Venture Capital News Roundup

Some startup founders live better than others. Sweetgreen founders Nathaniel Ru and Jonathan Neman presented their Soho loft in Bloomberg. Designed by Noa Santos, this 'eclectic midcentury apartment will make you want to start your own salad chain. 

Yesterday, Slack raised an $80M VC fund. Jeffrey Carter asks the question, "Should A Startup Raise a VC Fund?" Should a platform company financially incentivize people to build up their ecosystem or let it grow organically? Why would someone invest in a fund to build up an ecosystem versus investing in those startups with their own money?

Rob Hunter talks about the "McDonald's quotient" in The Macro. There are 20 million retail workers in America, but VC firms and startups often focus on hiring only candidates with prestigious colleges on their resume, many of whom have never worked a day of retail in their lives. Hunter calls for more diversity in tech in not only race and gender, but in experience. 

Yuri Gitahy in Lean.VC discusses how to evaluate startups based on their grasp of metrics. He uses a scale to assess. 1.) Founders have no idea or uncertain which metrics to use 2.) They know the fundamental principles for startup metrics, but do not know which ones to pick for their own company 3.) They know which metrics are best for them but do not create a routine evaluation process 4.) They implemented an automated dashboard and the business is constantly refined according to those measurements. 

In another article on metrics, David Teten of ff Venture Capital emphasizes Yuri Gitahy's point. "I want to see that management is using a dashboard every day, not just for board meetings." The best CEOs run their company by metrics, which means looking at numbers all day instead of people. The rest of the article discusses metrics that matter, how to create a dashboard, and how to track employee performance. 

Fred Wilson shares his mantra: "the VC's job is to realize their goals and dreams." But he is increasingly seeing a misalignment between VCs and founders.

Thomas Grota at T Venture Holding created a crazy-hot matrix for startups based on business impact, go to market strategy, and valuation. In a blog post, he gives his reasons for why these companies fall where they do on this matrix. 

Capital is no longer scarce, but that does not necessarily mean it is going to innovation. Albert Wenger at USV discusses the huge amount of total investable capital (north of $100 trillion). This is why we see companies raising extraordinary sums in private markets (not just Uber). However, too much of investable capital is allocated to financial speculation (EG derivatives trading). And shuffling money around with zero sum trades is not necessarily great for humanity. 

 

Sarah Guo discusses why messaging is increasingly the dominant way to engage on smartphones and where she sees opportunities for new players versus platform expansion opportunities. One great stat from this article: College students spend 9 hours a day on their smartphones. 

Ari Levy at CNBC asks if Silicon Valley's cash party coming to an end? Rounds will be harder to raise, valuation multiples will be lower, and companies will have to actually demonstrate metrics. Employees at high value startups are selling their shares on the secondary market, cloud computing networks are being valued at 11.8 times revenue down from 15 time revenue earlier this year. This is bad news for companies with negative gross margins, inflated valuations, and those operating in markets with cash rich rivals. Small companies are seeing lower valuation increases from angel to seed rounds. Deals are taking longer to close. 

But aside from those sobering trends, First Round released their holiday video, which is not to be missed. 

Compiled by @charleslacalle.