All-In E141: State of Series A's, VC dry powder, IPO window opens + more with Bill Gurley & Brad Gerstner

Key Discussion Topics:

State of Series A Funding

• Carta data shows median Series A rounds now at $7M (down 26% YoY)
• Pre-money valuations down 17% to $40M
• Market remains competitive but not as frothy as 2021 peak
• AI deals still commanding premium valuations around $200M

VC Dry Powder Reality Check

• Common misconception about "dry powder" - money isn't actually sitting in VC bank accounts
• LPs still have the capital, hasn't been drawn down by VCs yet
• Many LPs facing "denominator effect" due to public market declines
• Portfolio mark-to-market issues creating misaligned incentives between LPs and GPs

IPO Market Outlook

• Signs of IPO window reopening with companies like:
  • ARM (targeting $50-70B valuation)
  • Instacart ($12B valuation, down from $50B private round)
  • Klaviyo, Reddit in pipeline
• Brad Gerstner predicts 5-7 significant IPOs in Q4 2023, increasing in 2024
• Down-round IPOs becoming more acceptable to clean up complex cap tables

Macro Economic Discussion

• CPI showing signs of disinflation
• Record levels of household, mortgage, auto and credit card debt
• China experiencing actual deflation
• Debate between soft landing vs recession scenarios

Notable Quotes:

Bill Gurley on career advice: "Study history...knowing who the patriarchs were of your industry and knowing what they thought is super powerful in any endeavor."

Brad Gerstner on IPO outlook: "First class IPOs are coming and a bunch of down round IPOs are coming...these are high quality companies that will lubricate the IPO market."

The episode provided deep insights into the current state of venture capital, with particular focus on Series A dynamics, the complexities of VC dry powder, and signs of the IPO market reopening. The discussion also touched on broader economic concerns including inflation, debt levels, and potential recession risks.