Jason Lemkin: PluralSight S*** the Bed & The Next IPO Candidates | E1160

Jason Lemkin: PluralSight S*** the Bed & The Next IPO Candidates | E1160

Tech Industry Trends

  • The tech industry, particularly B2B to B2B software, is experiencing significant cutbacks and layoffs.
  • Canva's success in the consumer subscription space contrasts with the struggles of tech companies.
  • The viability of PE firms as primary buyers for software companies is uncertain due to the high loss ratio and potential for more significant write-offs.
  • Salesforce's recent announcement of slowing growth has raised concerns about the broader tech industry's trajectory, despite positive signs in the first half of 2023.
  • Unicorns that have experienced success are facing challenges and may need to rebuild their management teams to adapt to the changing market conditions.
  • The number of $50 million plus software exits in the US has been stuck at around 57 for a decade, while the number of startups has exploded.
  • Founders are still receiving outdated fundraising advice from 2021-2022, such as running a process and giving investors one hour to decide.
  • The recent decline in unicorn startups has impacted the events industry, particularly in the SaaS sector.

AI in Tech

  • The speaker discusses the potential for AI to create hundred billion dollar companies and the increasing spending on AI.
  • AI is now a necessity for SaaS companies to compete, and those that don't invest in it risk being steamrolled by the competition.
  • The impact of AI on revenue growth for tech companies is still unclear, with some companies reporting benefits while others have not seen a significant boost.

Fundraising and Investment Strategies

  • Limited Partner (LP) sentiment remains optimistic, with tolerance for underperforming funds, but concerns about "crazy AI deals" exist.
  • High-profile, conservative investors participating in large AI deals suggests their belief in substantial growth potential and a path to significant returns.
  • The speaker reflects on his own investment strategy and how taking LPs' money too seriously can lead to unnecessary stress and missed opportunities.
  • The speaker criticizes the practice of taking SPVs too seriously and suggests that investors should be less risk-averse and more willing to accept losses.
  • Focus on finding fund returners rather than individual investments with high returns.
  • Selling a small portion of a successful investment may not make a significant difference in the overall fund return.
  • The author emphasizes the importance of carefully crafting emails when reaching out to investors, as a poorly written email can lead to missed opportunities.

Market Valuations and Exits

  • The current market compression in SaaS valuations is concerning, especially for high-growth companies like Clavio and Rubric that are trading at modest multiples.
  • Liquidity in the tech industry has been scarce since 2021, with only two IPOs and limited options for cashing out investments.
  • Getting acquired is harder than it seems, and the current number of exits is not enough to support venture math.

Event Industry

  • The author notes that field marketing still accounts for a significant portion of marketing budgets but that some companies are hesitant to deploy these budgets.
  • The author observes a shift in preferences, with many individuals opting to stay home rather than attend in-person events, which has affected the events industry.
  • To be profitable, events need to have over 20,000 attendees.
  • The events industry is full of terrible people who don't care about their work.

20VC Company Culture

  • The speaker considers their company to be a fund first and a media company second.
  • The speaker used to spend more time on the events business before 2020 due to a terrible team.
  • The biggest near-death experience was losing $10 million in March 2020 when their event was shut down due to COVID-19.
  • He cares more about his team now than he used to, but he finds it harder to motivate them.
  • Analysts work tirelessly to find deals without any fixed salary.

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