Jan 31, 2022 · 44m · 20vc
20VC: How Startup Valuations, Fund Deployment Cycles, M&A and IPO Markets Will All Change in This New Market, Where Will The Biggest Crunch Be, When Is The Right Time To Be Aggressive vs Conservative with Roger Ehrenberg, Founding Partner @ IA Ventures
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this episode of 20VC, veteran investor Roger Ehrenberg joins Harry Stebbings to analyze how macro market downturns impact venture fund deployment, startup valuations, and exit options while sharing lessons on investor psychology and family legacy.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Harry holds 27.1% of the talking time here. How this is scored →
Harry as informed peer 2.8 Guest teaching 4.7 Guest disagreement 1.3 Harry pushing back 1.3
speaking balance: gold is Harry, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 23:45 Rejection of pay-to-play reserve strategy
Roger forcefully rejects Harry's framing about needing reserve strategies to avoid getting squeezed in pay-to-play rounds, stating that venture success is about amplifying upside rather than protecting downside.
Hardest push from Harry ▶ 16:22 Challenging extended deployment timeline assumptionsHarry directly challenges Roger's thesis that fund deployment cycles will lengthen, citing the massive capital supply entering venture from family offices and corporates.
Biggest teaching moment ▶ 4:45 Correcting host on historical market cyclesRoger politely corrects Harry's overview of market downturns by adding 1987, 1994, and 1997 to the list, proceeding to explain historical leverage and liquidity dynamics Harry missed.
Harry holds his own ▶ 31:11 Citing specific market M&A targets and valuationsHarry demonstrates active market tracking and valuation expertise by introducing specific corporate M&A proposals, including Twilio at $35B and an Apple-Peloton acquisition thesis.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Harry as informed peer | Guest teaching | Guest disagreement | Harry pushing back | Why |
|---|---|---|---|---|---|---|
| Roger Ehrenberg's Career Transition from Wall Street to VC | 2 | 4 | 1 | 1 | Harry asks standard career background questions and notes his own lack of experience with market cycles. Roger gently educates Harry by listing three additional market crashes (1987, 1994, 1997) that Harry omitted from his overview. | |
| Investor Psychology & Mindset in Downturns | 2 | 4 | 1 | 1 | Harry prompts Roger to unpack his Twitter thread regarding investor psychology during market downturns. Roger outlines core rules on emotional regulation, Maslow's hierarchy of needs, and peer communication without host pushback. | |
| Portfolio Fragility, Market Barbells, and Fund Deployment | 3 | 5 | 1 | 1 | Harry asks what business characteristics indicate startup fragility in the current climate. Roger explains the barbell dynamic of venture portfolios during market stress and how middle-tier companies struggle to raise follow-on rounds. | |
| Managing Early-Stage Startups & Insider Round Dynamics | 3 | 5 | 1 | 1 | Harry positions the conversation around practical fund management questions regarding insider rounds and position concentration. Roger provides detailed historical perspective using IA's investment in The Trade Desk. | |
| Deployment Timelines, Early-Stage Pricing, and Runway Management | 4 | 5 | 2 | 3 | Harry pushes back on the claim that deployment timelines will slow, citing the massive influx of family office and corporate capital into venture. Roger reframes the point by explaining how fear impacts pricing compression and deployment discipline. | |
| Mid-Stage vs Growth-Stage Venture Dynamics and Pay-to-Play | 4 | 6 | 3 | 2 | Harry asks about reserve strategy and avoiding penalization in pay-to-play rounds. Roger directly reframes Harry's approach, arguing forcefully from historical data that participating in pay-to-play rounds to protect downside is a fundamental strategic error. | |
| M&A Environment, Regulatory Pressure, and Private Equity | 4 | 5 | 1 | 1 | Harry offers specific market consolidation ideas like Twilio and Apple/Peloton. Roger educates on an overlooked macro factor, explaining how aggressive FTC oversight creates unprecedented friction for big tech M&A. | |
| Evolution of Wealth, Marriage Philosophy, and Family Investing | 1 | 4 | 1 | 1 | Harry steers into personal topics including wealth, family, and marriage dynamics over 35 years. Roger shares psychological principles on communication, empathy, and overcoming the need to win arguments. | |
| Quick-Fire Round: Mistakes, Hard Lessons, and Future Outlook | 2 | 4 | 1 | 1 | Harry runs a quick-fire segment on hard lessons and career regrets. Roger shares candid reflections on past investment mistakes and overcoming ego insecurity when hiring elite talent like Brad Svrluga and Jesse Beyroutey. |
Statements from this episode (20)
IA Ventures raised $475M across four seed funds
“Roger is a founding partner at IA Ventures, one of the most successful seed funds of the last decade, with four hundred and seventy-five million dollars across their four funds.”
