#101 VC Deep Dive: Jason Lemkin, Mike Maples, Eric Paley

Hi Everyone! 👋 Welcome to the new members of @TheFundCFO crew! We recently launched a paid tier and released our VC Fund Playbook + Models @ Streamlined.Fund! Re-linking some top 2023 posts: #67 Top VC CFO Posts & References & #65: WTF is Going On in VC (+ New Fund Model Data).

Every Tuesday/Thursday, we bring you actionable tools, real-world experiences, and insider insights for #VC CFOs/Finance Pros and fund managers, #LP investors, and industry enthusiasts/people who want to learn :). As a reminder:

• Tuesday: insights + interviews. Free for everybody.

• Thursday: deeper dives on VC GPs, CFO/COO strategy, more insights from LPs/GPs, and our take on what it all means (from 15+ yrs. of experience). Exclusive to Paid subscribers (most of whom expense these insights).

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“Don’t do what you can do - try what you can’t do.” -William Faulkner

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VC Deep Dive Recaps & Links

Thanks for all the great feedback on our recent VC deep dives! We’ve unpacked some insights from notable VCs around building generational firms (#99 IPOs Are Back / Early-Stage Upside, #97 Sequoia's Strength, #95 Footwork + 20VC, #93 VC DPI & Power Laws Today, #91 Fresh Takes From Top VCs, #89 Brad Gurley (Benchmark) + David Sacks (Craft), & #87 Building Generational Firms).

There’s a lot of great content from notable VCs, LPs, and CFOs/finance pros on the internet. Here, we’re focused on pulling out the insights out that really matter, as well as finding the most current content that overlays historical lessons with current market dynamics, which are changing faster than ever.

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VC Deep Dive: Jason Lemkin, Mike Maples, Eric Paley

A recent 20VC podcast with Harry Stebbings brought together Jason Lemkin (SaaStr), Mike Maples Jr. (Floodgate), and Eric Paley (Founder Collective). These VCs all have enough experience and security to share real and direct insights that others simply won’t. Emerging manager Ty Findley (Ironspring) said it best:

“So many great VC 🎙 pod episodes out this year discussing the reset occurring, but this particular 20VC episode is the best yet and a masterclass on what it takes to build a venture firm for the long haul given the 'game on the field' is now back to normal. Eric Paley, Mike Maples, Jr, and Jason M. Lemkin have all delivered real DPI (not just speaking from TVPI mark-ups), which allows them to speak freely/candidly on what matters vs. what's hype. Appreciate the content Harry Stebbings, over the years you've democratized access to how the best do what they do - changed everything for us #EmergingManagers.”

Today, we go deeper into each of these managers and their firms, unpacking our top insights and ways to apply them as VC GPs, CFOs and Finance Pros build their VC firms in 2023 and beyond.

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VC Backgrounds

Mike Maples Jr. (Floodgate) is a Co-Founder and Partner at Floodgate; Host of Starting Greatness podcast; Co-conspirator with awesome Startup Founders. Notable investments include Twitch, Okta, Lyft, Twitter.

Jason Lemkin (SaaStr) is a SaaS Founder, Enthusiast & VC. Out of a $100m+ fund, we lead $250k-$5m initial investments in great SaaS companies. Notable investments include Algolia, Mixmax, Pipedrive, SalesLoft, Talkdesk.

Eric Paley (Founder Collective) is Managing Partner at Founder Collective, a seed-stage fund in Cambridge, Massachusetts. NNotable investments include Uber, The Trade Desk, Coupang, Airtable.

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Top Takeaways for LPs & VC GPs, CFOs, and Finance Pros

1. Is the classic seed model dead? Can seed funds play in a world of $25M valuations? $30m valuations for YC rounds? Eric’s take: not dead! There’s a small class of companies that will price themselves too high which makes it hard to get follow-on capital. The rest of the industry is rationalizing pricing back towards normal in seed (although not all the way back to 2015). Being over-priced at seed is bad - makes it harder to raise your Series A.

2. Are pricing coming down? Mike’s take: valuations are still high but every startup is its own special snowflake. You have to be non-consensus and right to win big. Big exits still required being non-consensus and right. A seed round priced at $30m post is priced to perfection. Airbnb, Lyft, Coinbase were all unpopular and low valuations at the seed round. Feature, not a bug.

3. Non-consensus categories? Jason’s take: are there any non-consensus categories today? Mike’s take is that there’s no opportunity to be an activist investor if that’s the case. Otherwise you should buy an index fund. You have to have a prepared mind to receive the insight from an entrepreneur. The job of VC investors is to find inefficiencies.