Opinion
Only a very small percentage of VCs add value beyond capital
“A very small percentage do. Don't believe most add any value beyond capital, but I'm partial because I think my investors do a stellar job of that.”
Opinion
Denehy: Excessive startup valuations will trap tech companies
“Lower valuations. Just think a lot of companies are getting themselves into situations that are going to be very hard to get out of. So I think hip checking the valuations probably wouldn't hurt.”
Assertion Not checkable as stated
Traditional VCs are skipping due diligence to win competitive deals
“Term sheet in two days. No diligence, right? Just like, maybe send us a board deck. And there used to be a small number of well-known growth stage fund who would do that, but increasingly what's happening is a lot of more sort of traditional VCs, I think, are …”
Insight
Raising larger rounds never allows startups to skip future fundraising rounds
“No one ever skips around. You spend the money and you're back out in market on the exact same schedule you were if you raised Half as much money.”
Prediction Not checkable as stated
Startups with $15M ARR valued at $1.2B will struggle recruiting executives
“Like, hey, if you're a 15 millionaire or a business valued at 1.2 billion, I think you're going to have a challenging time recruiting the caliber of senior leadership that you want.”
Insight
Preemptive round markups rarely reflect actual commercial progress
“When you think about these like preemptive rounds where it's like, oh, some company raises at five hundred million in January, and then in March, they raise at a billion. It's like, it's unlikely in most of those cases that you actually engage in any commercia…”
Prediction Held up
Public markets cannot absorb the thousands of unicorns created since 2019
“If a thousand billion dollar plus valuation companies were created in the last two years, what we all know to be true is that in two to five years, like the public markets will not be able to ingest a thousand, maybe 2000 of these businesses far from it. And m…”
Prediction Held up
High valuations will trigger a major surge in total startup failures
“Yeah, so based on that, like, honestly, I think you're going to see a lot more zero.”
Insight
Capital cannot overcome limits on engineering hiring velocity
“More capital isn't necessarily going to make you move faster. There's a physical limit to how many talented engineers you can hire. In a six to eight month window.”
Insight
Raising at nosebleed valuations eliminates startup exit optionality
“And if you raise a nosebleed valuations and you ingest boatloads of capital, all of your optionality goes out the window in terms of successful exit.”
Insight
Scaling a startup gets easier as direct reports become senior executives
“Liz, it actually does get easier. Trust me. Like it does get easier because as you A bunch of things happen that make it easier. One, you understand your customer better. You understand your own business better. You understand the economic model better. In thi…”
Prediction Open · timeframe Nov 2026
Electric will be a successful public company within five years
“Electric's a public company, and a very successful one. Definitely within the next five years, that's a huge priority”
Insight
Denehy: Evaluating product-market fit based solely on revenue is lazy
“Revenue as a marker for product market fit on its own is probably a lazy way to look at it.”
Insight
Denehy: Pre-product market fit is about solution design, not custom engineering
“So when you're pre-product market fit, you generally don't get bonus points for building things from scratch. So really that Pre-product market fit stage has more to do with solution design than it does with engineering, or at least it should.”
Insight
Denehy: Zero technical debt means an engineering team lacks leverage
“I think most good engineering teams sort of look at technical debt like a credit card, right? You know, a balance of zero means you're probably not leveraging it enough. And if you owe Amex a 150,000 dollars, that's probably not good either.”
Insight
Denehy: Startups must prioritize commercial activity over perpetual research
“At the end of the day, you have to build a business, not a university research project. So there's a point at which you need to get the show on the road and engage in meaningful commercial activity.”
Opinion
Denehy: Startups spending years in beta are usually uncompelling businesses
“And so some of these companies that have effectively been in beta and I'm using air quotes, you know, for years, they might be successful to the extent that they have an elegant product that many people like to use, but as businesses, they're probably not all …”
Insight
Denehy: The size of a VC's support team reveals their true value
“At the seed stage, VCs always say they add value beyond cash, but If you actually do the best way, and at the seed stage, you need all the help you can get. So you really want a VC that's going to be able to step up and support you. Well, the best way to kind …”
Insight
Denehy: Growth-stage startups need VCs with prior founder experience
“I think as you get to later, later stages, you know, your A or B and beyond, it's really important that some of the big money earlier on is coming from investors who were at one point entrepreneurs in their own right that had real companies”
Prediction Didn’t hold up
Denehy: Electric will reach $100M ARR within five years
“Envision us as a de facto market leader. You know, this is a hundred million plus AR business, strong public market fundamentals, world-class leadership team, and probably still the coolest swag in the game.”
Insight
Bad executives can be fired, but bad 10% investors cannot
“Because if I hire an executive and they don't work out, I can fire them. But if I bring on an investor and they suck, you can't really like fire someone who owns 10% of your company.”
Disclosure
Electric raised an $80M Series D at just 10% dilution
“The number we came up with was roughly eighty million. And then we looked at that and said, okay, look at comps in the market. Hey, eighty million actually works out to where, you know, we can raise that round with, you know, 10% dilution. That feels right for…”
Disclosure
Electric grew ARR from $17M to nearly $40M in 2021
“A company like ours that went from, you know, 17 to close to forty million in ARR this year”
Insight
Growth startups can fail on experiments if core targets are met
“As long as the stuff in that experimental bucket doesn't drag down or otherwise negatively impact the OKRs of the business that we're aiming for next year, do what you want. Like, obviously, we want those things to work, but, like, it's okay to fail in that re…”