Ehrenberg: 2022 market downturn resembles 2001 dot-com crash, not sudden shock
“The difference between this and say, 87 and 97 with LTCM is that, you know, this is not a shock. This is not an episodic jolt. This is much more akin to a one when you had valuations getting stretched to the point of just lacking reason.”
Ehrenberg: Focus on portfolio fundamentals, not asset prices during downturns
“It's super important to go back to first principles, not focus on the price, but focus on the portfolio, and focus on, do you feel good about your positions?”
Ehrenberg: Middle-tier Series A and B startups will struggle to raise
“Again, I'm very well-known for saying that, you know, markets in general, they tend to look like barbells, especially in stress. And I think this time is no different is that the super high quality teams and businesses will continue to be able to raise on very…”
Ehrenberg: Non-crypto VC deployment cycles will lengthen significantly
“You know, I think what we're also going to see is investment time horizons. I'm going to leave crypto and web three aside because that occupies its own unique space, but just Kind of like non-crypto, non-web three venture. I think you're going to see deploymen…”
IA Ventures funded The Trade Desk when outside investors refused
“Yet, you know, the insiders were confident that Jeff Green, Dave Pickles, and the team were on the right track, and that they were doing something truly differentiated, and they were executing well. It just was in an unsexy area at a really bad time, and we co…”
IA Ventures invested over 10% of its $50M fund into The Trade Desk
“So we co-led seed, and then it leads into two small bridges. So when the dust settled, we ended up having 2.2 million out of a fifty million dollar fund in the company. So that was still, you know, under It wasn't until after they had taken off like a rocket s…”
Ehrenberg: Seed fund deployment timelines will extend beyond 18 months
“If you're talking about seed, I think that 12 to 18 month time horizons will be extended.”
IA Ventures deployed Fund I in 21 months, Fund III in four years
“Our deployment For fund one, 21 months. For us, super quick. And then fund two, closer to three years. Three, three and a half years. And then fund three, three and a half, four years.”
Ehrenberg: Peak market fear will cut seed valuation caps under $10M
“When the fear really hits, the really smart seed stage investors are going to go in hard. Because that's when you get the best opportunities. You get great founders, and you get great businesses at prices that are a half. Of what companies were getting, you kn…”
Ehrenberg: Early-stage startups should maintain 30 months of cash runway
“We generally preach, you know, 30 months of burn on your balance sheet, and really not ramping up spend significantly until you've demonstrated real customer traction.”
Ehrenberg: Series B startups growing under 100% will not get good terms
“If you're a series B company and you're not growing a hundred percent year on year, are new investors going to be throwing term sheets at you in this environment? I don't think so. Certainly not at the prices that those founders would want.”
Ehrenberg: Seed investors should almost never join pay-to-play rounds
“What the data shows is that, and this is a hard thing to stomach, it almost never makes sense to participate in a pay-to-play as a very early investor. Almost never.”
Ehrenberg: Venture success relies on amplifying upside, not protecting downside
“Being successful in venture is not protecting downside, it's amplifying upside, and pay to play is Are all about protecting downside.”
Ehrenberg: Tiger Global and Coatue face horrific portfolio markdowns ahead
“You know, their mark to market now, the next couple of years is going to be horrific. They're going to see huge markdowns on a huge swath of their companies, a bunch of stuff that they had counted on to go public isn't going to go public.”
Ehrenberg: 2022 and 2023 startup IPOs will be pushed back
“So I think you're going to see a lot more companies that were on the 22 and 23 calendar pushed back a public listing.”
Ehrenberg: FTC regulatory scrutiny will block FAANG M&A acquisitions
“I'm not sure the FTC is going to let those deals happen. So that adds a curveball in M&A that we have not had easily in a generation, which is this very, very restrictive regulatory environment where a bunch of the logical buyers, the FAANGs, for instance, are…”
Ehrenberg: Tech PE will fill M&A void but pay lower valuations
“And maybe what that speaks to, Harry, is a further rise of firms like Vista and Insight. So you have tech PE start to step into the shoes of M&A. The issue there, though, is they don't pay as much. Somebody like Vista, you know, they have accumulated a bunch o…”
Ehrenberg: Great product and market cannot compensate for a mediocre founder
“The notion of a great Product in a great market does not compensate for a meh founder, and I think I fell into the trap of thinking the founder's good enough because market and product was so strong, and I got that wrong.”