The great VC pullback of 2022 • Hacker News Board

Re: The great VC pullback of 2022

#81

Post by jacquesm » Fri, Apr 29, 2022, 8:55 PM UTC

aliswe wrote: post #13

orzig wrote: post #11

Let's get concrete: Q1'22 had 8.8k deals[0], which is 19% lower than last quarter. >> How many deals do you think they will report for Q2'22? I'll start, disclaiming that I have no domain or specific knowledge: 7.5k [0] https://www.cbinsights.com/research/report/venture-trends-q1...

Do quarters vary, I mean maybe it's better to compare YoY?

Yes, they do. Q1: 30%, Q2: 20%, Q3: 20%, Q4: 30%

This is my internal stat over the last 15 years or so (since 2007), there have been a few exceptional years but overall it seems to hold. Q4 and Q1 of the year following usually have a lot of post holiday season deal making that then results in deals being inked either still in Q4 or in the first three months of the new year, then things slow down a bit while all the new portfolio companies are integrated and then the holiday season starts. So come September everybody is back in the traces and ready for a new batch.

Re: The great VC pullback of 2022

#82

Post by pan69 » Fri, Apr 29, 2022, 8:59 PM UTC

lumost wrote: post #27

Having been at a series C+ company that ran out of money. There are a few things to keep in mind if you are working at a non-profitable startup. 1) Investors need to invest in something , not continuing operations. Companies who are about to run out of money will often claim to pivot in a different direction, launch new products, or go on hiring binges. A good sign that something is amiss is when all of this isn't ba…

> Companies who are about to run out of money will often claim to pivot in a different direction, launch new products, or go on hiring binges.

Why would a company that is about to run out of money go on a hiring binge?

Re: The great VC pullback of 2022

#83

Post by csomar » Fri, Apr 29, 2022, 9:08 PM UTC

dustingetz wrote: post #25

How exactly does the fed funds rate flow through categories of financial entities that end up inflating growth equities and therefore VC returns? I understand the total cash in the system is vaguely leveraged/multiplied by borrowing, but this borrowed money flows through which parties specifically and how do these vaguely spoken of economic forces actually interact?

I don't think even the Fed knows that. They are really playing with different instruments and seeing there effect on the economy. They have no idea how money flows and propagates. (see how high inflation surprised them).

Re: The great VC pullback of 2022

#84

Post by svachalek » Fri, Apr 29, 2022, 9:20 PM UTC

pan69 wrote: post #82

lumost wrote: post #27

Having been at a series C+ company that ran out of money. There are a few things to keep in mind if you are working at a non-profitable startup. 1) Investors need to invest in something , not continuing operations. Companies who are about to run out of money will often claim to pivot in a different direction, launch new products, or go on hiring binges. A good sign that something is amiss is when all of this isn't ba…

> Companies who are about to run out of money will often claim to pivot in a different direction, launch new products, or go on hiring binges. Why would a company that is about to run out of money go on a hiring binge?

I think you have cause and effect backwards.

Re: The great VC pullback of 2022

#85

Post by TheRealNGenius » Fri, Apr 29, 2022, 9:24 PM UTC

seibelj wrote: post #17

davidkuennen wrote: post #12

Having bootstrapped my own app I can't fathom how some other apps with millions of VC money will every turn a profit. My app provides me a nice income, but it's far from anything able sustaining teams of dozens of people. And I'm pretty sure throwing money on ads wouldn't change that.

You are thinking small and that’s fine. It is wonderful to bootstrap an app and make income. However some ideas are much larger and need a big team and years of effort before the big payoff.

don't know why you're being downvoted. You just presented objectively true facts.

Re: The great VC pullback of 2022

#86

Post by oarabbus_ » Fri, Apr 29, 2022, 9:29 PM UTC

abirch wrote: post #74

lumost wrote: post #27

Having been at a series C+ company that ran out of money. There are a few things to keep in mind if you are working at a non-profitable startup. 1) Investors need to invest in something , not continuing operations. Companies who are about to run out of money will often claim to pivot in a different direction, launch new products, or go on hiring binges. A good sign that something is amiss is when all of this isn't ba…

I'm an old fart who was around for the dot com days. Huge red flag the minute leadership shifts from growth to profitability. Usually a good time to update your CV.

>Huge red flag the minute leadership shifts from growth to profitability.

