- Off Balance
- Posts
- The Lowdown #6
The Lowdown #6
Private Equity firms pass the buck to themselves, Loom becomes a Loomicorn, California passes law mandating VCs report on diversity
šš¾ Hi friends!
In some personal, non venture related news, I turn 45 tomorrow š„³Ā
Iād like to take a moment to thank all the people along the way who have made me who I am, who have supported me, who have lifted me up when I needed lifting and who believed in me when I didnāt even believe in myself.
Iāll be dropping a post tomorrow on LinkedIn exploring some of the life lessons Iāve learned along the way. Be sure to check it out šĀ
So whatās the lowdown this week? Well, weāll be diving into:
š° PE firms pass the buckā¦ to themselves?
š¹ Loom exits to Atlassian
š¤·āāļø California mandates VCs report on diversity
And Season 5 of Nothing Ventured is now LIVE with a new look and some awesome new guests! Check out the first episode with Mark Kleyner from Dream VC who are building the Investor Accelerator for Africa š„
Also, if you have any feedback, or if thereās something youāre desperate to see me include, just reply to this mail or ping me online - Iām very open to conversations.
Give me a follow on LinkedIn, Twitter (do I really have to start calling it āXā soon?), Instagram.
(If you are trying to connect with me on LinkedIn, maybe read this post I wrote and make sure to start your request with āLowdownā and, more importantly, tell me why youād like to connect šŖš¾)
Donāt forget to like, rate and subscribe to Nothing Ventured on Apple, Spotify or YouTube, it really helps more people see what weāre doing!
Now letās get into it.
This edition of Nothing Ventured is brought to you by EmergeOne.
EmergeOne provides fractional CFO support to venture backed tech startups from Seed to Series B and beyond.
Join companies backed by Hoxton, Stride, Octopus, Founders Factory, Outlier, a16z and more, who trust us to help them get the most out of their capital, streamline financials, and manage investor relations so they can focus on scaling.
If youāre a CFO working with venture backed startups and want to join a team of incredible fractional talent, drop us your details here.
If youāre a growing startup that knows it needs that strategic financial knowhow, drop your details here to see how we can support you as you scale š
The Lowdown
Much of the news Iāve been consuming over the last week has naturally been focussed on the evolving crisis and events in Israel and Gaza, but there is some stuff of note that has been happening in the venture ecosystem that is still worth touching on.
The Private Equity Ponzi
The FT article below is quite an eye opener for those that pay attention to how the private markets operate and the issues that arise when there arenāt great routes to exit.
As the article states, PE funds are resorting to sell their assets back to themselves (under new funds with potentially new LPs) in order to provide liquidity back to their previous funds and investors.
Whilst the IPO market might be depressed, thereās just something about this that feelsā¦ off.
I mean, what does it mean when the āgreater foolā is your own fund? How do you justify an arms length attitude to valuation mark ups?
The funds doing this cite keeping the strong cash flows from these businesses in the portfolio, but this sounds like the sort of argument you make when youāre trying to convince yourself rather than others.
Weāll see if, and when, markets picking up these assets can exit through more traditional routes, or, if these funds end up holding the bag and having to explain to themselves why this was an okay thing to have done.
Loom-icorn
Given the last bit of news, hereās one that goes in the other direction.
Loom, the video recording platform used by founders, product teams, students and pretty much anyone that wants to communicate and demonstrate without having to write a 100 page email, has been acquired by Atlassian for $975m.
Now, given the value, I toyed with headlining this āSoonincorn,ā but that would be snarky for the sake of snarkiness - the business has raised over $200m and was purportedly valued at $1.5bn in its last round in 2021.
Iād guess that those series C investors in the last round probably had preference shares, so probably came out whole. But whatever happened in that last round, one has to imagine that the founders, employees and earlier investors have come out of this with a big smile on their faces.
As someone that has used Loom on and off for some time, and generally only has good things to say about the product, itās great to see the team seeing this through to a successful outcome.
Itās something to cheer about in an otherwise seemingly tough time for startups looking to exit.
Exciting news today. @loom is joining @Atlassian.
The company has entered a definitive agreement for Atlassian to acquire Loom for $975m.
25 million users.
1.5 billion minutes recorded.
1.8 million workplaces.
8 wonderful years in the making.— Shahed Khan (@_shahedk)
Oct 12, 2023
Reducing Bias or Increasing BS?
Those that know me and who have listened to my podcast for any time will know that I am a massive advocate for increasing funding that flows to under represented groups, whether thatās female founders or people from minority backgrounds.
California has just signed into law a bill that mandates funds in California or funds that have invested in businesses principally based in California report on the demographic information of their investee companies.
I always have mixed feelings when governments get involved in these sorts of activities. Whilst I think that shining a light is positive, I also assume that these things just become exercises in bureacracy without any real impact.
And, because of the way reporting will occur (% of founders rather than % of dollars invested), it may not really represent the actual diversity of investments that a fund has made.
I guess we will see how VCs react and, over time, whether this will make a real difference in what kinds of founders their funds flow to.
For now, Iāll buy into the fact that itās a step in the right direction.
And finally, I created a midwit meme which pretty much explains how I feel every time I open twitter, especially as I hit the big 45ā¦
šAnd thatās a wrap for this edition of The Lowdown - Iād appreciate your feedback so just reply to this email if youāve got something youād like to say.
šØ And if you think someone else might love this, please forward it on to them,
š§ Finally, if youāre a fan of the Nothing Ventured podcast, please donāt forget to like, rate and subscribe wherever you get your pods - it really helps us spread the word.
What do you think of the new look, new feel Off Balance newsletterI'd love to get your opinion so I can learn and improve šš¾ |
Thatās it from me so until next timeā¦
Stay liquid :)
Aarish
Join the conversation