The tide has turned for solo GPs

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Welcome to Startups Weekly, a nuanced look at this week’s startup news and trends by Senior Reporter and Equity co-host Natasha Mascarenhas. Subscribe to receive it in your inbox here.

It’s hard to be proactive after the tide has already turned. However, that’s what we’re seeing happening in the solo GP world, where investors, hearing that institutional investors’ risk appetite is changing, are extending fundraising timelines, lowering investment vehicle targets, or planning to exit the company altogether. Some have learned the hard way, while others, like Sahil Lavingia, tell LPs to literally cancel their checks if they feel guilty about investing in venture capital while the market fluctuates and interest rates rise.

It’s a shift from the fund-of-fund mentality that felt commonplace last year, in which investment firms lowered checks to early-stage, experimental investors to reduce risk and even lead early checks in a generation of new startups. Now, the idea of ​​supporting just one feels like a harder sell – depending on which institution you speak to.

For my full take on this burgeoning tension within the corporate world, read my TC+ column, “Are solo GPs screwed?”

I know some of us are still reeling from the SVB mess, which is still unfolding. My hope with this piece is to provide nuance as to how the market goes from here for a very specific subset of check writers. In other words, yes, there is a gloomy dark cloud that is now more visible than before. But there are umbrellas. Somewhere.

In the rest of this newsletter we talk about AI, icons and demo days. As always you can follow me Twitter or Instagram to continue the conversation. You can also send me tips at natasha.m@gotechbusiness.com.com or at Signal on +1 925 271 0912. No pitches, please.

Contents

It’s never GM; it’s only AI

Now that I apparently live in Cerebral Valley, it’s pretty easy to find investors, founders, or my close friends in the middle of a passionate conversation about artificial intelligence. Heck, we even recently screencast ChatGPT to explain SVB at wine night.

Despite the overactive news scene, thanks to ChatGPT plugins, the arrival of Google and the magic of Canva, the best piece I read all week came from our very own Devin Coldeway. In this analysis, Coldeway published a head-to-head comparison of the best generative AI tools, asking them to create everything from a phishing email to code.

Here’s what you need to know: In the AI ​​world, the compound effect is almost impossible to encapsulate. Technology continues to beat itself and progress should only be taken with a hopeful salt. But see for yourself if you don’t believe me!

Digitally generated image of silhouette of male head with multicolored gears inside on white background.

Image Credits: Andriy Onufriyenko (Opens in a new window) /Getty Images

Overheard on Techstars demo day

I went to an in-person demo day for the first time since 2019 this week, courtesy of 500 Global. There was a special, heartfelt energy in the room, in part because, as 500’s CEO Christine Tsai said, the 19 companies share their vision for the future “around one of Silicon Valley’s darkest backgrounds.” There’s more to follow on specific lessons, but below I thought I’d list some of the tidbits I heard during the accelerator pitch session.

  • “I find it very enlightening to compare your sales growth to your team growth – I personally don’t like companies with many operations, I definitely want to see more investment in R&D and product development.” [teams]”, Cindy BI, partner at CapitalX.
  • “We’re officially teenagers,” Tsai said on the accelerator’s 13th anniversary.
  • “When you think of a brand, you probably think of something like Nike. But for Gen Z, some of the greatest brands are people,” said Meghan Russell, founder and CEO of Detoure.
  • “We know how to get exits done,” Tripitaca CEO Peter Wachira later added, “We know how to get shit done.”

Image Credits: Contemporary Ad/Getty Images

One of the company’s most iconic duos wants to speak to you

I published a podcast interview with Freada Kapor Klein of Kapor Capital and Mitch Kapor, the entrepreneurial investment couple behind the top-notch impact investing outfit. The duo recently published a book, so that’s what we’re talking about, their choice to retire from investing and the legacy they continue to build.

Here’s an important moment the podcast: “It’s also worth pointing out that in the beginning there were a few people, white males, who thought about working with us and decided we weren’t going to make enough money, so they went elsewhere. So I hope they kick themselves in the head and I hope they learned something,” said Kapor Klein.

  • I was on comedian Alexis Gay’s podcast, Non-technical, earlier this month to talk about anything but my day job. Come for the croissant hate; stay for the devil’s advocate.
  • Also listen to Found, a podcast about the stories behind the startups. This week, the team published an interview with the brains behind “a genetics startup that aims to bring extinct species back to life to aid in environmental conservation efforts.” Jaw = dropped.
upfront-kapor-capital

Image Credits: Clark Studio

etc. etc.

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talk soon,

N