The State Of VC In 2023 - Where We Are, Where We Are Going And Where To Invest

Good morning…

Sam Lessin is a great venture capitalist (Slow Ventures) who I follow. He recently shared a deck titled ‘The State of VC in 2023 - Where We Are, Where We Are Going and Where To Invest’. It is an excellent. I will come back to it a few times in the next week to help you digest because there is much to discuss and learn.

I have been organizing my thoughts on the state of Venture Capital as we head towards 2024. If you follow me here, you know that for a few years I was not very active deploying seed capital. Silly prices and rising rates made it hard for me to build any conviction putting capital to work.

I spent a lot of time focusing on problems and opportunities that mattered to me as I aged as a person and consumer which led me to my passions in media, comedy, sports, wealth management, luxury and the ‘degenerate economy’. I have covered these trends a lot over the last nine months in the newsletter. I am seeing so many opportunities as certain of our investments grow including The 1916 Company (Watchbox).

Things have changed over the last six months and I have been very active. I led Grass Clippings and two more companies that will be announced over the next month. Quick sidebar…the making of the 9th hole at Grass Clippings (I am playing for the first time today) is fun to watch:

Some Big Trends I see…

More walls, digital and physical. We already have Josh Hawley pushing to ban Tik Tok. I am for digital walls starting with China who have one up against us. I wrote about that in 2022. I wish my adult kids would remove it from their daily lives.

Defense Defense Defense. I have zero expertise here, and we do not plan to make investments from our fund, but I am seeing a lot of VC chatter and events starting to organize since Oct 7. I bought some Palantir $PLTR shares for the first time today. Maybe DC and Virgina are the new San Francisco. I follow Joe Lonsdale who a leading venture investor in defense. I have made some personal investments in funds in the sector via funds. My friend Mike Slagh, former military, has organized the Defense Ventures Summit happening next week and it is packed with 102 VC and PE firms. I may try to sneak over.

Lean Cap Tables. Unique wedges, quicker to business success, deeper digging, more exits between $200-$500 million, continued valuation compression. I am very focused on this trend.

Email. While I continue to use social apps like Stocktwits and Twitter (desktop), Whatsapp and iMessage solve for most of what I need to network and be in social groups. Through our investment in Beehiiv I am seeing the surging demand for email as influencers realize they need to control their data and communicate with their audiences directly.

The incumbents continue to Dominate. While AI will be magical for users, it seems like the Apple, Microsoft, FaceMetaBook, Intuit, Adobe etc past behemoths will benefit the most. AI while transformative feels more like a win for already smart and motivated people.

AI. Lot’s of ‘hot’ money still to be deployed. My bet on AI is owning the $QQQ and $XLK.

Money/Crypto. Social Leverage has a decent amount of exposure to crypto by way of funds as I am not confident in my abilities to pick the winning teams and founders. I love the wild, global, frontier like risk/reward for a slice of any venture portfolio.

Have a great day.