Title: Investors Reflect on the Surprising Trends of H1 2023
The first half of 2023 has brought its fair share of surprises for both startups and venture capital investors. While some investors were caught off guard by the rapid rise of generative AI, others were astonished by the sudden influx of VC funds into AI-related companies. These unexpected trends have left investors contemplating their actions if they had known what the future held.
According to Matt Murphy, partner at Menlo Ventures, the speed of financings and valuations in the generative AI space has been the biggest surprise. However, he also notes the stark contrast between companies that have successfully raised funds and those that have struggled. Jenny He, founder and general partner at Position Ventures, echoes this sentiment, emphasizing how many top-tier firms transitioned from a wait-and-see approach to active involvement in AI in 2023.
Not all surprises related to AI were positive. John Tough, managing partner at Energize Ventures, expresses his bafflement at how easily some firms shifted their focus and investments from climate funds to AI. On the other hand, Rajeev Dham, partner at Sapphire Ventures, believes that while AI advancements will spawn transformative companies, there is still a long way to go, potentially leading to wasted capital.
However, not all surprises revolved around AI. Mark Grace, an investor at M13, highlights the wide range of early-stage valuations, particularly in the Series A stage. He finds it interesting how the seed market has remained resilient, contrasting with the quiet later stages of funding.
Looking back, many investors express their desire to have been more active and faster in their decision-making. Logan Allin, managing partner and founder at Fin Capital, regrets not being more active during a macro environment like this one. Likewise, Jason Lemkin, CEO and founder of SaaStr, believes he should have met with more founders, recognizing that great companies are still being formed in the SaaS industry.
Despite these surprises and hindsight reflections, Howie Diamond, managing director and general partner at Pure Ventures, humorously declares his personal investment in First Republic Bank stock as something he wishes he hadn’t done.
In conclusion, the first half of 2023 has brought a mix of surprising trends in the startup investing world. The rapid rise of generative AI and the shifting focus of investors towards AI-related companies have left some investors amazed. However, concerns about lost capital and the varying valuations of early-stage companies have also emerged. Looking back, many investors wish they had been more active and quicker in their decision-making. These reflections provide valuable insights for investors as they navigate the unpredictable landscape of startup investing.
Disclaimer: This article does not constitute financial advice. Please consult with a professional financial advisor before making any investment decisions.
