Tren Griffin+ Your Authors @trengriffin I work for Microsoft. Previously I was a partner at Eagle River, a private equity firm established by Craig McCaw. I am on the board of directors of Kymeta. Jan. 12, 2020 1 min read + Your Authors

1/ "Gross margin was the defining characteristic of successful IPOs, and direct listings certainly made a splash last year."  https://tomtunguz.com/the-health-of-the-us-venture-market-in-2020/ 

I've written about the benefits of high gross margins.  https://25iq.com/2017/02/04/gross-margin-for-fun-and-profit-involves-beer-and-music-streaming/  But below the gross margin line costs can kill too

2/ "Investors deployed $117B in 2019 up from $106B in 2018. This market has grown 20% over the last five years. Q4 2019 saw meaningful dip from Q3, but it's too early to say whether it's an aberration, or the beginning of a longer-term trend."

3/ Compare the size of the VC-based funding market to the size of bond markets and you can see why people say VC punches above its weight:

"In 2018, the total amount of U.S. investment-grade debt increased by about 3% to $6.7 trillion as of Jan. 1, 2019"  https://www.spglobal.com/en/research-insights/articles/u-s-corporate-debt-market-the-state-of-play-in-2019 

4/ How much capital can VC absorb before returns fall below the opportunity cost of capital for a marginal limited partner?

Fred Wilson on that: https://avc.com/2009/04/the-venture-capital-math-problem/ 

Bill Gurley: "VC has long been a trailing indicator to the NASDAQ. Venture capital is a cyclical business.”


You can follow @trengriffin.



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