Oct 20, 2023 · 27m · 20vc
20VC: NEW FORMAT: Harry Stebbings on Why Seed Pricing is as High as Ever, Why Series A is the Best Place to Invest Today, Why Growth Founders Need to Reshape Expectations, Why M&A Windows Remain Shut and When Will IPO Windows Crack Open
0:00 / 0:00
gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this special solo episode of TwentyVC, Harry Stebbings utilizes proprietary dataset insights to analyze the venture capital market, covering LP fundraising dynamics, valuation resets across seed and growth stages, liquidity roadblocks, and emerging AI trends.
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 97.9% of the talking time here. How this is scored →
Harry as informed peer 0.0 Guest teaching 0.0 Guest disagreement 0.0 Harry pushing back 0.0
speaking balance: gold is Harry, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 13:40 Monologue format - no guest combativeness
This is a solo presentation episode by Harry Stebbings without an active guest, so no interpersonal combativeness occurred.
Hardest push from Harry ▶ 10:05 Monologue format - challenging industry dogmasWhile Harry challenges the conventional industry dogma of 'leaning in' using fund data, it occurs as an analytical monologue rather than interpersonal host pushback.
Biggest teaching moment ▶ 8:50 Monologue format - no schooling of hostBecause there is no guest present in the conversation, the host is not schooled or corrected by an external speaker.
Harry holds his own ▶ 9:30 Monologue format - Harry delivers proprietary data insightsHarry presents proprietary data showing an inverse correlation between founder NPS and manager DPI, showcasing deep domain analysis within his solo breakdown.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Harry as informed peer | Guest teaching | Guest disagreement | Harry pushing back | Why |
|---|---|---|---|---|---|---|
| Special Episode Format Announcement and Data Context | 0 | 0 | 0 | 0 | This is a solo monologue segment where Harry introduces the new format and outlines the three core pillars of LP fundraising. Per the prompt instructions, monologue segments receive zeroes across host and guest interaction metrics. | |
| Evolution of Winning Manager Profiles and Portfolio Discipline | 0 | 0 | 0 | 0 | Harry delivers a solo analysis on the shift toward disciplined portfolio management and the 'end of the barbell' fund sizing trend. Since there is no guest interaction, all scores are zero. | |
| Proprietary Data Insights on VC Performance, Valuations, and Carry | 0 | 0 | 0 | 0 | Harry presents proprietary 20VC data points regarding DPI vs NPS, temporal diversification, and markdowns in a solo monologue format, resulting in all zero interaction scores. | |
| Core Criteria for Evaluating Fund Managers | 0 | 0 | 0 | 0 | Harry monologues on what LPs should evaluate in fund managers and transitions into his assessment of seed-stage pricing dynamics. No back-and-forth dialogue occurs. | |
| Series A as the Optimal Risk-Reward Entry Point | 0 | 0 | 0 | 0 | Harry explains why Series A currently represents the best risk-reward profile and discusses pricing compression at the growth stage. As a monologue, all metrics are scored at zero. | |
| M&A Stagnation and Tech IPO Market Outlook | 0 | 0 | 0 | 0 | Harry reviews the stagnation in M&A due to lack of buyer interest and regulatory scrutiny, sharing his timeline for tech IPO window openings. As a solo presentation, scores remain zero. | |
| Secondary Market Opportunities and Liquidity Dynamics | 0 | 0 | 0 | 0 | Harry discusses the secondary market landscape across funds, LPs, and employees, concluding with five predictions for AI. As a solo monologue, all power dynamic scores are zero. |
Statements from this episode (31)
20VC Holds 1,000+ Investor Track Records and 10,000+ Founder References
“At TwentyVC, we have the most comprehensive data on a generation of venture investors. We have over a thousand track records, over 10,000 references with individual NPS from founders on their investors, where they added value, where they didn't add value, how …”
LPs Remain Open for Business Despite Negative Public Sentiment
“First and most importantly, despite what you read on Twitter, LPs do remain open for business.”
Fund Managers Need Two of Three Key Pillars to Raise Capital
“A truly differentiated model, be it on the servicing side, be it on the sourcing side, you have to have two of the three to be successful in this fundraising market.”
VC Success Will Shift From Brand Capital to Deal Picking
“So we'll see a shift in emphasis away from the aspirational capital towards the really great pickers.”
Top VCs Succeed by Strategically Trimming Best Positions, Not Doubling Down
“The best actually strategically lent out of their best positions, and so I think we'll see a movement away from the momentum, portfolio management, liquidity management doesn't matter, to actually the best returning managers being incredibly disciplined around…”
LPs Are Abandoning Sub-$100M and $1B+ Funds for $250M-$600M Range
“LPs are moving away from the sub hundred million dollar funds with little track record and little data. In a lot of cases, given the size of their check, it's not worth their time for the risk profile attached. At the same time, LPs are moving away from the bi…”
Higher Founder NPS Inversely Correlates With VC DPI Returns
“There is an inverse correlation between the NPS of the manager and the DPI provided. Most often, the higher the NPS, the lower the DPI, and vice versa.”
