A few more thoughts on funding rounds

Hey! I used to just blog on the ol’ substack, but a friend told me to stop being a fucking coward and send my notes via email. Since people subscribed to get them. So, here you go! — Alex

A few months ago, I was on the phone with a Prominent Venture Capitalist who remarked off-hand that the media no longer cared about, or covered startup funding rounds. This isn’t true — I compile the Daily Crunch email every afternoon; we’re covering a lot of deals — but the comment stuck with me.

Why did this investor think that deal coverage was dying, or dead? I’ve figured it out.

This morning I got to do a little writing with my colleague and comrade Anna, digging into Q2 2021 venture capital activity. The resulting piece was essentially a highlight reel, a list of superlatives, a digest of investing decadence. There’s so much money bashing around the startup world today that records are being set in nearly every region and country.

Just for flavor:

$156 billion is what CB Insights has on the books for global venture capital activity in the second quarter, up from $60.7 billion in Q2 2020. That’s a gain of 156% on a year-over-year basis. A FactSet chart indicates around $150 billion was raised in the second quarter, up a similar percentage from its year-ago result as what CB Insights counted.

The same source recorded a record number of deals in the quarter — 7,751 — along with a record number of new unicorns born in the period, some 136.

That is why folks in venture capital are struggling to get writing folks like myself to notice any particular round or another, and may think that the media is no longer is interested in the regular flow of startup investments. There are simply so many that it’s all but impossible to cover more than a small fraction of them, so it feels to the less-discerning that interest has dried up.

Which is wrong. Instead, the media is simply covering a smaller percentage of total deal volume over time, as the number of reporters on this particular beat is flat at best, and venture activity has gone through the fucking roof.

My solution to the situation has been to get even worse at email, and demand more from the rounds that I cover. Others reporters will handle the deluge in their own manner. But the sheer fucking scale of venture capital activity around the world is such that simply raising money today is a little bit whatever.

We can draw an analogy. Venture capital used to be scarce. Thus, VCs had leverage, and could underpay for startup equity while demanding all sorts of onerous terms from founders as there weren’t many other ports for entrepreneurs to call. Then more money flowed into venture capital thanks to yield-starved LPs, changing the game. Suddenly, simply having cash wasn’t enough to land a deal. VCs responded by layering on services, paying higher prices, and generally treating founders better.

You can see where I’m taking this. The venture capital reporting game used to have fewer deals and players, which meant that any single round carried more weight. Now there are infinite deals to cover, so the supply/demand curve has shifted. (In this loose comparison, I’m the startup and startups are the venture capitalists, but you follow me.)

Anyway, all this is to say that it’s super noisy in the startup market today. Standing out isn’t going to be easy, but it’s probably the only way to get noticed.