Prediction Not checkable as stated
Parekh: Some startups raising at $1.5B on $4M ARR will succeed
“So I'm not going to sit here and tell you that every company that raises money at a one and a half billion dollar valuation of four million of ARR is going to work, but you're going to have a subset that are definitely going to work.”
Prediction Not checkable as stated
Deven Parekh predicts venture-backed startups will significantly reduce employee option strike prices
“I think there's going to be a lot of those cases where companies with our support, you know, we're going to significantly reduce the valuation of the option and equity incentives going forward.”
Prediction Didn’t hold up
Deven Parekh predicts the tech IPO market will reopen in H2 2024
“Let me start by saying, since the chairman of the Fed can't predict the economy, I'm certainly not going to try, but I'm probably a little bit more optimistic. I'm probably closer to Jason, kind of back half of 24.”
Assertion Supported
Deven Parekh: Cloud optimization revenue headwinds have bottomed for software companies
“We went through 12 months where every infrastructure software company was talking about cloud optimization, which was driving down their volumes. If you look at the last quarter, that's kind of bottomed and just start moving in the right direction.”
Opinion
Deven Parekh: 2023 AI valuations are in a hype cycle ahead of fundamentals
“Look, we think right now in 23, the valuation, we're in a hype cycle. The valuations are way ahead of Where companies are, and you're seeing companies who've raised money as recently as six or nine months ago who are already being impacted by something develop…”
Insight
Deven Parekh argues venture investments fail from missed growth, not overpaying
“We have a line that we use internally is that we never overpay. Companies miss their numbers. What it really is saying, if we're right on our growth underwriting, price is not really the problem, because it's amazing the power of compounding.”
Prediction Not checkable as stated
Deven Parekh predicts rushed venture deal timelines will cause negative outcomes
“I think the bigger challenge today, to be honest with you, Harry, is less around price. It's more on how quickly decisions are having to get made, and I think that, I think, might have, you know, negative implications, not just for investors, but also for foun…”
Disclosure
Insight Partners invested in Checkout.com on a handshake without a term sheet
“I mean, you've got to be at checkout. I mean, we did that deal on a handshake. We never signed a term sheet.”
Disclosure
Parekh: Insight's biggest misses were passing on high-valuation winners
“And I think that where we've generally had misses They've been more because we said no on valuation and the company actually executed incredibly well at a very, very large market.”
Assertion Supported
Deven Parekh: SaaS revenue growth correlation to valuation dropped from 72% to mid-30s
“If you go back to 2020, the correlation to revenue multiple in the public markets was something like 72% was correlated to revenue growth. Today, it's in the mid-thirties.”
Disclosure
Deven Parekh: Insight underwrote 2020-2021 growth deals assuming 50% multiple contraction
“When we did deals in 20, 21... Revenue growth driven deals, right? As opposed to buyouts or even more EBITDA driven, we do both. We were assuming on average, 50% multiple contraction.”
Insight
Deven Parekh: Late-stage growth market activity does not dictate the IPO window
“So I don't really see a relationship between a slowdown in the late stage market and the IPO market. I think they're kind of right now disconnecting.”
Disclosure
Deven Parekh: Insight Partners has substantially marked down many 2021 investments
“The ones that we made in 21, a lot of them are marked down substantially.”
Disclosure
Deven Parekh: Insight deployed almost zero Fund XII capital to AI in 2023
“We have been active in AI, but ironically, if you look at fund 12 or most recent fund, like I think about seven or eight percent of it is invested in AI companies. Ironically, almost zero of it was invested in 2023. Almost all of it was invested in 2021. In mo…”
Disclosure
Insight Partners incorrectly predicted severe underperformance and halted deployment during COVID
“Where we all met with our LPs. We said, you know, we're probably not going to deploy any capital. Valuations are going to go down dramatically. Get ready for probably our worst performance in a really long time. And of course, none of that came true.”
Disclosure
Insight Partners' successive funds have seen higher median portfolio growth rates
“If you look at our kind of median growth rate in our funds, you know, fund five, fund six, fund seven, fund eight, as you get to each successive fund, the median growth rate is higher, and that's with bigger funds.”
Disclosure
Insight Partners' biggest misses came from passing on high valuations
“When we do our analysis of the deals that worked and the deals that didn't work, we often find is when we did something that we thought was cheap, those didn't work particularly well either. And I think that where we've generally had misses, they've been more …”
Insight
Deven Parekh argues brinksmanship negotiation tactics fail in venture deals
“People feel like, oh, in order to negotiate, you have to have this brinksmanship style. Actually, honestly, don't think that works.”
Assertion Supported
Insight Partners acquires 70-80% of unprofitable venture companies using zero leverage
“We also do control deals where we're buying control of companies that you would define as a venture company, where a set of existing investors For whatever set of reasons, wants to get liquidity. And we're excited about the growth profile of the company. They …”
Assertion Not checkable as stated
Deven Parekh argues insider signaling risk no longer prevents follow-on rounds
“I mean, the market has shown that the signaling risk is not that significant of a risk. That is entirely possible for us to invest in something earlier, for us to not pursue the next round, and for the companies still have to be able to raise capital.”
Insight
Deven Parekh argues return-optimizing VCs should focus time on middle-tier companies
“If you said, I'm a robot, and I'm going to allocate my time in a way that totally optimizes fund returns. Actually, you spend almost no time with the winners. The market's great. The management's great. You're a cheerleader. You're not adding as much value as …”
Prediction Not checkable as stated
Deven Parekh predicts life sciences will see Moore's Law-style compounding growth
“And you can think about a category that I think is going to have the same type of growth over the next 10 to 20 years and has had the same type, if not more, Moore's law effects. It's life sciences, biotech, pharma.”
Disclosure
Parekh: Insight Partners' data shows cheap investments rarely perform well
“When we do our analysis of the deals that worked and the deals that didn't work, we often find is when we did something that we thought was cheap, those didn't work particularly well either.”
Assertion Not publicly verifiable
Deven Parekh: Insight Partners had 180 companies growing over 50% in Q2 2023
“Insight has a hundred, had a 180 portfolio companies that grew north of 50% in, you know, Q two of 20, 23 over Q two of 2022”
