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The Twenty Minute VCEd Sim & Jamin Ball: Did Figma Kill M&A Markets & 3 Requirements to IPO in 2024 | E1101
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At a glance
WHAT IT’S REALLY ABOUT
Venture Reset: Overfunded Startups, Broken M&A, and Tougher IPO Bar
- The discussion examines how the 2020–2022 funding boom created an overhang of overvalued, underperforming startups now facing hard choices on M&A, recapitalizations, or eventual shutdowns. Ed Sim and Jamin Ball argue 2024 is when boards must confront reality, regardless of runway, by asking if businesses can ever grow into 2021-era valuations. They explore why large-scale M&A is structurally constrained by regulation, how private-to-private deals and mid-size exits will become more important, and what it will realistically take to IPO in this environment. Throughout, they stress capital discipline, honest board-founder conversations, and why current vintages—despite pain—may be among the best in a decade.
IDEAS WORTH REMEMBERING
5 ideasRunway is not the same as having a viable business.
Many companies have 24–36 months of cash but are growing too slowly or are too overvalued to justify continuing as-is; boards must ask if the company can ever grow into its last round valuation, not just whether it can survive.
Hard, early conversations between boards and founders are now mandatory.
Investors should push founders on their energy and conviction, realistic endgame, and whether selling, merging, or even returning capital might create a better outcome than grinding toward an unreachable valuation.
Overpriced 2021 rounds made many cap tables a structural risk.
Huge late-stage rounds built massive preference stacks and 100x ARR entry valuations, making it mathematically difficult for many companies to ever exceed their last private valuation, especially as public multiples normalize around 7–10x revenue.
Large-scale M&A is constrained; mid-size and private-to-private deals will matter more.
Regulatory scrutiny (e.g., Adobe–Figma) makes big tech acquisitions risky and slow, so most activity will be in $100–$500M deals, category tuck-ins (like Palo Alto’s strategy), acqui-hires, and private-to-private mergers to build platforms.
To IPO in this market, companies must be financially fit and realistic on valuation.
Expectations are for ~30%+ growth, cash-flow break-even or close, and trending toward Rule of 40–50; many IPOs will be down-rounds versus 2021 private marks, but going public can reset cap tables and create currency for hiring and M&A.
WORDS WORTH SAVING
5 quotesThis shit is really fucking hard, and it takes a long time, so you gotta be patient.
— Ed Sim
Companies who raised those big mega rounds are pretty much all in this overvalued and underperforming bucket.
— Jamin Ball
Just because you have 24 or 36 months of cash doesn’t mean that you have a business.
— Ed Sim
Don’t make the cap table a risk to your business.
— Jamin Ball
The firms that are making capital calls in 2024…this is gonna be a fucking incredible vintage five years from now.
— Ed Sim
High quality AI-generated summary created from speaker-labeled transcript.
