Apr 8, 2022 · 40m · 20vc
20VC: What Happens To Growth Rounds in this New Environment? Where is the Funding Crunch? How Does This Impact M&A and Going Public? How do Crossover Funds Respond? What Does it Mean For Early Stage and more with Eric Liaw, General Partner @ IVP
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In this episode of 20VC, host Harry Stebbings interviews Eric Liaw, General Partner at IVP, to discuss the changing landscape of growth-stage venture capital, valuation recalibrations, and competitive deal dynamics. Liaw shares critical insights on founder relationships, board governance, lessons from past investment mistakes, and strategies for navigating market uncertainty.
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 37.9% of the talking time here. How this is scored →
Harry as informed peer 3.4 Guest teaching 3.4 Guest disagreement 1.2 Harry pushing back 2.8
speaking balance: gold is Harry, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 34:53 Calling out VC echo chamber
Eric directly targets industry norms, calling out the self-congratulatory echo chamber on social media and podcasts as a key flaw in the venture ecosystem.
Hardest push from Harry ▶ 13:00 Host pushes back on early-stage optimismHarry forcefully challenges the optimistic narrative of early-stage investors, pointing out public market blood on the streets and asserting that valuation trickle-down is inevitable.
Biggest teaching moment ▶ 6:43 Stage spectrum breakdownEric reframes Harry's binary question about picking versus access by mapping them across a stage spectrum from seed to late-stage growth.
Harry holds his own ▶ 15:36 Host challenges TAM predictabilityHarry uses insights from analyzing investment memos to challenge Eric's reliance on TAM predictions, pointing out that VCs consistently underestimate their biggest winners.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Harry as informed peer | Guest teaching | Guest disagreement | Harry pushing back | Why |
|---|---|---|---|---|---|---|
| Eric Liaw's Background and Journey into Venture Capital | 1 | 2 | 0 | 0 | Harry asks a standard conversational opening question about Eric's path into venture capital. Eric shares his origin story from Stanford during the dot-com bubble to Morgan Stanley, TCV, and IVP. | |
| Picking vs. Access in Growth Stage Venture Capital | 2 | 4 | 1 | 1 | Harry asks whether venture is primarily picking or access. Eric reframes the premise by explaining that seed/early stage is picking while late stage is access, then shares hustle stories about Supercell in Finland and UiPath in Romania. | |
| 2022 Market Outlook: IPOs, M&A, and Regulatory Headwinds | 5 | 4 | 2 | 5 | Harry pushes back on early-stage investor optimism, offering a cynical counterpoint about market contraction and trickle-down valuation impacts. Eric provides a nuanced breakdown of how growth rounds face the highest pressure due to public market comparables. | |
| Navigating Price Sensitivity, Loss Ratios, and Capital Allocation | 5 | 4 | 1 | 4 | Harry challenges the idea that investors can accurately predict TAM or winner size at early stages, noting VCs consistently underestimate massive winners. Eric acknowledges this tension and discusses price sensitivity and capital deployment strategies. | |
| Identifying Product-Market Fit and Maintaining Relationship-Driven VC | 4 | 3 | 1 | 3 | Harry questions how growth funds balance going earlier without over-expanding portfolios in a hyper-competitive market. Eric explains IVP's focus on clear product-market fit and relationship-driven investing over transactional speed. | |
| Career Regrets: Lessons from Passing Early on Datadog | 4 | 3 | 1 | 4 | Harry throws a direct question on how traditional VCs compete with fast-acting crossover funds like Tiger Global writing large checks on a single call. Eric acknowledges the shift and discusses focusing on proactive prep and relationship building before processes start. | |
| Boardroom Dynamics: Guiding Founders without Overstepping | 4 | 4 | 2 | 4 | Harry presses Eric on hard boardroom scenarios, asking what a board member does when trust in a founder's judgment breaks down. Eric explains board duties, governance, and how his board style evolved with experience. | |
| Fatherhood, Work Ethic, and Overcoming Imposter Syndrome | 3 | 4 | 1 | 2 | Harry shares personal fears about losing his work ethic and edge when starting a family, prompting a reflective dialogue on parenting, forced prioritization, and imposter syndrome. | |
| Quick Fire Round: Culture, Habits, and Final Investment Insights | 3 | 3 | 2 | 2 | In the quick-fire round, Eric candidly calls out venture capital's self-congratulatory echo chamber as something he would change about the industry, while sharing lessons from Whoop data and a story about Derek Jeter's work ethic. |
Statements from this episode (18)
IVP manages over $8.7B in capital with a 43.1% 40-year IRR
“As I said, IVP, one of the leading later stage venture capital and growth equity firms with over 8.7 billion dollars of committed capital and a 40 year IRR of 43.1%.”
