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What Does the Post Crash VC Market Look Like?

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Re: What Does the Post Crash VC Market Look Like?

#71

Post by kasey_junk »

anm89 wrote: post #48
anthlax wrote: post #24

Earlier quoted context omitted.

Ah! It seems your crystal ball is working better than mine. Could you tell me how you know a bigger crash is coming?

This is the least clever take that gets repeated to death by people who are 100% sure they are being very clever. I guess all of those billionaire investors are total idiots thinking about the future without crystal balls. Yes, please give me your misunderstanding of EMH to prove to me I'm wrong. I'll wait.

Do you have a particular billionaire investor in mind? Because the most obvious ones (Buffett, Icahn, Soros, Griffin) explicitly use investment strategies that don’t require knowing where the broader markets are going to go.

Ray Dalio got famous and rich specifically designing investment strategies because he didn’t believe in a crystal ball.

I’m genuinely curious which investors you are talking about where choosing where market indexes will be is their investment thesis.

Re: What Does the Post Crash VC Market Look Like?

#72

Post by pdevr »

syntaxing wrote: post #12
time_to_smile wrote: post #10

"Post" crash? If you think what we've seen is the crash you have no idea what's coming.

Genuinely curious what you think crash means. 2021 definitely inflated our stock market way too much but we're definitely within reasonable corrected zone IMO. What should we expect as a crash? Even with the Great recession, we're looking at a 27% drawdown so we're about halfway there?

>you have no idea what's coming

Taken literally, it is true :) None of us know what is going to happen.

Personally, I think it won't be the crash that will hurt more, but the time it will take for recovery. Anyone who has invested money in something, gets impatient with no growth for a long time following a crash that resulted in a loss for them.

Re: What Does the Post Crash VC Market Look Like?

#73

Post by lupire »

koolba wrote: post #17
syntaxing wrote: post #12

Earlier quoted context omitted.

Genuinely curious what you think crash means. 2021 definitely inflated our stock market way too much but we're definitely within reasonable corrected zone IMO. What should we expect as a crash? Even with the Great recession, we're looking at a 27% drawdown so we're about halfway there?

Going in the other direction, we’re 11% above the pre-COVID high for the S&P. And that’s with $6+ trillion dollars having been pumped into the economy. There’s plenty of crash and plenty of inflation left in the pipes.

Wouldn't inflation push nominal stock prices up, since there are excess "cheap" dollars to spend?

Re: What Does the Post Crash VC Market Look Like?

#74

Post by lupire »

phpthrowaway99 wrote: post #15
syntaxing wrote: post #12

Earlier quoted context omitted.

Genuinely curious what you think crash means. 2021 definitely inflated our stock market way too much but we're definitely within reasonable corrected zone IMO. What should we expect as a crash? Even with the Great recession, we're looking at a 27% drawdown so we're about halfway there?

In the previous crash, even viable companies that were growing and made sense were brought close to crisis. Currently Nikola motors is worth a few billion. In a crash they'd be dead.

Nikola is 50% down from pre-covid IPO, and -93% from Covid peak.. Even a bad business has assets, and could make some money selling something or getting acquired for basic competencies.

Re: What Does the Post Crash VC Market Look Like?

#75

Post by lotsofpulp »

disgruntledphd2 wrote: post #62
fny wrote: post #46

Earlier quoted context omitted.

Citrix was struggling to borrow $4Bn for a leveraged buyout, they issued bonds that effectively yield 10% annually. That's a massive return we haven't seen forever in fixed income.

Yeah and basically nobody wanted it, which implies that things are gonna get worse.

Or that Citrix was overextending itself.

Re: What Does the Post Crash VC Market Look Like?

#76

Post by rr888 »

syntaxing wrote: post #12
time_to_smile wrote: post #10

"Post" crash? If you think what we've seen is the crash you have no idea what's coming.

Genuinely curious what you think crash means. 2021 definitely inflated our stock market way too much but we're definitely within reasonable corrected zone IMO. What should we expect as a crash? Even with the Great recession, we're looking at a 27% drawdown so we're about halfway there?

> Even with the Great recession, we're looking at a 27% drawdown so we're about halfway there?

Dotcom crash the Nasdaq dropped 78%. No one really knows what'll happen now though.

Re: What Does the Post Crash VC Market Look Like?

#77

Post by nateburke »

kypro wrote: post #42

Hm. Thing is as profitable big tech companies get larger and the TAM of tech sectors grow it makes some sense that early stage valuations would increase. This is both because there is more opportunity for a company to scale, but also because when you have several trillion dollar tech companies out there happy to acquire innovative tech companies then multi billion dollar exits become much more feasible. Companies lik…

> So no, in my opinion 20x EV/sales isn't that crazy for a good SaaS company.

I agree but with the specification that the only way to get that "good SaaS company" multiple now from an acquisition is with the stick rather than the carrot.

What I mean by "stick" that is the target (e.g. Figma) needs to be a active threat to the acquirer's (e.g. Adobe's) business -- as opposed to the "carrot" wherein the target (e.g. any AI-first company making interesting pictures) has a valuation driven by narrative ("humans will prefer AI-generated content over celebrity-generated content).

Acquirers have more leverage on price now.

Re: What Does the Post Crash VC Market Look Like?

#78

Post by disgruntledphd2 »

lotsofpulp wrote: post #75
disgruntledphd2 wrote: post #62

Earlier quoted context omitted.

Yeah and basically nobody wanted it, which implies that things are gonna get worse.

Or that Citrix was overextending itself.

Yeah, sure. That being said, the fact that there haven't been any other deals like this this year is a suggestion that the market for them has changed, mostly independently of the company involved.

Re: What Does the Post Crash VC Market Look Like?

#79

Post by EwanToo »

kypro wrote: post #42

Hm. Thing is as profitable big tech companies get larger and the TAM of tech sectors grow it makes some sense that early stage valuations would increase. This is both because there is more opportunity for a company to scale, but also because when you have several trillion dollar tech companies out there happy to acquire innovative tech companies then multi billion dollar exits become much more feasible. Companies lik…

To comment on the statement:

"Companies like Microsoft are making close to $100b a year today and they have to put that money to work somewhere"

They'll make stock buybacks, and they'll pay out dividends, far less risky to their stock price and long-term management incentive schemes than most value destructive large acquisitions.

Re: What Does the Post Crash VC Market Look Like?

#80

Post by suoduandao2 »

collegeburner wrote: post #44
datalopers wrote: post #9

Earlier quoted context omitted.

Broad markets will crash and LPs will ask for capital back. The overhang will drop without requiring investment.

i don't think it's that simple. pretty much every asset class posting shitty returns this year, hell even bonds are in a bear market. so institutionals are gonna look at other managers and see a bunch of red and not necessarily stop alt allocations. it's also relevant that you can't just ask for capital back as an LP. it's committed to a fund. you can not commit to another one but the price of much greater returns in…

Surely 'all asset classes' can only drop relative to some exception, where is everyone taking their money? I know we have significant inflation, are people going into cash despite it?
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