First Round doesn't know if there's a tech bubble, but...
J Thoendell stashed this in Tech
First Round points out that a VC lesson from the dotcom bubble was that the best firms didn’t stray too far from their knitting in order to chase outsized opportunities. Just because there’s a lot more capital in market, that doesn’t mean your firmneeds to put a lot more capital to work.
For First Round, that’s meant keeping fund sizes static and increasing the threshold for new deals. If a typical deal costs 30% more than it did several years ago, then First Round wants to be 30% more certain. Yes, that does sound like a small strategic shift, but it also reflects the greater portfolio concentration that comes with higher deal prices without corresponding fund size increases.
That may be. However, measuring certainty is an imprecise science.
First Round's best investment EVAR, Uber, was made when there was NO CERTAINTY AT ALL. When it comes to VCs, actions speak so much louder than words.
In venture capital, everything seems obvious in retrospect.
But usually at the time they're taking a bet that's scary risk-wise and/or valuation-wise.
That's why they get paid the big bucks.