Pod Insights Equity Podcast How hard was it to raise venture capital in Q1? About this episode Alex filled in for Natasha as host this week, and to celebrate the end of Q1 2023 and the start of another earnings cycle, we invited PitchBook Senior Analyst Kyle Stanford onto the show. Stanford and his company are key providers of data concerning the domestic and global venture capital markets making him a perfect guest to help kickstart our look at recent venture results, and trends.
We had a lot to talk about:
Where early-2023 venture aggregates are trending, including a chat about different stages of startup size and how investors are approaching those groups.
Sectors that are hot and sectors that are, well, not.
When we might get an exit market that actually exists, again. And why Stanford popped our fading optimism that we could get more IPOs later this year.
And we had a good time. We hope that this episode helps you form an informed posture towards fundraising for, and operating your company.
For episode transcripts and more, head to Equity’s Simplecast website.
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Transcript 0:11 Speaker 00 Hello and welcome back to Equity, a podcast about the business of startups where we unpack the numbers and the nuance behind the headlines. My name is Alex and this is our Wednesday show where we niche down to a single person, think about their work and unpack the rest. Today, we are talking to Mr. Kyle Stanford, the Lead Venture Capital Research Analyst at PitchBook, covering all things US market. Kyle, I think this is the best way I've ever jumped into the Q1 dataset. I'm very excited that you were here. How are you?
0:37 Speaker 01 I'm great, you know, can't complain. Again, just another, oh, it's actually sunny outside in Seattle. So what a way to start the day off.
0:45 Speaker 00 If it's sunny in Seattle, Microsoft stock goes up by five points, right? Isn't that how that works?
0:48 Speaker 01 That's what I heard, yeah.
0:49 Speaker 00 Okay, good. Well, if you own Microsoft stock, congratulations. Kyle is someone that I have emailed with and quoted ad nauseam over the years. So it's great to have him on the show. PitchBook, if you don't know, is a, oh, Kyle, I'll just let you do it. What's PitchBook?
1:01 Speaker 01 PitchBook is the leading data and technology and research provider for the private markets and public markets.
1:07 Speaker 00 Yeah.
1:07 Speaker 01 Fully owned by Morningstar.
1:09 Speaker 00 Yes. So if you want data on startups, venture capital deals, all that stuff that we chew on a lot on this show, PitchBook is one of the best places to go. I depend on them quite a lot. I use their data all the time because you have very good search tools. So shout out to your UI team for making that pretty easy to use.
1:24 Speaker 01 Hey, I can let them know.
1:25 Speaker 00 We're here today because Q1 is behind us. We are now into Q2 and we want to know what the hell happened during the first quarter. So from a very high level, Kyle, when we think about aggregate US venture capital numbers for Q1, what happened compared to Q4 of last year? And where do we stand on kind of a year-over-year basis?
1:43 Speaker 01 I think when you look back on Q1, and obviously the data is not going to show Silicon Valley Bank, it looks like a very boring decline, right? Deal count was down a little bit from Q4, but we still came in at, you know, almost 3,900 deals. Deal value was at $37 billion, which is really low compared to what we saw, but it's not too big of a decline from Q4.
2:04 Speaker 00 Okay.
2:04 Speaker 01 However, Stripe's deal isn't there, $6.5 billion.
2:08 Speaker 00 Ooh.
2:09 Speaker 01 So that takes us down to $30 billion, lowest since Q1 of 2018.
2:14 Speaker 00 Okay.
2:15 Speaker 01 So very low. Deal count's still declining, but there's It's so tough because there's so many funds in the market, like small funds that are making deals that are not driving up the deal value that it is, it's still really high, higher than anything before 2021.
2:28 Speaker 00 So it sounds like we're seeing dollar volume decrease a bit more noticeably than deal volume. And that sounds like we're seeing a lot of smaller deals. So is this kind of implication that the earlier stage market is perhaps doing better than the later stages of startup investments?