Hasn't over 2/3rds of FAANG done this since the beginning of the year?

Re: The great VC pullback of 2022

#87

Post by b20000 » Fri, Apr 29, 2022, 9:44 PM UTC

lumost wrote: post #27

Having been at a series C+ company that ran out of money. There are a few things to keep in mind if you are working at a non-profitable startup. 1) Investors need to invest in something , not continuing operations. Companies who are about to run out of money will often claim to pivot in a different direction, launch new products, or go on hiring binges. A good sign that something is amiss is when all of this isn't ba…

1) you need people and money for success. you need to spend on marketing or customers won’t know about your product. in my experience investors expect products to find adaption in some free/magic/viral way if they are any good. of course that is a simplification.

Re: The great VC pullback of 2022

#88

Post by adventured » Fri, Apr 29, 2022, 9:45 PM UTC

tschellenbach wrote: post #75

mupuff1234 wrote: post #31

As a bystander not viewing this through SV lens, I do somewhat hope that the VC bubble bursts (although I 100% feel bad for low level employees that will suffer). Looking at the market during 20-21 it seemed like it was acting in ways that, at least to me, feel like market manipulation/fraud/pyramid scheme (see SPACs). Companies that barely even had a product were "valued" at billions - it just doesn't make sense. Al…

Just to be clear, it's not just VC. This high valuation bubble applies to all companies, including public ones.

A lot of the high valuation / high multiple stocks from the latest bubble have already cratered.

Snowflake has gone from $405 to $171.

Zoom has gone from $406 to $99.

Shopify has gone from $1762 to $426.

Unity has gone from $210 to $66.

Square has gone from $289 to $99.

Roblox has gone from $141 to $30.

Coinbase has gone from $368 to $112.

Robinhood has gone from $85 (really $50-$60 stable) to $10.

Rivian has gone from $179 to $30.

Twilio has gone from $412 to $111.

DocuSign has gone from $314 to $88.

Etsy has gone from $307 to $92.

Pinterest has gone from $81 to $20.

Roku has gone from $490 to $92.

Beyond Meat has gone from $160 to $36.

Peloton has gone from $129 to $17.

Draft Kings has gone from $64 to $13.

Teladoc has gone from $174 to $33.

Virgin Galactic has gone from $57 to $7.

Palantir has gone from $29 to $10.

DoorDash has gone from $257 to $74.

Cloudflare has gone from $221 to $86.

Fastly has gone from $66 to $15.

DigitalOcean has gone from $133 to $39.

UiPath has gone from $90 to $17.

Asana has gone from $145 to $26.

Atlassian has gone from $483 to $224.

Okta has gone from $276 to $119.

And so on.

This is a massive ongoing collapse and it's holding (we're 5-6 months into the persistent decline), there is no rebound occurring.

The bubble is over (and has been for a while now). It makes sense there would be a sizable VC pullback from the public market crash that is happening to the more bubbly (and less profitable) companies.

Re: The great VC pullback of 2022

#89

Post by deadbunny » Fri, Apr 29, 2022, 9:58 PM UTC

oarabbus_ wrote: post #86

abirch wrote: post #74

Earlier quoted context omitted.

I'm an old fart who was around for the dot com days. Huge red flag the minute leadership shifts from growth to profitability. Usually a good time to update your CV.

>Huge red flag the minute leadership shifts from growth to profitability. Hasn't over 2/3rds of FAANG done this since the beginning of the year?

We're still considering FAANG startups?

Re: The great VC pullback of 2022

#90

Post by adventured » Fri, Apr 29, 2022, 10:04 PM UTC

TheRealNGenius wrote: post #85

seibelj wrote: post #17

Earlier quoted context omitted.

You are thinking small and that’s fine. It is wonderful to bootstrap an app and make income. However some ideas are much larger and need a big team and years of effort before the big payoff.

don't know why you're being downvoted. You just presented objectively true facts.

I didn't downvote, but I'm fairly certain the downvotes come from the "you're thinking small" part - it comes across as condescending, even if it wasn't meant that way. If the parent chopped off the first sentence it would dramatically change the perceived tone toward a neutral to positive one. That is, the first sentence is largely unnecessary (it adds nothing other than the risk of people taking it quite negatively).

Like so:

It is wonderful to bootstrap an app and make income. However some ideas are much larger and need a big team and years of effort before the big payoff.