Mark Suster, General Partner at Upfront Ventures, argues that high entry valuations for generative AI startups eliminate potential arbitrage and destroy venture return profiles.
Disclosure
Suster: VCs settled with embezzling founder, getting equity but zero cash
“It's one step worse than that, which is, I know of a company in which the founder embezzled money. Ok, literally stole millions of dollars. In order to not end up in a big legal battle, their VCs ended up settling, and they got all the stock back, but none of …”
Assertion Not publicly verifiable
Suster: SoftBank, Tiger, Coatue, and Insight marked 60% of 2021-2022 unicorns
“Of the 1260% were marked by four firms, ok? SoftBank, Tiger, Coachu, and Insight.”
Opinion
Suster: Founders should avoid demo days and batch fundraising hype
“Like, you've got one company, and there's no divorce clause from investors, so I really think entrepreneurs need to take the time to get to know their investors, which is why I'm not a big proponent of demo days, or overhyping your company, or Waiting to meet …”
Prediction Not publicly verifiable
Suster predicts party rounds will perform worst over the next three years
“And party rounds did incredibly well. For the last five years, but I suspect party rounds are going to do the worst for the next three years, because getting conviction across three or four small investors that each own seven, eight, nine, 10% of your company …”
Assertion Contradicted
Mark Suster: 2021 tech overvaluations were worse than dot-com bubble
“1998, 99, 2000 are nothing compared to the overvaluations of twenty-twenty-one.”
Prediction Open · timeframe May 2029
Mark Suster: Venture market correction will take another five years
“So we're two years into a correction. I think it's going to take another five.”