2:43 Speaker 01 Yeah, probably on a relative basis, right? I think when we look at what's happening at the late stage and our venture growth stage, so much of that investment activity was reliant on crossover investors and other large non-traditionals. And they've pulled out pretty, pretty quickly. And without them, those large deals aren't getting done, you know, at least on the number that were like, obviously stretched 6.5 billion dollar deals, one largest deal of all time. But as far as the number of large deals, I think there was only 50 total, like 100 million dollar deals.
3:11 Speaker 00 Yeah.
3:11 Speaker 01 Last year, there was 500 or something. The year before, there were 875. Like, it's been a pretty big decline. And that capital availability or low capital availability is a huge, huge problem right now without the exit markets also being there for these companies to participate in.
3:27 Speaker 00 We're going to get to the exit markets in a little bit, and I'm going to make you go on the record talking about when the IPO market's going to recover to a point in which we have deals to look at. But let's start at the earliest stages. This is why Commodores Demo Day week. And so I've been thinking a lot about the smallest companies, the couple of founders raising kind of a pre-seed or a seed check. What does the data tell us about valuations for the smallest companies out there? And kind of like perhaps investor sentiment, optimism around these baby companies?
3:51 Speaker 01 You know, what's really weird is that seed deal valuations pre-money are this quarter at the median highest we've ever seen in the quarter to date.
3:58 Speaker 00 What? Really?
4:00 Speaker 01 Right? There's a lot that goes into that because we collect completed deals. So we're seeing the highest quality deals are coming through, especially at a time when lower quality deals are not getting done. They're not going to be in the data. We're also seeing, you know, large multi-stage investors moving down to early stage and seed. There are, there's still a huge number of micro funds that have been raised the past few years that are putting capital worth. And there's also like, because those large funds are moving down, smaller funds are also getting pushed earlier. And so now companies are raising pre-seed rounds. Or maybe there are multiple seed rounds that they're raising. And so these companies are just more developed than they were five years ago, 10 years ago. And so the data is really interesting. I would also say like, we don't have, or we don't collect revenue, especially for seed stage companies. And so when we talk about the highest valuation, right?
4:44 Speaker 01 We don't know what the revenue multiple is going to be on those.
4:47 Speaker 00 Yeah.
4:47 Speaker 01 And so everything that we know and we've heard is that those multiples are much lower. And so that high valuation median is on a median company that is generating a lot more revenues than would have raised a seed round a year ago, two years ago. So.
5:01 Speaker 00 Yeah.
5:02 Speaker 01 Lots of impact there, but valuations are high for seed.
5:04 Speaker 00 It's funny to see the, the impact of the kind of survival of the fittest thing going on in the market because I'm not seeing valuations shift as much as I expected, even in kind of the later stages. And I think that's partly because the only companies that are raising deals that we notice are really high quality. And so they're not under as much price pressure. I'm wondering though, when companies that are less exciting to investors have to go raise again, if that's going to change the numbers that we're seeing in a material way, because certainly if you're more of a wounded animal, like I say, wounded unicorn, you're going to probably have to take a pretty big discount just to get more capital on the table. But we haven't heard, or at least I haven't heard that much about that yet. I don't know if you guys have seen that show up yet.
5:43 Speaker 01 No, down rounds like really have been relatively low. I think from our Q4 valuation report, it was still the annual figure for 2022 was the lowest on a proportion or percentage wise of down rounds that we've seen, right? But we saw last year hundreds of thousands of layoffs. We saw a lot of debt being taken out to LinkedIn runway. We saw a lot of bridge rounds that were just kind of not down rounds, not great up rounds, just extending the time before it coming, need to come back to market. So we have pulled the down round data for Q1, that'll be in our valuation report, but I would expect like, there's got to be an uptick. I think Q4 was a little bit higher than Q3 last year. Q1 will be a little bit higher.
6:23 Speaker 01 I think the second half of this year is when a lot of the companies that aren't the stellar companies have to come back to the market and that LinkedIn runway runs out. The layoff lever has already been pulled and now they're coming back to the equity market, raising in a much more formidable market on. Revenue multiples that are much lower. Hopefully they've gotten their rest of their financials in order, but it's going to be an interesting show. I think the second half this year.
