One of the smartest people I know said three interesting things today about GenAI and LLMs: 1. Right now people believe LLMs can do just about anything. The reality is that they can do a pretty small set of things very well. There are a ton of people messing around with LLMs for use cases for which they are clearly suboptimal.

We talk to a fair number of LPs. If we connect the dots, it seems there is a huge explosion coming. Here's how it might unfold: First, a lot of VCs have gotten really big. I mean really big. We have heard of one case where a Fund II was raised that was 10x the amount of all the capital deployed by Fund I. Funds doubling (or more) in size from one vintage to the next is pretty common.

What's the impact of ChatGPT on VC? Here's one take I had this morning: ChatGPT is - at least right now - mostly a proof point on how advanced software/data/ML/NLP has become. The easy UX makes it really easy for people to understand how far AI has come.

When revenue multiples far too high, revenue growth is over-priortized. That means CEOs start overpaying for revenue growth. This happens in a number of ways: 1. Hiring. CEOs hire too fast, and lower the bar to bring more people on board faster. That can bring faster revenue growth, but it also destroys company culture....

The idea that this downturn is going to be less painful for European (or Israeli) startups because somehow they raised at more reasonable valuations through 2021 is just wrong. Founders and VCs on this side of the pond were very aggressive with super high valuations in recent years - often with less traction or tech or commercial savvy than their US counterparts.

Low interest rates and a flood of fast dumb late-stage capital has jacked up artificial paper venture returns. This has had several effects: First, it helped convinced LPs to flood the sector with capital in search of these unsustainable returns. LPs are not blameless in the bubble collapse we're living through.

With the end of easy money, a lot of smart founders are pulling the plug on projects that weren't that well thought-out. This is great news. It will create the conditions necessary for them to focus their energy on projects that are better and more carefully conceived.

With the end of easy money, a lot of smart founders are pulling the plus on projects that weren't that well thought-out. This is great news. It will create the conditions necessary for them to focus their energy on projects that are better and more carefully conceived.

1/ Prediction - we are entering a 3-6 month period in which very little that happens in the very early-stage market is going to make much sense. Market will bifurcate silently into two halves: 2/ Half the market (or more) will still be engaging in very high-priced investments of questionable value, but a lot of noise - still betting on a quick markup from a greater fool downstream.

What are the implications of this? For Founders? For VCs? No wrong answers. Curious to hear thoughts. "YC’s $500,000 Standard Deal" blog.ycombinator.com/ycs-standard-d… My take: (1) definitely good for YC; (2) probably neutral to negative for most founders (it's not a lot of cash, but it puts the squeeze on the next round, especially if that round is small)

Wow. Hearing of case after case of "big boy" Series A+ VCs literally fighting to stick big checks into very early-stage companies I'm not comfortable putting small checks into. This market is . . . . . interesting. Assuming both the Series A+ guys and I am acting rationally and with some skill - what is going on? What explains the inverted risk curve of the VC market? After all, as a small first-check firm, I'm supposed to be taking MORE risk than they are.....

Most of crypto is a fraud perpetrated by "technical" people on non-technical people. The mathematics may be legit. (I don't really know. I am not a PhD. Neither are most of you.) But the use cases are demonstrably not legit and driven by speculative greed and social proof. The second worst aspect of this is that many of these technical people have convinced themselves of the legitimacy of the crypto industry and can credibly claim to have good motivations. They are, for the most, victims of self-delusion and confirmation bias.

The atmosphere of sheer panic among VCs these days is disconcerting. If I was an LP, I would be sitting on my hands right now. Up and down the capital stack, people have lost their wits, if not their minds. How do I know? Two things: (1) speed and (2) strategy drift.

Index closes $200 million dedicated seed fund to intensify multi-stage thesis tcrn.ch/2PJPaSJ via @techcrunch @TechCrunch What I love about this is the framing. Index's roots were in taking early stage bets on European startups when almost no one else believed Europe could generate great VC returns. But Index did.

I'm not sure this is true, but I am starting to think it might be. Thesis: seed funds and "accelerators" basically can no longer work together. Choose one path and you self-select out of the other. The best seed funds, like Angular, have gotten pretty good at adding a ton of value and connecting portfolio companies with customers and investors. We're willing to write big checks and build great syndicates - and in many cases, we add a lot of signaling power.

Secret of early-stage investing in a four easy steps: 1. Develop a strong internal sense of what "truly great" looks like. This is the key step. Get this wrong and the rest is irrelevant. Here you must be intellectually honest and very humble. "Truly great" is a matter of fact not opinion. A matter of past not future.

Angular Ventures is super excited to release our 2020 Data Deck on Enterprise & Deep Tech VC Investment in Europe & Israel. 73 pages of proprietary data & analysis. (Thank you @poetential for all the hard work here!) @poetential You can find the full report (downloadable) on medium/docsend here: medium.com/angularventure…

People seem to going absolutely bananas about an Israeli proposal to establish an age-based and points-based system for Coronavirus release. Regretfully, I mistakenly characterized this as a "policy" as opposed to a "proposal" in a twitter thread that has absolutely exploded (nearly 700K views - completely insane).

Woke up to good news from Israel on ending the Coronavirus lockdown this morning, which I think should be shared widely in English. With the appropriate caveats that I am not an expert in any relevant field, here's my best understanding of what the Israeli government is doing to end the lockdown:

VC market has completely locked up. Growth stage bankers are reaching out to me (a very early-stage fund) to see if we want to join $10M rounds. Any VC saying they are "open for business" or "business as usual" is lying or stupid. You probably don't want either on your cap table over the long run. Angular is still considering new investments, but our stratospherically high bar is astronomically high now.

1/ Increasingly hearing about double-digit million "Series A" rounds on companies with low single-digit ARRs. 2/ Revenue multiples on these things are in the 20-30x range sometimes, which is pushing post-money valuations towards the $100M mark and beyond.