In partnership with
Good morning 👋
And happy National Kangaroo Awareness Day to those who celebrate.
We’re breaking down a Lightspeed partners’ thoughts on the Series A crunch happening in venture plus why it matters and what we think happens next.
Let’s get into it.
P.S. 💰 Are you a full-time investor AND do you want to get paid more?
Today’s highlights
Data and thoughts on the Series A bust
Three products that have meaningfully changed our lives
The power of being stage agnostic
Meme of the day: Hopefully your GP doesn’t dress like this …
TOP
The Series A bust 📉
A lot has been written about the Series A bust, but we haven’t found anything as good on the subject as this piece by Nnamdi Iregbulem (Partner @ Lightspeed).
There’s a ton to unpack in Nnamdi’s original article, and it’s been ~10 months since this was written; here are some general thoughts from us on why it all matters and what we think happens next.
Why it matters:
Raised expectations; lower confidence: Investors are demanding better traction and stronger metrics to justify Series A rounds, but they no longer see Series A as a clear sign of product-market fit. This shift means that while companies are required to show more, investors are actually less confident in what the Series A signals about a company’s future success. Founders need to understand that reaching a Series A isn't the safety net it once was.
Series A ≠ de-risked : In the past, moving from Seed to Series A was seen as a de-risking milestone, akin to graduating from college. However, investors now realize that most companies at the Series A stage still face substantial risks. This has eroded their confidence in paying a premium for these assets that still carry a large amount of risk.
We’re now seeing the full negative effects of the 2020 hype cycle: Historically, we've seen a strong pipeline of companies moving from seed to Series A. Recent numbers, however, indicate a significant decline in this graduation rate. Measured graduation rates will continue to fall for several quarters as companies go out for and fail to raise Series A rounds. Graduation rates from seed to Series A could drop to 25%, or one-third or one-half of what they were at the peak.
What happens next: Boom years create a distorted view of PMF; down years return things back to equilibrium.
Balance has returned to the venture world, and maybe that's a good thing (unless you’re a founder trying to raise with a little bit of traction).
The bar has been raised, and investors are questioning the bar as a meaningful indicator of success in the first place. We’ve already seen this play out, and we don’t expect things to change any time soon.
If there is one takeaway from this piece, it’s this: If you’re raising or planning to raise soon, get as much proof as possible before you start asking for dollars.
Read more: The Series A Bust
Together with beehiiv
Who really owns your audience?
Being a Creator has never been easy, but unpredictable algorithms make connecting with your audience on social media harder than ever.
Enter beehiiv, the newsletter platform used to send this very email.
beehiiv frees you from the algorithms, giving you the tools to connect and create a more direct relationship with your followers.
Plus, with a network of premium advertisers and paid subscription options, you can tap into new revenue streams from day one.
LINKS
📥 The Messy Inbox Problem—Wedge Strategies in AI Apps: Andreessen Horowitz makes the case for using generative AI to help process unstructured information and entering data into industry-specific systems of record to qualify their prospective customers and initiate a number of downstream workflows
⌛️💸 How To Lose Time and Money: Paul Graham’s essay warns as the world gets more complicated, the most dangerous traps are new behaviors that bypass our alarms about self-indulgence by mimicking more virtuous types
🫵 Nobody Is an Authority on Your Potential But You: Roelof Botha, managing partner Sequoia Capital, sits down with View from the Top
💡 What Do You Do With an Idea?: Better technology can unblock a tremendous backlog of old ideas that previous generations have left on the shelf
🌎 Game Changers 2025: CB Insights lists 9 technologies that will change the world
🤲 Next Play Opportunities 10/22: Ben at Next Play shares opportunities for co-founders, early teams, scaling companies, investment roles and more
TWEET
HEADLINES
Battery Ventures’ Chelsea Stoner on the power of being ‘stage agnostic’ in tech investing (GS)
Anthropic Announces Software That Operates Devices, New Models (The Information)
Venture debt activity picks up in Europe (Pitchbook)
Marc Andreessen says AI model makers are in ‘a race to the bottom’ and it’s not good for business (TechCrunch)
MEME
RECS
Things that have improved our lives + business
Superpower: The most-useful health membership I use with 100 lab tests, health dashboard, a full hour review with their medical team (skip the waitlist and get 25% off here)
Clay: I haven’t found a better prospecting tool (and their name is sick)
POLL
Does your boss dress better or worse than Zuck?
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
RESULTS
Here are the results from our poll question in yesterday’s piece:
Who has more control in fundraising markets right now?
🟨🟨🟨🟨⬜️⬜️ GPs (5)
🟨🟨🟨🟨🟨⬜️ LPs (6)
🟩🟩🟩🟩🟩🟩 Don't care - show results (7)
18 Votes
