Welcome into the extremely issue that is last of Exchange! This month, The Exchange column and its newsletter are also coming to an end with for Millionaires+ sunsetting. Thank you for reading, emailing, tweeting, and spending time with us for therefore years that are many

P.S. A special thanks it over from myself to Anna, who was nothing short of a brilliant lead author for this newsletter since taking. She deserves credit that is endless her work on the email.

Today on The Exchange, we’re digging into continuation funds, counting down through some of our favorite historical Exchange entries, and discussing what we’re excited to report on for the rest of the year! — Alex

Continuation funds

Continuation seemed like an theme that is apt our point of view. Additionally it is a really topical one: “The source that is greatest of liquidity now is going to be continuation funds,” VC Roger Ehrenberg predicted in a recent episode of the 20VC podcast.

In case you aren’t familiar with the term, let’s turn to the FT for a definition:

Continuation funds, which are common in private equity [PE] but rare in venture capital, are a investment that is secondary that enables all of them to “reset the clock” for quite a while on some possessions in old resources by attempting to sell all of them to a different car which they additionally control. It will help a VC fund’s backers, known as “limited partners,” to roll-over their particular exit or investment.

If you have been following the last few months of venture capital activity, the “why now?” is easy to answer. As the StepStone Ventures team told our colleague Becca Szkutak in her December 2023 investor survey: “With portfolios awash in unrealized value, fewer exit that is immediate, and longer hold durations beingshown to people there, GPs are starting to have imaginative to be able to produce exchangeability.”

In rehearse, a continuation investment views investors that are new in existing portfolios, but “it reflects today’s valuations,” Ehrenberg said. This repricing and the conflict that is potential of around it sound challenging the theory is that, but Ehrenberg does not believe therefore. “You have actually web brand-new people examining a portfolio, therefore they’re the cost setter, maybe not the manager that is existing”

It’s not just very funds that are large Insight Partners and Lightspeed that will explore this program, often. “It’s a strategy that is viable a decent swath of the venture industry,” Ehrenberg told 20VC host Harry Stebbings.

Whether it’s continuation funds, strip sales or secondaries, there’s a impetus that is clear VC to find answers to its usually ill-timed rounds, even as we had currently seen because of the increase of permanent money and openly detailed resources. A typical thread in today’s economy is tasks and organizations aren’t because of the time they have to totally become successful, therefore also it’s good to hear that net investors are prepared to give portfolios more time to shine.

RIP if it supposes a temporary discount The Exchange

The Exchange began its life in late 2019, before it even had a name. It quickly became a column that is daily the few days, and soon after on the weekend publication. The Exchange was a For Millionaires+ product on the site, but its weekend issue was sent out for free as an email for those of you interested in the historical quirks of building media products. Why was that the case? Because at the time we didn’t have the tech that is internal distribute subscriber-only email messages!

Over the life span regarding the Exchange on For Millionaires+ we delivered a lot more than 1,000 articles and updates, rendering it the largest and — when we may — many impactful solitary task for operating readers as to what had been our compensated item. The Exchange and TC+ had been inseparable, that they are being retired together so it makes sense. Still, as with any project that mixed both work and passion that is personal we’ll skip it.

From its begin, the $100 million ARR club in addition to very early days that are pandemic with stock market collapses and fear, The Exchange was around to chronicle the 2020–2022 startup boom, and its later conclusion. We went from tallying monster rounds and a blizzard of IPOs to venture that is watching dry out and startup exits become rarer than silver. It’s been crazy.

Anna Took over The Exchange’s newsletter in early 2022, around the right time that Alex became editor-in-chief of For Millionaires+. The columns continued to be a combined group task, but we’d to divide and overcome to help keep our result at complete tilt.