6:48 Speaker 00 Well, just to kind of wrap up on the earliest stage point, your note about valuations actually tracks with what I'm hearing about Y C companies. Like one thing that I foolishly expected was a retrenchment in what these kind of like couple of founders and maybe three customer startups would be worth. And it turns out that Y C valuations are still, I'm hearing about like $15 million caps on safes and so forth. So that actually does fit in. I'm just surprised at the durability of optimism while everyone else seems to be worrying about the economy, geopolitics, inflation, interest rates, and the earliest stage seems to be fine. So I guess it's good. I just a little surprised by it.
7:23 Speaker 01 Yeah, I don't see any reason why you wouldn't be or why we wouldn't be surprised, right? I guess when we look at it right, though, these seed companies are five plus years away from the public markets, even the successful ones.
7:34 Speaker 00 Yeah.
7:34 Speaker 01 They are as insulated as possible. These venture investors, like their job is put money to work, right? So they need to be smart about it. And if they can find, especially these large multi-stage firms that have scout programs, that have small seed funds, that have investors everywhere, knowing everything about what's going on in the market, they can probably feel really comfortable about what they're sourcing from a quality standpoint.
7:54 Speaker 00 Yeah.
7:54 Speaker 01 And they have the money to back it up, right? So it's a these weird metrics where there's weird ideas of what a seed investor is, is completely changed.
8:02 Speaker 00 Yeah. Well, one thing we saw as everyone was able to raise a lot more money for their venture capital firms back in the 2020, 2021 era was people going more multi-stage, you know? I mean, Y C recently pulled back from late-stage investing to pick an example of how things are now shifting. Is the multi-stage approach still as popular as it was? Or is it also in decline as we're seeing overall round counts and so forth descend?
8:24 Speaker 01 I mean, I think it's just too early to choose one way or the other, right? These funds are going to be 10-year funds. They're going to have a long lifespan ahead of it. What we have seen is that obviously the number of billion-dollar funds declined to close, declined drastically over from Q1 to Q4 last year. I think like two were closed this year. But I don't see any reason why that would, I mean, it'll be a while. We'll never see $35 billion funds closed again, probably for a long time. The multi-stage strategy is a very interesting, like really good strategy. If you have funds that are sourcing seeds, sourcing early stage, sourcing late stage, then you can follow your top companies throughout and you can continue investing in them rather than just try to stay at your pro-rata. You can take larger stakes if you want.
9:05 Speaker 00 Yeah.
9:06 Speaker 01 You can invest in them through IPO. And so I don't think that strategy is going to decline, especially if we see a bunch of emerging managers not be able to raise another fund and we kind of consolidate the number of funds. I think the ones that have multi-strategies within their portfolios are going to be the ones that continue to stay. And so that will probably actually end up proliferating the strategy a little more.
9:26 Speaker 00 Yeah, I mean, honestly, given the amount of solo GPs that raised a fund one in the last couple of years, they might struggle to raise a fund two, given how much things have changed. I wonder if they don't just kind of get brought on to kind of like middle-stage funds as their scout team or as their effective early-stage outreach. Because if you can, as you said, get allocation early and follow a company that's a winner, you'll do great. We saw this stretch, I think, to the breaking point, though, when VCs were putting together SPACs to try to take some of their portfolio companies public. That didn't work out the way anyone expected, but the pitch there was from first check to last check. And I think it is too early to say, but I'm curious to see what fraction of the companies or firms that followed that approach were more following it because interest rates were zero and money was free versus it making the most sense for their ability to generate returns on an incremental dollar basis.
10:10 Speaker 01 I mean, it was a really cheap way to raise a couple hundred million dollars for a new strategy to go after or to a potential new strategy, right?
10:17 Speaker 00 Yeah.
10:18 Speaker 01 I mean, our D-SPAC index is down more than the VC-backed IPO index. I think they're both down 50-plus percent since the beginning of 2022. So I don't think, especially with the extra regulations that have been put on SPACs since the kind of explosion in 2021, 2022, I don't see that being a strategy that people continue pursuing.
