The Twenty Minute VCEd Sim & Jamin Ball: Did Figma Kill M&A Markets & 3 Requirements to IPO in 2024 | E1101
CHAPTERS
- 0:00 – 3:19
Meet Ed Sim & Jamin Ball, and the core question: what happens to exits in 2024?
Harry introduces Ed (Boldstart) and Jamin (Altimeter) and frames the episode around a late-stage liquidity shift: investors wanting cash back to recycle or return to LPs. The discussion tees up the big themes—runway, valuations, and what M&A/IPO markets look like in 2024.
- •Why the episode now: late-stage investors prioritizing liquidity
- •Guests’ backgrounds: Altimeter’s growth focus vs Boldstart’s inception-stage model
- •The central debate: what happens to M&A and IPO paths in 2024
- •Early signals: regulation and public-market multiples shaping private outcomes
- 3:19 – 5:01
Do 2021-era mega-round companies ‘hit the wall’ in 2024?
Harry asks whether 2024 is when heavily funded companies finally face reality. Ed argues yes: growth has slowed, cash burn matters again, and boards must confront whether the business is viable at lower growth rates.
- •Runway extension vs building a durable business
- •The end of 100% YoY growth as the default in enterprise software
- •Cash-flow break-even becomes a near-term necessity for many
- •2024 as the year boards can’t avoid hard decisions
- 5:01 – 8:23
PitchBook data: the fundraising whiplash and its downstream consequences
Jamin shares data showing how 2021 compressed years of fundraising into ~18 months, followed by a sharp reversion. He explains how milestone discipline broke down, leaving many companies overvalued relative to achievable performance in a risk-off environment.
- •Capital raised collapsed back toward pre-2021 trendlines
- •Milestones were waived in ZIRP, forcing painful catch-up later
- •Overvalued + underperforming (relative to 2021 plans) becomes the dominant bucket
- •Hard questions emerge: is cash balance giving false comfort?
- 8:23 – 10:26
Why seed still feels ‘hot’: the inception-stage bubble and multi-stage behavior
Harry notes seed feels competitive despite overall declines; Ed agrees and cites evidence that seed valuations rose while other stages reset. They discuss multi-stage funds moving earlier for cheaper optionality and how that inflates inception-stage pricing.
- •Seed/inception rounds stayed pricey even as later stages fell
- •Carta-style observation: seed as the only stage with valuation increases
- •Multi-stage funds hunting early checks as the “cheapest entry price”
- •Ed warns of a bubble at inception-stage pricing
- 10:26 – 15:58
Boardroom reality checks: the questions founders must answer (even if it gets ugly)
Ed lays out how boards should push for honest conversations: does the founder still have conviction, can the company ever grow into its valuation, and should they pursue exits or down rounds now rather than later. The group discusses why these talks are hard, slow, and often conflict-heavy—but necessary.
- •Founder energy/conviction as the first gating question
- •Assessing whether the company can ever grow into 2021-era valuation
- •Earlier acceptance of down rounds or strategic exits to avoid value drift
- •‘Founder-friendly’ means having hard conversations, not avoiding conflict
- 15:58 – 22:09
Incentives collide: pref stacks, early vs late-stage return math, and 1x outcomes
They unpack how large preference stacks reshape acquisition and exit feasibility. Jamin explains how early-stage power-law dynamics differ from late-stage recycling needs, and how 100x ARR pricing breaks when public multiples normalize.
- •Preference stack size becomes a primary constraint in M&A outcomes
- •Late-stage investors may prefer liquidity/recycling over long odds
- •Public software median multiples (7–8x) vs 2021 private pricing
- •Math of 100x ARR entry: requires massive growth just to break even
- 22:09 – 27:02
AI pricing déjà vu: how to avoid making the cap table a business risk
Harry challenges the practical advice of ‘raise less’ when AI founders face sky-high term sheets. Jamin and Ed argue founders are relearning discipline: milestone-based fundraising, avoiding valuations that restrict exit options, and choosing investors/board members carefully.
