Venture Observations 2016 — Tweetstorm version

Follow me @samirkaji for my always random, sometimes relevant thoughts on the world of venture investing and startups.

As we move closer to Labor Day (amazing how quickly this year has gone), I wanted to share a few observations we’ve seen within the world of venture. I may expand on a few later, but in the interest of time and ease of digestion, I’ve listed my thoughts tweetstorm style below— Yes, I may have hit >140 characters on a couple below.

1/No slowdown in Micro-VC formation; we have observed 77 new first time funds in 2016 (some still raising)

2/New Micro-VC’s w/no prior inst. investing experience should expect no inst. LP’s/target $20MM or less.

3/Opportunity funds more common; i.e.DCVC, SoftTech, Lightspeed, Eclipse, Homebrew (2015), Industry, E.ventures

4/1H16’ massive fundraise year; many funds held dry closes; anticipatory raises to guard against potential sig market downturn

5/Established inst. seed funds going larger and often play later in seed process. Post-Seed/early A hot area right now.

6/Harder to raise on either end of funding barbell (late stage; pre-seed). Seems $1MM ARR is bar for inst.seed SaaS rounds

7/Incongruence of private markets (growth focus) and public markets (profitability) very remains prominent.

8/Anecdotal, but we are seeing far less SPV’s being created for B+ round deals.

9/”Unicorn” market very top heavy; 50% of unicorn market cap can be captured in top 12 companies (Uber,Xiami,Airbnb top 3)

10/Leveraging of technology within venture firms; proprietary tech at firms like Goodwater, Signalfire, Eventures.

10/Low yield environment/recent exits (Jet/Nervana/DSC/Cruise/Twilio IPO) bring hope of a relaxing liquidity sphincter in priv. mkts

11/Diversity in venture much more prevalent in seed stage firms

12/LA venture fund ecosystem heating up with new entrants;i.e.Refactor/Fika/Alpha Edison/Troy/etc.