10:36 Speaker 00 No. I mean, a SPAC is just a way to take a company that might be medium and turn it into an absolute donut, as far as I can tell. Like, do you want to turn your share price from $10 to $0.60? Well, then SPAC. But I think for any serious company, it hasn't been the approach. But let's hold off on the late-stage stuff for a second because I want to riff for a second on what I think of as kind of like the middle of startup life, your Series Bs, your Series Cs. I'm curious, in the US market, what are we seeing for companies that are approaching what we might call late-stage growth?
11:07 Speaker 01 Yeah, so we have this really good model. It's called capital demand to supply. We model out the amount of capital that we are estimating is needed or expected to be raised by companies. Then we just look at how much is actually being supplied by the investors. And at Series C and Series D are late stage. It's like a three times the amount of capital is being asked for and is actually being supplied. So like this is where we expect the down rounds to come, right? It's a, you know, huge amount of funding has been going to these companies in the past few years. Now that capital is gone, what are they going to do? They can't IPO. They probably have a valuation that's way too high for an acquisition, or they're going to take a huge down round to get acquired, but they can't raise money either. And so this is a big problem for the late stage.
11:50 Speaker 01 And that Series C and Series D is where the, we see the lowest capital availability. Series B is still very low, but I think it's $2 is being asked for for every dollar being supplied.
12:02 Speaker 00 Yeah.
12:02 Speaker 01 So there's a huge gap there.
12:03 Speaker 00 Okay, but like if I go shopping, I will often want to have $2 for every $1 that I have. You know, so my question is how material of a shortfall is a two to one demand, supply ratio? And how much worse is a three to one? Like kind of in more practical terms for folks listening.
12:19 Speaker 01 Sure, right. So if I need 50 million to operate and I can only get 25 million, that's bad.
12:23 Speaker 00 Yeah.
12:24 Speaker 01 Right. And so if that's the entire market is asking for, you know, whatever $100 billion this year, and they can only get 50, companies are going to struggle. And I think that's where we're going to see the bifurcation in the market, where the winners are going to win because they're going to get, if they need 100 million, they're going to get 100 million. And the companies that are struggling and need 50 million to operate are going to get offers for 10 million and a huge down round or, you know, go out of business.
12:48 Speaker 00 I mean, if you need 50 and I offer you 10, what is that, six months of runway? Like, I mean, that's a, that's a brutal number.
12:54 Speaker 01 Yeah, right. And so that's, it's either a major pivot. That's a lot more layoffs. That is basically capital to sustain rather than to grow. And that's not what VC is predicated on. So yeah, that's when you get in some other, you know, R and P, biopreneurs might come in and be like, all right, we will supply some capital, but we're going to take 50% of your company and we're going to restructure it and we're going to. Roll it into one of our other platforms and go that route. So I think that, you know, two to one or the three to one, especially for those, you know, later stage or venture growth companies is pretty big discount. And like to juxtaposition that, like in 2021, people were asking for a hundred million and they were getting 110 million.
13:32 Speaker 00 Right.
13:32 Speaker 01 And so it's like, all right, great. Now we can grow. We can hire a bunch of people. Exact opposite now.
13:37 Speaker 00 I mean, I was hearing about companies that were raising two and three times in the same year because they would finish around and then people would roll them like, cool. Do you want to raise your series C now? Because here's a check. I mean, it's just amazing to me how when things were the most expensive, people were willing to buy the most. And now that things are much cheaper, people don't really want to buy it. And I know there's other things going on to make that happen, but it always makes me giggle when there's less capital available and prices are cheaper because you would think it would be the other way around, even though that's not really how supply and demand works.
14:04 Speaker 01 Yeah.
14:05 Speaker 00 But before we move on to the really late stage stuff, we talked about Bs, we talked about Cs, talked about Ds. Any notes on series As out there for startup founders that might be looking to leave the seed range and kind of go into the, uh, the lettered grounds?
14:16 Speaker 01 I mean, As are tough too, right? We've seen valuation, the median valuation decline significantly there. So now you're looking at seed median valuations that are continuing to go up and As that are coming down and that creates problems trying to raise a new round. Capital is still there. Probably if we look at the number of funds that were under a hundred million raised the past few years that are targeting seed A around there.
