tripitaca, later adding, “We know how to do the shit.”
One of Venture’s most iconic duos wants to talk to you
I posted a podcast interview with Freada Kapor Klein and Mitch Kapor of Kapor Capital, the entrepreneurial investor couple behind the leading impact investing firm. The duo released a book recently, so we’re talking about it, about their choice to walk away from investing and the legacy they continue to build.
Here is a key moment of the podcast: “It’s also worth pointing out that in the beginning there were a few people, white men, who were considering working with us and decided we weren’t going to make enough money, so they went elsewhere. So I ‘hope they kick each other and I hope they learned something,’ Kapor Klein said.
- I was on comedian Alexis Gay’s podcast, Non-Technical, earlier this month to talk about anything other than my day job. Come for the croissant hate; stick around for the devil’s advocate plea.
- Also listen to Found, a podcast about the stories behind startups. This week, the team published an interview with the masterminds behind “a genetics startup that seeks to bring extinct species back to life to help with environmental conservation efforts.” Jaw = fallen.
Seen on TechCrunch
Startup says seaweed flowing to Florida has a bright side
Hivemapper is 1 million miles away from beating Google Maps
Twitter will remove ‘legacy’ blue checks on April 1
China reminds US it can and will kill TikTok hard sell
Seen on TechCrunch+
Threading the Needle: Exploring 5 Ideas with the Founders of LGBT+ VC
Investors want the best ESG data. Here’s how to give it to them
As TikTok and Coinbase Face Regulators, Some Questions Are Simpler Than Others
Pitch Deck Teardown: Prelaunch.com’s $1.5 million seed deck
How Fellow Started 8 Years to Build a Coffee Empire