Liaw: Early-stage venture is about picking; late-stage is about access
“I think at earlier in seed stages, I think there's Probably more picking going on. I think that those stages companies need capital or else they're likely to die. Capital is more like a necessity. I think as you get much, much later sort of companies that are …”
Liaw: 2022 public listings and SPAC activity will decline from 2021
“I think there will still obviously be new listings and direct listings and probably not as many SPACs. That's a different topic. I do think you'll still have some activity, but not like last year.”
Liaw: 2022 tech M&A volume will slightly exceed 2021
“I expect maybe a little bit more M&A this year than last year, just because last year there wasn't that much of it.”
Liaw: Regulatory fear has chilled M&A for Meta, Google, Amazon, and Apple
“I think that probably the bigger challenge is for a lot of the biggest mega cap tech companies, fear of regulation and regulatory authority intervention is probably causing a lot of them to say, this is probably not worth our time, right? So it's kind of a fun…”
Liaw: Salesforce will pause major M&A while digesting Slack
“Now, I think Salesforce is probably going to be quiet for a little bit as they digest Slack.”
Stebbings: Startup market downturn will trickle down to early stage
“I think it's going to get worse, and I find it amazing that all these early stage investors are like, oh, it's fine, we're going to be great, and I think multiplier effect is real, and the trickle down will happen.”
Liaw: Growth stage startups will be hit hardest by market correction
“I think growth will be hit the hardest, because there, the universe of alternatives, particularly for some of the largest investors, is Private company A at multiple X or public company B at multiple Y.”
Liaw: High entry valuation multiples require path to $300M+ revenue
“If something's five or ten million, but you really have conviction, it can become three, four, five hundred million in revenue, then the 600 to a billion entry price is still fine. If it's like five, 10, and you think it's gonna maybe get to a hundred, a 150, …”
Stebbings: Every VC Underestimates the Potential Scale of Their Top Winners
“Every single investor has underestimated just how big their winners can be.”
Stebbings: Growth Funds Allocate Less to Reserves Than Early-Stage Funds
“Most growth are actually much more heavy first check, and they don't have such heavy reserve allocations compared to early stage funds.”
Liaw: IVP Invested Over $100M into Aiven After $16M Initial Check
“Our first investment was sixteen million dollars in size in their series B. They've now gone on to raise a C and a C one. Now we have over a hundred million dollars invested.”
Liaw: Passing on Datadog's Series B was his biggest career regret
“Biggest regret in my career was not investing in Datadog a lot earlier than when we ultimately did. We loved The company, it was probably nine or eleven million dollars in revenue at the time. This is probably the 2014 time frame, and they raised a series B. S…”
Liaw: Unprepared introductory pitch meetings with founders are now obsolete
“The idea of, you know, have a first meeting. So tell me about your company and you know nothing like that's a dead meeting. And that's actually great. It saves time, saves the entrepreneurs time so they can get back to running their companies and doing the bus…”
Liaw: Distrusting a CEO's decision means investing in the wrong person
“And then you have to go back to, well, you don't trust your CEO to make the decision. You probably invested in the wrong company or person.”
Liaw: Boards Must Replace CEOs Who Have Lost Board Confidence
“If the consensus view ends up being that the CEO has lost the confidence of the board, then I think the board has a responsibility to make a tough decision. The CEO serves at the pleasure of, for the shareholders, and the board is actually supposed to be the o…”