14:36 Speaker 00 Yeah.
14:37 Speaker 01 There's still a lot of capital. I think everyone gets stuck on the top line dry powder figure that we put out at $300 billion, which yeah, is great. But the more important thing is that there's a huge number of funds, unique funds that are down in C and series A. And so there's still capital there for strong companies, but it's definitely the benchmarks for raising are much higher than they were in 2021, 2022. So I think that just shows that investors are being much more cautious, probably a little too cautious because they were over exuberant in 2021, but I think that's the, the natural market cycle.
15:07 Speaker 00 Yeah. Well, everyone who's had a big night out always says they're never going to drink again. And it might take a couple of days more moderately before they get back to it.
15:13 Speaker 01 Hair of the dog, right?
15:14 Speaker 00 Hair of the, well, I tried that for a couple of years. It didn't quite go as planned. Looking at the later stages, though, I want to talk about this because it brings into account the exit market, which you and I both know has been garbage for the last 12, 15, 18 months. M and A doesn't seem to be super active. There have been some headline deals announced, but they're kind of tangled up in antitrust quite often. The IPO market is zero and SPACs are over. Private equity is active-ish, but not quite as active as I expected. Does that change this year, do you think? Do we get to IPOs by the back half of 2023? Or is it going to be another honestly boring year of waiting for stuff to happen?
15:48 Speaker 01 It'll probably be a boring year. I don't see any reason to believe, I know, right? It's not going to be any reason to believe that the IPO market is just going to miraculously change, right? What's going into that? All right. The Russia-Ukraine war on the outside. Okay, that's still going on. Inflation. All right, that's still high and being a little more temperamental than everyone wants. Interest rates look like they're going to keep rising. Like, that's all the things, or not all of them, but a lot of things that are increasing the uncertainty for investors. And especially if you're talking about investors are now looking or putting a premium on positive free cash flows and like actual potential profitability metrics when many of the unicorns have been built on the bro at all costs.
16:23 Speaker 00 Yeah.
16:24 Speaker 01 Right? And so flipping that switch back to, oh, let's just get our stuff in order is not a six-month or a year process. That's a longer-term business model shift.
16:34 Speaker 00 Yeah.
16:34 Speaker 01 And so I don't see any reason that we can expect public market investors to look at some high cash burn, low profit, or no profit, even if there's high revenue growth. Like, that's just not what investors are looking for right now. So I think it's going to be, we'll need geopolitics to subside everywhere. We'll need to see inflation definitely come down and stop and fall. Interest rates stop to at least let some certainty in the market be like, all right, this is where the bottom is maybe, right? Then you might see some companies start to go out, right? We know Instacart has already filed theirs confidentially. No one wants to be the first, and it'll probably be more than a couple that is going to really turn on the spigot, I guess, right? So I think it'll be 2024 before we see any real movement
17:19 Speaker 01 from VC-backed companies going to the public market.
17:21 Speaker 00 I mean, that's depressing as hell, but I don't disagree. I mean, Turo's kept its IPO filing hot. They filed all the S1As. We know that Reddit and Klavio are in the wings somewhere. Instacart's in there. But, you know, if you're waiting for inflation to come down and interest rates to stop rising, you're almost ironically waiting for the economy to suck. Right? So like, it's kind of like, did we have to go through this economy sucking to come out the other side to have IPOs? Cause if that's the case, it could be the back half of 2024 before we get real IPOs.
17:49 Speaker 01 I mean, what we need is we just need public market investors that are going to be willing to take on these probably high cash burn companies again. And that is going to, you know, they need to have some certainty in the market, right? And if no one knows what's going on, no one wants to touch. You've seen what our, our B spec IPO index has done over the past year and a half. It's down 60%.
18:07 Speaker 00 Yeah.
18:07 Speaker 01 Right? If those are the typical companies that we can expect to come to market, they're not going to receive a lot of interest from public market investors right now.
18:14 Speaker 00 Yeah.
18:14 Speaker 01 So there's a lot of other places for those investors to put money for a short term and have it pretty liquid. Whenever they decide they are ready to look at these, you know, tech companies again, but tech is not, you know, the darling of the public markets right now. And so I don't see any reason why this year we'll, we'll shift that.
