The Twenty Minute VCJason Lemkin: Every VC has a FRAUD in their portfolio; The IPO market is about to EXPLODE | E1046
At a glance
WHAT IT’S REALLY ABOUT
Jason Lemkin Predicts IPO Surge, Slams Seed Hype and VC Complacency
- Jason Lemkin reflects on his early VC career, arguing new investors should deploy quickly into their strongest networks while also accepting they are apprentices inside someone else’s fund. He explains why true seed remains overheated and fragmented, while Series A/B are in a painful correction and late‑stage growth is cautiously reopening around disciplined 15x ARR valuations.
- He urges founders to be realistic about valuations, warning that many hot seeds are now structurally uninvestable for classic seed funds and that founders with 10+ years of runway and no product‑market fit should even consider offering capital back to investors. Lemkin also contends that every major VC has at least one fraud, because most due diligence is confirmatory rather than truly skeptical.
- On market structure, he expects a strong IPO window in the back half of 2024 driven by large, high‑quality SaaS and AI companies, though not at 2021 bubble multiples. He is increasingly skeptical of the current tech workforce’s work ethic, arguing that low effort expectations post‑2021 make true high performers unusually valuable but rare.
IDEAS WORTH REMEMBERING
5 ideasNew VCs should lean into their early ‘hot hand’ instead of waiting a year.
Conventional advice to avoid doing deals in year one protects the fund more than the new partner; if you have a strong network or brand, you should aggressively back the founders and markets you deeply understand, then learn portfolio construction and ownership discipline from more experienced colleagues.
Define a narrow investment sweet spot and valuation playbook to manage risk.
Lemkin only backed founders better than him, in markets he intuitively understood, at stages where revenue signals existed (e.g., $100k vs ~$1m ARR) and with clear ownership targets; this clarity naturally determines check size, acceptable valuation bands, and reduces stress and downside.
Seed is oversupplied and splintered; insiders can raise party rounds without leads.
Operator angels and multi‑stage funds have flooded seed with capital, especially for well‑connected ‘insider’ founders, making party‑style rounds with 20–30 small checks common again despite the narrative that conviction‑led rounds are back; traditional seed funds often can’t compete on price or speed here.
Series A and B are the real bottleneck as expectations and reality diverge.
Founders still expect fast, ‘hot’ As within 12–18 months at high step‑ups, while A/B investors want disciplined valuations, efficiency, and real traction; companies that miss the window will either fail, reset expectations and burn, or eventually raise from patient investors who wait for post‑hype acceleration.
Growth is back but capped: strong SaaS names see ~15x ARR and heavy secondary interest.
For efficient companies at $30–60m+ ARR, growth funds are actively offering term sheets around 10–15x ARR and aggressively buying early‑investor secondary stakes when founders won’t raise primaries—cleaning up cap tables at valuations the companies themselves find premature or unnecessary.
WORDS WORTH SAVING
5 quotesIf you have a hot hand or a great network, go do those deals. You only live once.
— Jason Lemkin
Seed investors can’t participate in hot startups anymore. You can’t make money in seed investing in hot seed rounds.
— Jason Lemkin
Every VC has a fraud in their portfolio. The truth is they only do confirmatory due diligence.
— Jason Lemkin
Founders today don’t respect venture capital anymore. They have no respect for money.
— Jason Lemkin
2024 will be rich with IPOs. It will be a good year with solid multiples—not 2021, but solid.
— Jason Lemkin
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