📶 Annual Confluence.VC Community Report (2023)

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Good morning 👋

We launched Confluence.VC officially in June 2020 to become the VC operating playbook for junior venture capital investors.

Our goal for creating this was simple: to create something that made the VC onboarding curve easier than it was for us.

We’re working towards that goal every day, and over the past three-and-a-half years, we have:

• Written 229 emails

• Interviewed 82 investors and startup founders

• Published 163 blog posts

• Created 139 YouTube videos

• Shared dozens of memes

All to help others better understand venture capital as an asset class.

Our core offering is a private community and resource library for full-time investors.

Our free version gives members access to all of our best VC resources packaged up in a clean Notion document. Our paid version gives members the same along with our member directory, private Slack group, hundreds of investment memos, investment frameworks, tools to hire better investor talent, and a handful of other features.

This report details data on all investors who have joined either of our two membership options over the past three years.

We hope you enjoy.

MEMBER METRICS

The number of members is a vanity metric for most online communities, but here are our updated numbers. More detailed information about our members is found throughout the rest of the report.

• Members: 1,904

• Funds: 1,484

• Locations: 121

More: Search investors through our investor database

LOCATIONS

1. New York, NY (430)

2. San Francisco, CA (257)

3. London, UK (100)

4. Los Angeles, CA (93)

5. Chicago, IL (72)

6. Boston, MA (69)

7. Palo Alto, CA (51)

8. Toronto, Canada (49)

9. Austin, TX (43)

10. Washington, D.C. (40)

Takeaways:

• US venture hubs are what you would expect. No surprises at the top of the list. In the US, New York, SF, and LA are the most-popular spots for investors. There are several other markets with some investor density but not nearly the same critical mass as the top 10.

• Midwest venture capital is sparse. Chicago and Austin are the only two cities listed in the top 10 that are not based on EST ot PST time zones. There are WAY more Midwest venture dollars than there were a decade ago, but the representation still lags behind what you find on the coasts.

• Toronto is the Canadian venture hub; London is the European venture hub. As a US investor, it’s easy to lose sight of the bigger picture and forget about international venture markets. If you invest in Canada or Europe, these are the two cities where you should be building a co-investor network.

SECTORS

1. Fintech (1,212)

2. AI (1,143)

3. Digital Health (957)

4. E-Commerce (919)

5. Cloud Infrastructure (893)

6. Future of Work (886)

7. Cybersecurity (802)

8. Marketplaces (801)

9. Enterprise SaaS (774)

10. Developer Tools (770)

Takeaways:

• Fintech is the most popular (and most competitive) category for venture investment. Ask 50 funds what their investment thesis consists of, and you’ll probably hear 90% of them mention fintech as one of their sectors of interest. We get it - traditional financial services are broken, fintech companies are closest to a customer’s wallet, they usually have sticky contracts if they sell into banks, and there are now several IPO and M&A examples that prove the demand. The problem in venture (and any asset class for that matter) is that when more money piles into a particular category, more competition creates more negative outcomes for a larger portion of investors.

• The AI boom has resulted in more venture dollars going into fewer sustainable AI companies. The AI hype train was a real deal earlier this year. If you sat on the sidelines, you look like one of the smart ones while many other investors lick their wounds after paying a premium (again) on companies that became worthless after ChatGPT’s latest developer day.

• More time spent online = more opportunities for investment. More time spent shopping online creates more e-commerce enablement opportunities. More time spent online creates more cyber protection opportunities. More online business creation creates more opportunities within the future of work and dev tools.

STAGES

1. Seed (1,463)

2. Series A (1,352)

3. Pre-Seed (916)

4. Series B (877)

Takeaways:

• VC is still an ownership game. We’ve seen (and written about) funds that are becoming more creative with achieving ownership targets. Investing at the seed is the most popular among our members. Then the question becomes: how do you compete for information access at the earliest stage? We’re biased, but we believe you need to create better investor networks.

• A combination of seed + Series A investing is the most-popular investment strategy from our members. Invest at the seed, monitor, and double down on the winners when you have enough proof points. Easier said than done, but that seems to be the consensus among members.