  • Below is a summary of a number of the most popular Exchange entries. Needless to say, we couldn’t return through the archive that is entire which you can find here — so consider this a partial download of the hits:
  • The $100M ARR Club (December 2019). The start of a series that is long-running into pre-IPO startups. A number of the entrants like com monday later went public.
  • Why is everyone OKR that is making computer software? (2020) january. Our“startup that is first cluster design post, searching into that which we discovered becoming an unusually hectic section of upstart tech organization energy.
  • API startups are right that is hot (May 2020). API startups would stay hot for years to come, leaning on the model that Twilio helped pioneer. It’s interesting to think back to May of 2020, when there was fear that is still ample the marketplace. Minimal did we all know that which was coming that is next
  • Don’t Hate on no-code and low-code(might 2020). The reduced, no-code debates have actually quieted notably since the way of generating computer software that non-developers adjust and bend with their will that is own has more table stakes than controversial product choice. Still, it wasn’t always that way.
  • Startups have never had it so good (2021) july. By mid-2021, it absolutely was obvious that the marketplace for startup shares was at a era that is new with investors piling cash into every software company that moved.
  • How to make the math work for today’s sky-high startup valuations (July 2021). Underpinning the funding that is massive that we noted prior to was an expectation that computer software development would definitely be quicker, and last for a longer time than previously anticipated. That ended up not becoming real.
  • What could end the startup increase? (2021) september. We were a little concerned in later 2021 that the pace of investment was not entirely sustainable. The market would stay hot for a while longer, but our notes about potential disruptors to the startup boom wound up being reasonably accurate. Interest rates really did change the game.
  • More LP transparency is overdue (2022) january. VCs will say to you whatever they purchase but they are usually much more tight-lipped about their particular backers that are own. We argued that startup founders are due a bit more information on where their capital is ultimately coming from.
  • Why you shouldn’t ignore Europe’s tech that is deep (February 2022). One narrative that is interesting in recent quarters is Europe’s venture and startup resilience during the present slowdown in private-market capital investment. We said that european tech that is deep poised doing really. And, well, we were right.
  • Yes, it is become more difficult for startups to improve capital (2022) july. By mid-2022, it was clear that the boom times were over, despite 2021’s exuberance stretching into early 2022.
  • The rise of platform engineering, an opportunity for startups (2022) december. In the place of buying even more designers, you will want to invest to assist them to be much more effective? Later on cuts to developer payrolls caused it to be obvious that the period of mass-hiring ended up being behind us, making the thesis right here much more important.
  • The mirage of dry-powder (2023) january. After a end that is lackluster 2022, the positive take had been that VCs had a lot of dry powder — capital to place to work — that they certainly were sitting on. Certainly those resources would shake loose and recreate the times that are good? Anna argued that some of the venture capital theoretically sitting on the sidelines was less “real” than it looked.
  • A core plank of the SaaS model that is economic under severe force (August 2023). A proven way that computer software organizations develop is through attempting to sell a lot more of their particular solution to clients with time. But, by final it was clear that net retention was suffering, meaning that a lot of organic growth that startups might have once counted on was evaporating.
  • Will august the power of data in the Al era leave startups at a disadvantage? (2023) august. Then do the companies with the most data win the day if AI is data brought to life? And if so, where does that leave startups?
  • Rainbow or storm? (2023) september. After discussing fintech that is improving, Anna dug into the use of AI to fight fraud. It was an interesting turnabout of the usual AI and fraud narrative, which involves AI bolstering activity that is fraudulent of restricting it.
  • Klarna’s economic glow-up is my story that is favorite in right now (November 2023). After seeing its valuation slashed, Klarna didn’t instead slow down and held developing and increasing its economic overall performance. Alex provided all of them a thumbs-up that is big progress made.

WeWork’s bankruptcy is proof that its core business never actually worked (2023) november. What more can we state about WeWork apart from that it absolutely was a leasing that is weird play that never had a very good core business.

Why I’m modestly crypto-bullish in 2024 (2024) january. In front of place bitcoin ETFs, this line suggested that this could be a fecund one for crypto as a whole year. So far, so correct.

Yes, the tech layoff surge you are feeling is real (2024) january. Also to close-out a number of the most popular, or most notable entries, the layoff that is recent has been anything but a mirage. Sadly.

We’re not done(*)While The Exchange is shuttering, we still have big plans for coverage this year. Thankfully we’re both still at For Millionaires, so you are far from rid of us. Alex wants to work on unicorn health, the continuing condition of financial obligation funding in 2024, and just how AI will see buy in the OS level. Anna is interested in AI hubs beyond bay area, GP stakes spending and whichever S-1 we are able to get our arms on.(*)Thanks Again for reading The Exchange’s newsletter and post. We’re so very grateful to have gotten to spend so time that is much you with this task. Onward and up!(*)