The Lowdown #6

???????? Hi friends!

In some personal, non venture related news, I turn 45 tomorrow ???? 

I’d 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 didn’t even believe in myself.

I’ll be dropping a post tomorrow on LinkedIn exploring some of the life lessons I’ve learned along the way. Be sure to check it out ???? 

So what’s the lowdown this week? Well, we’ll be diving into:

???? PE firms pass the buck… to themselves?
???? Loom exits to Atlassian
????‍♀️ 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 ????

Also, if you have any feedback, or if there’s something you’re desperate to see me include, just reply to this mail or ping me online – I’m very open to conversations.

Give me a follow on LinkedIn, Twitter (do I really have to start calling it ‘X’ 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 “Lowdown” and, more importantly, tell me why you’d like to connect ????????)

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Now let’s get into it.

The Lowdown

Much of the news I’ve 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 aren’t 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, there’s just something about this that feels… off.

I mean, what does it mean when the ‘greater fool’ 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 you’re trying to convince yourself rather than others.

We’ll 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, here’s 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 ‘Soonincorn,’ 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.

I’d 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, it’s great to see the team seeing this through to a successful outcome.

It’s 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 that’s 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, I’ll buy into the fact that it’s 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 45…

????And that’s a wrap for this edition of The Lowdown – I’d appreciate your feedback so just reply to this email if you’ve got something you’d like to say.

???? And if you think someone else might love this, please forward it on to them,

???? Finally, if you’re a fan of the Nothing Ventured podcast, please don’t forget to like, rate and subscribe wherever you get your pods – it really helps us spread the word.

That’s it from me so until next time…

Stay liquid 🙂

Aarish