#201 VC News, YC, & The Future of Venture Capital
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Venture Capital News, YC, And the Future of VC
A lot has been written about the future of VC - where are we going?! Big news in private VC markets this week included the SpaceX valuation soaring to $350 billion and its [most?] notable investor Founders Fund shaking things up.
In San Francisco, Y Combinator held its first in-person demo day in 5 years. I pulled a visual from the internet archives and enjoyed looking at the YC company valuations in 2020 vs. 2024, notably:
Stripe: $36b in 2020 to $65b (private) in 2024 (1.8x)
Airbnb: $30b to $86b market cap (2.9x)
Instacart: $30b to $12b market cap (ouch)
Cruise: $19b to losing $3.5b as part of GM (big ouch)
Doordash: $16b to $74b market cap (4.6x, wow!)
Coinbase: $8b to $83b market cap (10.4x, big wow!)
What’s the takeaway(s) here? Big wins can still come if you’re investing later in the game at multibillion dollar valuations. None of these big wins were a sure thing, even a year ago. However, big losses are still on the table as well!
Pictured: Y Combinator Top Valuations (as of 2020) in Honor of Demo Day
Three Future States of the Early-Stage VC Ecosystem
Looking back to when I first began investing in venture capital in the early 2010s, so much has changed since that time.
Earlier this week, Charles Hudson published a piece on the future of the VC (linked above), with a focus on early-stage. I really enjoyed the piece as he shared some details of his thinking and excerpts from his latest annual general meeting. He kicked things off with calling out three future states of the early-stage venture capital ecosystem (also illustrated in the chart below):
Return to the Status Quo
Small and Large Firms Diverge: Bifurcated Seed Market
Big Fund Domination
I highly recommend reading Charles’ post, linked again here.
The Future of Venture Capital: 2025 & Beyond
So where do we go from here? As I’ve spoken with a number of LP investors and VC fund managers over the past few months (as well as reviewed a lot of data), here are my top thoughts on the future of venture capital.
The venture capital ecosystem is undergoing significant shifts as we head into 2025. Here are the key things we and other VC GPs, CFOs, and LPs are thinking about as we head into the new year:
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