VC market overview, Vision Fund impact, Amazon's core businesses & more with Acquired | E1530 | Summary and Q&A

TL;DR

Q2 VC exits drop significantly, signaling market correction.

Key Insights

• 💮 Q2 VC exits hit a record low since 2016.
• 🌱 Seed round values declined by 35% in Q2, indicating a cautious investment landscape.
• 🪃 Companies are readjusting valuations post-boom era to align with market shifts.
• ❓ A more balanced investor sentiment is observed as companies navigate the market corrections.
• ❓ Market corrections suggest increased maturity in investment decisions and valuations.
• 💦 The drop in exit values highlights the need for prudent investment strategies.
• 🤝 Seed round deal values signify a shift towards sustainable growth rather than excessive valuations.

Transcript

okay everybody we've got an awesome show for you today acquired ben gilbert and david rosenthal are on the program we go super deep on what we're seeing in the venture capital market we cover a bunch of the crypto vc stuff and how token investments should happen we also break down some crazy stats from pitchbooks q2 us venture monitor we dive into ... Read More

Questions & Answers

Q: What was the significant trend observed in Q2 for the VC market?

Q2 saw a drastic 63% drop in exit values, marking the lowest since 2016, indicating a market correction.

Q: How did seed round deal values fare in Q2 compared to the previous quarter?

Seed round deal values declined by 35% in Q2, reflecting a more cautious approach to investments in the market.

Q: How are companies reacting to the changing market dynamics post the boom era?

Companies are readjusting valuations and coming back to the market at different prices, displaying a level-headed approach to maintaining investor confidence.

Q: What insights can be derived from the shift in VC market behaviors in Q2?

The market corrections show a more realistic valuation approach, signaling a healthier ecosystem for long-term growth potential.

Summary

In this video, Ben Gilbert and David Rosenthal deep dive into the venture capital market, discuss crypto VC investments, and analyze some interesting statistics from Pitchbook's Q2 US Venture Monitor. They also explore Amazon's business model and Ben shares insights on two interesting companies. The conversation evolves into a discussion about J-trading, which refers to learning public market trading from the audience. They explore the goals and strategies behind J-trading and the importance of understanding the public market for private market investors.

Questions & Answers

Q: When did Ben and David raise their fund and what is the status of the fund?

Ben and David raised their fund in Q1 2022, but they mentioned that the status of the fund is not as forthcoming as it was in the previous year. They also have three special purpose vehicles (SPVs) currently open for deals.

Q: Can you explain what SPVs are and their significance?

SPVs, or special purpose vehicles, are investment entities created for specific deals or projects. They allow investors to pool their funds and invest in a specific opportunity without directly investing in the company itself. SPVs can provide flexibility and help manage risks associated with specific investments.

Q: What has been the reaction to Ben and David's recent SPVs?

Ben and David mentioned that they launched their SPVs recently and have already received positive feedback. They believe that despite the uncertainty in the market due to various factors such as geopolitical instability and inflation concerns, there is still interest in investment opportunities.

Q: What is J-trading and why is Ben pursuing it?

J-trading refers to learning public market trading from the audience, where Ben aims to become a top-performing public market investor. He believes that understanding public markets can complement his skills in private market investing and help him make better investment decisions. Furthermore, he wants to learn from the public and gather theories about what might work in the public market.

Q: What are the goals and strategies of J-trading?

Ben's primary goal is to become a top quartile public market investor, identifying lasting companies with great products and talent. He believes that public market expertise can inform his private market investing decisions. He aims to invest a significant amount of capital and aims for a 5x return in 10 years. Ben also shares his public trading activities and learnings with the audience through J-trading.com.

Q: How does Ben determine when to distribute public shares from private companies?

Ben mentions that he struggles with the timing of distributing public shares from private companies. He ponders whether to sell before the company goes public or at different valuation milestones. It is a balancing act between maximizing profits and evaluating the long-term potential of the companies.

Q: What are some key factors Ben considers in his public market investments?

Ben mentions several factors he considers in his public market investments. These include the quality of the company's products, the talent behind the company, the market dynamics, and the timing of the investment. He also looks for companies trading at reasonable valuations based on their growth rates and fundamentals.

Q: Can you provide some examples of recent trades made by Ben and David?

Ben mentions that he has made trades in TSMC and Shopify recently. He sees TSMC as an important company with a strong moat and believes that geopolitical risks are creating a price suppression opportunity. Shopify is an interesting investment due to its role in empowering e-commerce merchants and its potential to capture a significant portion of the e-commerce market.

Q: What is the significance of the price-to-sales ratio in assessing investment opportunities?

The price-to-sales ratio compares a company's market valuation to its revenue. Ben mentions that he looks for companies that previously had high price-to-sales ratios but have now come back down to earth. This suggests that the companies may be trading at or near their fundamental valuations, making them potentially attractive opportunities.

Q: How does Ben deal with the risks associated with investing in public markets?

Ben acknowledges the risks involved in public market investing, such as geopolitical volatility and market downturns. He believes that his long-term investment horizon and his focus on quality companies provide some downside protection. Additionally, he aims to learn from the public and gain insights from the audience, which can help mitigate risks and improve his investment decisions.

Q: How does Ben handle public market trading on the air during the podcast?

Ben mentions that he makes trades live on the podcast using Robinhood. He shares his thought process and rationale behind the trades while ensuring that he is not providing investment advice. He aims to learn from the audience and gather feedback on his trading activities.

Takeaways

In summary, Ben and David's discussion covered various aspects of the venture capital market and their exploration of crypto VC investments. They delved into J-trading as a way to learn from the public market and improve their private market investment decisions. The conversation also touched on key factors in public market investing, recent trades made by Ben and David, and the importance of understanding company fundamentals and valuations. Overall, their insights provide valuable perspectives for investors navigating the complex world of venture capital and public market investments.

Summary & Key Takeaways

• VC market sees a 63% drop in Q2 exits, the lowest since 2016.

• Seed round deal values decline by 35%, showing cautious investment approach.

• Companies readjust valuations post-boom era, maintaining investor confidence.