18:31 Speaker 00 You know, part of this to me is, and this is going to come across as a slightly mean, but like a fair comeuppance. Like if you look at Lyft's stock on a price sales basis during its history as a public company, for some reason it was priced at like 10x revenue a little bit ago. Now it's worth like point eight, point nine X trailing revenue. And the market just seemed to have accidentally valued a lot of companies, not just a little bit wrong, but incredibly wrong. And so working through that will take time. It's just a bummer for companies that probably would have been okay and weren't too crazy, but are now stuck in a market where they're being placed in a box with companies that got super exuberant and over their skis. And I just feel for those founders who are doing fine, but that's no longer good enough. If that makes sense, Kyle?
19:13 Speaker 01 Yeah, no, it doesn't. I mean, we actually pulled, you know, a chart that looks at the, for our VC back to IPO index, which is going to be the best proxy to venture right now, looked at the price of sales ratios of those companies. And you can see in like basically right after everyone became comfortable with the new mechanics of, of what was going on when the pandemic started. Those prices sales just shot up and that took valuations along with it. And now they're back down to a very, you know, minimal multiple. And so even, yeah, those companies that are still growing or they're, hey, we're, we hit our benchmark that we set out the last round are not going to get the valuation that they thought they were at that time. And so that valuation, if there's valuation was too high before, now it's going to be a relatively small step up. Now, not what they're expecting.
19:56 Speaker 01 And so what everyone did from valuing companies after the pandemic, whatever the reason was, is now making it really difficult for companies to come in and raise on terms that are beneficial for them. And so that makes, you know, raising, it's a whole new category for companies that are just trying to survive and grow. Now they have to deal with all these pricing problems too.
20:15 Speaker 00 I really think that what we should do is we should get some really sad, like dirge organ music to play in the background of this entire episode. As you and I just go through all the bad news, it's.
20:23 Speaker 01 It's dark and ominous tones.
20:25 Speaker 00 Yeah, like something you expect to see in like, like a creepy Gothic cathedral. Let's, let's try to do something a little bit happier, just for the sake of it. I want to talk about sectors a little bit. Fintech has had a rough 2022. Is there any bright signs in the world of fintech that have caught your eye in the early look at the Q1 data?
20:42 Speaker 01 I mean, nothing in particular. I think it's so difficult, right? Because all these sectors are struggling compared to what they were doing in 2021.
20:49 Speaker 00 Yeah.
20:49 Speaker 01 In fintech in, you know, 2020, 2021, you know, buy now, pay later was huge, right? Well, now Apple's doing it, I think. So that's a bright spot for Apple, but not for all the companies that are trying to build this business model and actually grow on the public market. Especially fintech though, is such a broad category, right? You're going to find little segments within it that are very, very strong. So those are in there. Now, it's not something that I have dove into from my perspective yet though.
21:13 Speaker 00 And we consider bright spots inside of fintech. Obviously crypto must be blowing up right now. That was, that was sarcasm and people didn't catch it.
21:20 Speaker 01 Oh, yeah, I got it. I got it. Yeah, crypto, I mean, web three, right? Crypto web three, whatever, you know, you want to call it was. That was another crazy story from a year ago. You think Silicon Valley Bank is crazy?
21:33 Speaker 00 I mean, Silicon Valley Bank was-
21:35 Speaker 01 Go back to crypto 2021.
21:36 Speaker 00 It's pretty crazy. I mean, I didn't get enough sleep that whole week. It was, it was busy. You know, actually, I wasn't going to bring it up, because I wanted to kind of have like a forward look, but maybe I should ask about it because I'm a little bit surprised at how much we went from nothing to sheer panic back to kind of business as usual. And so maybe the right question is, will there be any material lingering impacts on confidence amongst investors and founders that matters after the Silicon Valley Bank crisis?
22:05 Speaker 01 I mean, how forward do you want to get, right? I mean, I think investors generally have a very relatively short memory. Well, like Silicon Valley Bank was a huge part of venture.
22:15 Speaker 00 Yeah.