TITLE

1. Associate (345)

2. Investor (332)

3. Principal (201)

4. Analyst (162)

5. Partner (120)

6. General Partner (78)

7. Founding Partner (33)

Takeaways:

• We’re no longer a junior VC community. We originally built Confluence to solve the problems of a junior VC. That was three years ago, and many of our first members have leveled up and moved into decision-making roles. As the ICP changes, so do our goals.

• Partners and GPs are becoming more represented. ~12% of members are partner-level or above. This is a noticeable difference from when we started three years ago, and the reasons for this change are that some members are advancing internally within their own funds and becoming partners, others are spinning out to start their own, and the longer we stick around, the more partner-level investors apply to join.

TYPE OF FUND

1. Early-Stage Venture (1,141)

2. Growth Equity (260)

3. Corporate Venture Capital (121)

4. Accelerator / Incubator (84)

5. Family Office (74)

Takeaways:

• Traditional venture capital funds are our ICP. ~60% of our members invest with early-stage venture funds. Originally, this was the only segment we served, but the community has now branched out to include growth equity, corporate VC, accelerators, and even some family offices.

• There are more funds than you think. Even a few years ago, we were convinced that the TAM of venture capital investors was tiny. That has changed, and we have barely scraped the surface of the total number of funds out there.

• The next few years should be a golden age to invest at the growth stages. More early-stage venture funds have popped up more early-stage companies. Many of these companies will fail or suffer down rounds as capital markets correct. The ones that survive will do so because of better underlying business economics, and growth equity funds can be more selective in choosing which of these businesses they want to partner with.

MEMBER INSIGHTS

Before joining the community, we ask members what their biggest pain points are. We also ask whether they are looking for only education (our free version) or education plus access to the community (our paid version).

Once accepted, we then capture data on which features are being most used by members.

What are members looking for?

Takeaways:

• Building an investor network is the biggest pain point for investors. You can either a) figure it out on your own by boiling the ocean, or b) you can join the #1 private community of investors and gain access to an ultra-high-quality network of investors.

• Death, taxes, and finding new deal flow. An investor is only as good as their deal flow. We make it easier for members to find deals by sharing investment memos on every company that submits through Commonapp.VC. Read one of our latest pieces on how other funds are modernizing their sourcing engine.

Do they prefer free or paid?

Takeaways:

• Majority of members have a willingness-to-pay of zero. Not everybody wants to pay for an online community, and that’s okay. We have a free version for these, so they can still get some value without opening their wallet.

• >25% of applicants want to a premium membership. So far, our subscription numbers have not quite reflected this. A few tests we have run include offering lifetime pricing and an annual discount.

Most-popular features

Free (ranked by number of pageviews)

1. LP Data Room Template: What all should be included when it comes time to raise from LPs

2. Venture Financing Trends: How to benchmark a standard term sheet

3. VC Chatbots: Agents to help investors get more done

4. VC Salary Data (2020 - 2023): Full database access of our previous comp surveys

5. Financial Modeling Templates: 25+ templates and models to use

6. VC Tech Stack: 80+ tools we recommend and use to invest

7. Investment Memo Template: Our standard memo template for sizing up new opportunities

Paid (ranked by number of pageviews)

1. Member Directory: Filterable database of 1,900+ investors that are members.

2. Legendary VC Frameworks: Frameworks, lessons, quotes, and additional reading from legendary investors at Accel, a16z, Founders Fund, Sequoia, and others.

3. Premium Affiliates: Earn $100 simply by getting your team to sign up.

4. Commonapp.VC Memos: Full memos on every company that has submitted through Commonapp.VC.

5. VC ChatGPT Prompts: 100+ prompts to give you more leverage as an investor.

P.S. If you’re interested in online communities of learning VC, we have two things you might be interested in.

1. Community Builder Playbook: All of our lessons from starting, scaling, and monetizing a community without writing code. Use this link to get 20% off.

2. Ultimate Venture Capital Resource Library: 400+ resources covering every part of getting started in venture capital. Use this link to get 20% off.

Thanks for reading this far and giving us a little bit of your attention this week.

Feel free to unsubscribe whenever this stops becoming valuable to you.

- Clay