Dear SaaStr: Why Are So Many VCs Grouchy These Days?

I think because it’s so damn hard to truly make money as a VC.  So, so much harder than it felt in late 2020 and 2021:

  • If you aren’t in the top quartile of venture fund performance at least, maybe higher, you can’t raise another fund. So slowly, you are out of a job.
  • If you invest in Hot Deals, they are always priced beyond perfection. You can’t afford them. So you don’t think you can make any money.
  • If you can’t get into Hot Deals, you can’t make any money because only the Hot Deals make enough money to return the fund.
  • If you invest in Almost Great Companies, it feels good, the metrics move, it sounds right, but you can’t make any money, or at least, not nearly enough.
  • Sequoia does so much better. See point #1.
  • Andreessen always pays more. See point #2.
  • While AI is very hot, outside of that, Decacorns seem elusive.  The average public SaaS company is worth about $3 Billion, which is a lot, but often not enough to impact a larger VC fund.

It’s very hard to really make money. To turn say $150m into $500m, with a bunch of losers in the portfolio. It turns out.

A related post here:

Why VCs Need Unicorns Just to Survive

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