22:15 Speaker 01 But JP Morgan has been moving into that territory for a couple of years.
22:19 Speaker 00 Yeah.
22:20 Speaker 01 There's a lot of venture debt, venture lender funds that are now kind of looking like, you know, it's not going to be the same model. They're not going to take on deposits or anything like that. But other banks too have quickly moved in and taken on like Brax, Mercury, you know, all these different venture backed banks basically have taken up some of the area of the void that was left by Silicon Valley Bank. So I keep saying that, like, obviously, this has been best case scenario so far. Best case scenario, I guess, would have been nothing happening.
22:45 Speaker 00 Right.
22:45 Speaker 01 But having all the deposits backstopped, having everyone be able to move back to kind of business as usual, hopefully just introducing into the market a little more caution, like smart caution and like due diligence pieces of the investment cycle. Like, I think that's probably a benefit to the market, right? We've seen, you know, some sort of lackadaisical due diligence for the past few quarters or years. So, yeah, I think in a few years, it will be a kind of like a tagline, be like, oh, do you remember Silicon Valley Bank? But I think all these other banks and lenders are there to fill the gap, right? And so investors will, again, make sure that their portfolio companies' muddies are safe, but because everything got backstopped and kind of got out the other side without too many barriers, right? I think, I think people will forget.
23:30 Speaker 00 Yeah, I think tactically, there's been a shift. I saw some data from, I think it was NRX that- A bunch more startups now have, you know, multiple bank accounts and that's smart. And we could argue they should have done that earlier, but whatever. But it doesn't seem like the overall tenor of like venture economics, building startups, where you put them together, how they're overall banked. Like nothing changed as much as I thought it was going to, given the weekend from hell that everyone was kind of running around panicking as if they were on fire. It seems to have been cleared up or cleaned up better than probably anyone expected during the actual crisis itself. So kind of a win, I would say in a really ironic kind of backwards way.
24:06 Speaker 01 Yeah. You know, it's interesting though, so that weekend I was down at South by Southwest and it was like very small topic, like not many people were talking about it, right? We were at a sponsoring event and there was like a lot of founders that didn't have, you know, probably large enough companies or they were either weren't banked yet or hadn't really raised money. So they were like in a different spot, but the people that were talking about it were the investors from the Bay Area that were there, or they was like us because I'm covering it and I can even know what's going on at all time. But it was not the topic of the conference from my perspective, at least.
24:35 Speaker 00 So I mean, according to my text messages from that weekend, it was the only thing happening. But then again, you know, you and I live in kind of a strange part of the market where we're very focused on just that segment of the economy. So it makes sense that we were kind of more focused on it than the averages.
24:50 Speaker 01 Yeah, I had actually, I had taken that Friday off work. I had on PTO and I woke up and I looked at the news and I basically was like, all right, well, I'm just going to go work all day.
24:58 Speaker 00 Right.
24:58 Speaker 01 Yeah. Like need to be done.
25:00 Speaker 00 I mean, our jobs sometimes don't let us take time off when we want to. But that's okay. That's part of the gig. About yourself, before I let you go, thank you for the Q1 dive. I'm looking forward to getting my hands on all the data as always. But when I was creeping on your LinkedIn, prepping for today's show, I noticed that you are a CAIA, which was an acronym that I had never seen before. And so I'm curious, just if you could define it for the audience and
25:24 Speaker 01 Sure.
25:24 Speaker 00 Tell us why it matters.
25:25 Speaker 01 Yeah, so that is the Chartered Alternative Investment Analyst Charter. I mean, they position it similar to a CFA, just it focuses on alternative investments. And so private equity, hedge funds, you know, all the likes of alternatives is kind of what the focus of that charter is. So it's pretty good. It's helped a lot.
25:42 Speaker 00 Is it a test you pass or a class you take?
25:44 Speaker 01 It's, yeah, it's a two test charter. So CFA is three tests. This one's a two test. So yeah, just did that a couple of years ago.
25:51 Speaker 00 Was it hard?
25:52 Speaker 01 I will say I didn't pass the first one the first time.
