Disclosure
Loverro: IVP saw two potential down rounds in a single week
“We're seeing, I would call it a trickle, but like a noticeable uptick from Q-four in deal flow, and we saw two potential down rounds this week.”
Prediction Not checkable as stated
Loverro: Late 2023 and 2024 startup fundraising wave will overwhelm VCs
“The way I back into the math says that there's a lot of companies that are going to be raising the end of this year and next year, and what's going to happen is there's only so many hours in a day for the investors who do, say, A, B, and C rounds that are goin…”
Insight
Loverro: VCs should heavily fund good companies or give zero capital
“If it's a good company, give them a lot of capital, and if it's not, zero. That's probably the right decision framework.”
Prediction Not checkable as stated
Loverro: Current tech downturn hangover will be worse than 2008 GFC
“In the lead up to the great financial crisis mortgages were going bananas. You had LBOs going bananas. Investors and venture weren't to the same degree. You didn't see companies in the public markets in tech or the privates trading at You know, hundreds of tim…”
Prediction Held up
Loverro: LPs will refuse to commit to fast-deploying venture funds
“Unfortunately, I think that is gonna be the comeuppance that a bunch of funds suffer. LPs are gonna say no.”
Opinion
Loverro: Every VC firm should have marked down portfolios recently
“Everybody should have done some sort of markdown in the past 12 months for their venture investments.”
Prediction Open · timeframe Feb 2028
Loverro: Seed and Series A valuations won't return to $1.5M pre-money
“Now, are prices gonna go in seed and series A back to, you know, in series A levels where, you know, great companies were done at one and a half pre? No. Not happening.”
Insight
Loverro: VCs avoid down rounds because they hate the complexity
“Fewer down rounds happen than probably should happen because VCs don't like them.”
Disclosure
Loverro: IVP announced multiple 2022 deals at 10-15x forward ARR
“We've, we announced multiple deals last year in 2022, where they were priced at something like 10 to 15 times forward ARR.”
Assertion Partly supported
Loverro: Venture firms shifting back to three-year deployment cycles
“They, they're now saying, okay, I have to hit the brakes and I'm going to go back to that three year deployment cycle. And so that's dividing the dry powder out there by a third.”
Prediction Held up
Loverro: VC LP commitments in 2020-2021 will exceed 2023-2024 combined
“If we were to take a bet, Harry, is there, are there more LP commitments in 2023 and 24, or 21 and 21 combined? I guarantee you the 20 and 21 number was gonna be bigger than the 23 and 24 number, if you really zoom into that small timescale”
Insight
Loverro: Valuation corrections take 1.5 to 2 years to reach seed investors
“What happens is, here, here's the waterfall, right? Okay, public markets multiples correct, and you're, let's say you're like a mutual fund, and you do pre-IPO rounds, and companies aren't trading at 30 times revenue anymore, they're trading at seven times, an…”
Disclosure
Loverro: IVP took a disproportionate amount of liquidity in 2021
“We did feel a little bit like that in 21, and so we took a disproportionate amount of liquidity in 21.”
Insight
Loverro: Easy decisions made by startup management are usually half measures
“If a decision is easy, it's probably a half measure. If it's hard, if it's really damn hard, if it's controversial, you're probably doing enough of it.”
Opinion
Loverro: Passive venture capital governance is dead and will not return
“Last year, I have to say there was this meme that founders didn't want investors on their board, that governance wasn't important, and that founders just wanted cheap, easy capital, and I'm not sure I ever fully believed it, but I was damn scared that could be…”
Opinion
Loverro: Venture capital is too hierarchical and promotes talent too slowly
“And I think venture is too hierarchical we promote people too slowly, but a lot of the talent and the ideas come from people who are younger in their careers and so I think venture firms need to promote sooner, give mid-level junior people more credit, it'll o…”
Prediction Not checkable as stated
Loverro: The tech market frenzy of 2020-2021 is not coming back
“The craziness that went on in 2020 and 21 isn't coming back”
Assertion Supported
Loverro: Public software multiples have corrected to 2016-2018 levels
“So, you know, in the public markets, software companies, multiples there have corrected to what we saw in 2016, 1718 to normal multiples.”
Insight
Loverro: Startup bridge rounds must provide at least six months runway
“A good bridge round at least six months. So I would ask really hard questions about any bridge round that's, you know, measured in weeks or a month or two.”
Disclosure
Loverro: RRE Ventures executed a rare successful bridge round for Venmo
“At RRE, there was a bridge round we did for what is now a very famous fintech company that got the company to a sale. Ironically, though, in retrospect, that was just a good company. And they should have just raised more money and kept calling. That company wa…”
Prediction Not checkable as stated
Loverro: Startups will rush fundraising into July and August 2023
“I think a lot of firms or a lot of startups are going to be raising later this year. And that usually means like labor day and everybody wants to get in front of that. So my guess is July and August, we start seeing a lot more businesses come to market knowing…”
Insight
Loverro: Startups should finish fundraising with 6-7 months runway remaining
“My rule of thumb is you should start raising by 12 months. If you have 12 months of capital left, you're in the red zone. Now, does that mean you need to hit go and speak to every venture firm with exactly 365 days, you know, to go? No. But it means your strat…”
Insight
Loverro: Marketing dollars are more effective in downturns as CAC falls
“The marketing spend that you have now is so much more powerful Then the marketing spend you had say during 21. Why? Your competition has pulled back. They're not bidding on keywords. So the CAC is down.”
Insight
Loverro: Ten-Day Fundraising Deadlines Work Best After Prior Relationship Building
“10 days is a good deadline. Have a deadline. The only other thing I'd add though, is if you really want people to have maximum conviction, 10 days is like the detailed diligence, but if they understand the business and they have a relationship with you, have t…”
