So every day there are more and more massive funding rounds
But where does all that money >come from<?
1/ From "Limited Partners", the ones that give VCs $ to invest
And they had an incredible year
Top endowments and LPs saw a jaw-dropping 62% (!) returns from VC + PE in 2021
2/ Top LPs (endowments, universities, family offices, etc) did even better than that
Wesleyan's endowment for example grew 54% overall last year, and 95% from venture and private equity (!!)
Woah
And many / most are (re-)investing even more into VC + PE after those gains
3/ As you can, these huge gains (even though many are on paper), so swell endowments that for now, even with some market tumult, there's more and more investment dollars to go into venture and PE
Look how much Wesleyan's endowment grew in 2021, and it's a relatively small one:
It's a next-generation marketing platform built mobile-first, with a focus on bigger deals and enterprise
It took off almost immediately
It's at $260m in ARR, growing 63% YoY
5 Interesting Learnings: 🔽🔽🔽🔽🔽
#1. $500k+ deals make up half their revenue, and $1m deals 37%
Big deals fuel the growth at Braze. Still, Braze isn’t overly concentrated, with no customer being over 5% of their revenue. A classic “going more and more upmarket” enterprise playbook.
#2. 126% NRR Overall, and 135% in their $500k+ customers.
What you’d expect, and it’s helpful to see this segmented. The Really Big Customers have 135% NRR. You should aim for the same with similar-sized B2B customers.
DataDog has gone from 5% enterprise in early days to 80% now at $1.5B in ARR: saastr.com/5-interesting-…
FreshWorks and Samsara have moved the SMB focus to $5k+ up accounts. E.g., only 25% of FreshWorks customers pay > $5K, but they are 84% of revenue: saastr.com/5-interesting-…
A lot of older times in VC talk a lot about the incentives of “fees” in venture
Why? Let’s take a look at the Old Days. Like, until 2019.
1/ Until 2019 or so, a “3x fund” — that tripled the LPs’ money was top tier. “2x” was not great, but good enough for another check.
2/ Today, the bar has gone way up. LPs want 4x net funds or better now, and may have multiple funds per cohort that are 5x-10x or more.
3/ Now, depending on the maths and fund structure, in a “2x net” fund, the partners might still make the majority of their money off fees — not “carry” from investing
At “3x net”, the math would favor carry, but only many years down the road