25:54 Speaker 00 Well, I didn't pass my driver's test the first time.
25:58 Speaker 00 So because I am guest hosting for Natasha Moskarenas on this Wednesday show, I'm gonna take a page out of her book and do what apparently we call the fun little get to know your guest lightning round questions to wrap up. So I didn't write these, by the way, I'm just going off of the the team idea doc. So what Kyle is the best advice you've ever received?
26:17 Speaker 01 Probably just like work your ass off. Yeah, I mean, that's difficult, but I think it's one of those things where I see if you have a passion and you work your ass off and you can do it, you can get to it, you can get to a point where everyone else like, wow, damn, that person, they they know what they're doing. They know how to work hard. So I think that's something that received even just a pitch book from my boss. I was just like, I was like, I don't know how to do that. Like work your ass off and do it.
26:44 Speaker 00 You've been at PitchBook for like nine years.
26:47 Speaker 01 Yeah, I started there in 2014. So nine years. Actually, I think I started in March 30th of 2014.
26:53 Speaker 00 Well, happy work anniversary. Are you gonna make it all the way to the decade, Mark?
26:58 Speaker 01 Yeah, I'm just chugging along here.
27:00 Speaker 00 Yeah, yeah. I joined TC, I think in 2013 for the first time. So when I read that about you, I was like, oh, we've been doing this for a while now. Maybe feel a little bit aged.
27:09 Speaker 01 Yeah.
27:09 Speaker 00 Okay, one more question from the list. If you were a VC, what sector would you invest in in 2023?
27:15 Speaker 01 So I heard someone say this one time, and I thought it was really good, but men's beauty.
27:20 Speaker 00 Yeah.
27:21 Speaker 01 I think as I get older, I'm always looking for eye creams. I'm looking for skincare. I'm trying to, you know, stay young. And I think it's like avoiding the market. Like something like Manscaped is not a revolutionary product, but they've built a brand and they've done that. And it's like, men, many beauty stuff, too.
27:36 Speaker 00 Yeah.
27:37 Speaker 01 So that's where I'd invest.
27:38 Speaker 00 I mean, male grooming is probably a pretty big category, and I don't think it's gonna be solved by putting everything instead of camouflage packaging.
27:43 Speaker 01 It's very true.
27:44 Speaker 00 Yeah, like I don't really need macho eye cream. In fact, I just need eye cream, period, because my beauty regime is zero. And I should probably, you look better than I do today. So I should I should take some hints from that. Okay. And then to close this off, best new music you've heard in the last 12 months, artist, song, genre, whatever you got. Take us away with some musical recommendations and then let's get back to work.
28:05 Speaker 01 You know, I'm really old school, and this is not new at all. This is a horrible answer, but I just like love putting on Foo Fighters and getting work done. And so. You know, Pretender, like Everlong, just like the classics. I just, that's my jam.
28:19 Speaker 00 So when I read anything from the PitchBook analyst crew, I should put on old Foo Fighters and just headbang as I go through it.
28:26 Speaker 01 Yep.
28:26 Speaker 00 Okay, well, I will try that when I get my hands on the Q1 report. And as a note, everybody, the reason why this episode's out on a Thursday is that we wanted to talk about all this data, but it was under a PitchBook general embargo until Thursday. So sorry the show was out a day late, but we figured it was worth it. Kyle, thank you for your time, man. And we will be in touch as always, but I want to have you back on the show later in the year to see how things kind of shake out and see where you and I were right and where we were wrong and lessons learned. So come back in like six months.
28:53 Speaker 01 Yeah, that sounds great to me.
28:54 Speaker 00 All right, everybody, Equity is back, of course, on Fridays as usual. So tomorrow, we'll see you then. In the meantime, hope you're having a good YC demo day. Goodbye.
29:02 Speaker 02 Equity Wednesdays are hosted by myself, TechCrunch Senior Reporter Natasha Mascherinas. We're produced by Teresa Locan Solo with editing by Cal Keller. Bryce Durbin is our illustrator. Alyssa Stringer leads audience development and Henry Pickavet manages TechCrunch Audio Products. Thank you so much for listening and we'll be back next week.
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