2021 12-Month Deployment Funds Paid 41% Higher Entry Prices
“For those that deployed funds in 12 months in twenty-twenty-one, their average entry price is 41% higher than those that deployed over a three-year period.”
Exit Timing Yields 3x Return Spread on Identical VC Positions
“Proprietary 20 VC data shows managers with the same positions, but three X different returns due to timing and size of exiting a position.”
Gap Between TVPI and DPI Will Be Largest in Venture History
“The chasm between TVPI and DPI will be the biggest in venture history.”
Top-DPI Venture Managers Mark Down Portfolios Fastest
“There is a direct correlation between the best performing DPI managers, And the speed and accuracy with which they mark down their positions.”
Rapid Fund Scaling From $300M to $2B Misaligns Manager and LPs
“If a fund today is three, three hundred million, and the manager wants to scale to two billion over the next three to five years, They might not be aligned to your long-term financing interests.”
Seed Valuations for Top Deals Will Remain High Through Late 2024
“For the best deals, in the best markets, pricing continues to remain incredibly high at seed, and I believe we will see it stay that way over the next six to 12 months.”
Sub-$75M Funds Cannot Compete in High-Priced Seed Rounds
“This is not a game that a sub-seventy-five million dollar seed fund manager can play. You simply cannot get the ownership required, or the check size often in those hot rounds, to make the business model work for that entry price and that check size if you're …”
VC Checks Under 1% of Fund Size Are Not Firm Priorities
“For founders listening to this, wondering if the check size that the fund is looking to invest in their company is meaningful to the fund, a very simple heuristical question to ask is, what percent of your fund is this check going into my company? If it's unde…”
Series A Is Currently the Best Risk-Reward Entry Point in Venture
“I think Series A is actually the best risk to reward insertion point in venture stay.”
Gap Between Seed and Series A Valuations Has Never Been Smaller
“The price inflection between seed and Series A has actually never been smaller. Yet the de-risking that has occurred in that chasm has never been greater.”
Multi-Stage VC Funds Are Retreating From Series A to Seed
“As mentioned, many of the multistage funds are reluctant to deploy the 20 to forty million dollar Series A and B checks, and are instead moving to seed to remain in market, still writing checks, but putting fewer dollars out the door.”
Fast-Growing SaaS Startups Over $15M ARR Get 10-15x Multiples
“When at fifteen million ARR and above, 10 to 15 X revenue deals are still on offer for fast-growing SaaS companies.”
Non-AI Growth Founders Will Face Valuation Compression
“Founders are going to need to reduce expectations on price if they don't have a great AI story, but they're at fifteen million in ARR, with good margins, strong revenue quality, the deals can still get done, But you're definitely going to see compression in te…”
Tech M&A Markets Will Remain Closed
“M&A markets have dried up almost completely, and I think they will continue to remain closed.”
Small-Scale M&A Is Limited Strictly to AI Talent Acquisitions
“The only small-scale acquires that we are seeing take place currently is acquisitions where there is incredibly desirable AI talent within the startups, and incumbents are purely acquiring those companies for that AI talent and integrating them into their exis…”
Stripe and SpaceX Will Not Go Public in 2024
“I don't expect Stripe or SpaceX to go out next year, and Databricks alone won't be enough to crack open the IPO windows.”
Tech IPO Market Will Not Reopen Until Q1 2025
“I think this will be a twenty-twenty-five Q. One event, but the question is what will be enough to crack them open? As I said, I think twenty-twenty-five Q. One is when we really will start to see the IPO windows open again.”
Current VC Market Is a Historic Secondary Market Opportunity
“Today is likely one of the best ever opportunities for activity in the secondary markets”
Institutional LPs Are Selling VC Fund Positions at 70-80% Discounts
“We've seen discounts from our data, either in full or as a strip sale, at as much as 70 to 80% off.”
Top VC Secondary Market Positions Will Close Within 12 Months
“I expect some of the best secondary positions to be bought in the next 12 months.”
99% of Money Invested in AI Startups Will Go to Zero
“However, 99% of the money invested into AI startups today will go to zero.”
Proprietary Data Is the Single Most Important Differentiator in AI
“In AI, access to proprietary data will be the single most important differentiator.”
Incumbents Capture Short-Term AI Value, Startups Win Over 5-10 Years
“In the short term, incumbents will accrue the most value, leveraging existing distribution, To provide co-pilot products. Over the longer term, startups providing tools for new product paradigms will be best placed to win over the next five to 10 years.”