- •AI is the one pocket where 2021-style term sheets persist
- •Guideline: don’t let the cap table become a risk to the company
- •Raise to milestones; know what you’re committing to for 18 months
- •Shift from transaction-driven to relationship-driven fundraising
- 27:02 – 43:40
Exit landscape shifts: fewer mega-acquisitions, more $300–600M outcomes, and private-to-private deals
Ed argues antitrust and scrutiny reduce blockbuster exits, pushing the market toward smaller strategic M&A and private-to-private combinations. They discuss the ‘musical chairs’ problem—too many funded competitors per category—and why moving early matters.
- •Antitrust makes large strategic M&A far less viable (Customer/Meta wouldn’t clear today)
- •Smaller strategic acquisitions persist, but acquirer capacity is limited
- •‘10 of everything’ means a few winners and many forced outcomes
- •Private-to-private (e.g., Airtable/Airplane) as a path to platform-building
- 43:40 – 51:17
State of M&A in 2024: regulatory headwinds, limited acquirers, and category rollups
Harry asks directly if pessimism is warranted; Jamin says large-scale M&A is constrained by regulation and board risk tolerance. For smaller deals, the bottleneck is acquirer bandwidth, leading to prioritization of tuck-ins, talent, and highly strategic product additions.
- •Figma/Adobe as a deterrent for large, distracting M&A attempts
- •Boards often decide ‘not worth attempting’ big deals
- •Two common deal types: acqui-hires vs strategic product tuck-ins
- •Acquirer bandwidth limits how many targets can be absorbed
- 51:17 – 56:57
IPO outlook: markets are ‘open,’ but only at the clearing price (and many will be down-round IPOs)
They argue IPOs can happen anytime, but valuation expectations must reset. Jamin highlights how IPOs clean up cap tables and enable reinvention with liquid currency, while Ed stresses readiness and the practical benefits of public-market stock for hiring and acquisitions.
- •IPO availability vs willingness to accept the market-clearing valuation
- •IPO as cap-table reset: preferred converts, shareholder base evolves
- •Most 2024 IPO candidates likely price below 2021 private rounds
- •Public currency helps recruiting and accelerates platform M&A
- 56:57 – 1:01:53
Requirements to IPO in 2024: cash-flow discipline, durable growth, and Rule of 40/50 thinking
Ed gives a concrete checklist: near cash-flow break-even, ~30%+ growth, and a credible path toward Rule of 40/50. Jamin adds that scrutiny is healthy—like ‘going pro’—and forces operational fitness and long-term durability.
- •Baseline bar: cash-flow break-even (or close)
- •Growth standard resets: ~30%+ as ‘high growth’ now
- •Rule of 40/50 as an organizing framework (with a growth tilt)
- •Public-market scrutiny as a forcing function for maturity
- 1:01:53 – 1:04:44
Have we saturated software spend? Why growth slowed and what changes next
Harry raises SaaS saturation concerns; Ed argues creative destruction and platform shifts (AI) will drive new cycles. He also notes two practical drags: startups stopped buying from each other, and enterprises overbought earlier—resetting retention and expansion dynamics.
- •Creative destruction: new cycles every 10–20 years
- •Enterprise spend tightened; ‘willy-nilly’ buying is over
- •A meaningful chunk of revenue was selling to other startups—now vaporized
- •Retention likely normalizes (e.g., 110–115%) vs peak-era expansion
- 1:04:44 – 1:10:15
Quick-fire: investing principles, longs/shorts, and where 2024 upside may appear
In rapid Q&A, Ed and Jamin share investing advice and public market views. They point to data strategy as a prerequisite for AI adoption, and highlight emerging categories like AI security as under-discussed opportunities.
- •Ed’s advice: patience + ‘cheer, challenge, chill’ across cycles
- •Jamin’s advice: ‘cool’ is the enemy of real buyer-driven value
- •Ed’s 2024 long/short: Microsoft long; Apple short (near-term) with edge-AI upside later
- •Under-the-radar themes: data infrastructure (Tabular) and AI security (ProtectAI)
- 1:10:15 – 1:14:40
Closing optimism: why this vintage could be special (and where Ed is most bullish)
They end on a constructive note: valuations have reset while a major technology shift begins, creating strong conditions for new company formation. Ed adds specific optimism about Israeli founders’ resilience and continued strength in security/infrastructure building.
- •Setup: bottom half of valuation reset + early innings of tech shift
- •Expectation: creative destruction creates new category leaders
- •Ed’s regional bet: Israeli founder resilience and execution
- •2024–2025 viewed as potentially exceptional investment vintages
