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The Twenty Minute VCJason Lemkin: WTF is Going On in VC? Are LPs Investing in New Funds? | 20VC #965
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At a glance
WHAT IT’S REALLY ABOUT
Jason Lemkin Explains the Brutal New Reality of Venture Capital
- Jason Lemkin and Harry Stebbings dissect the post‑2021 venture and SaaS landscape, contrasting the exuberant, inflated years with today’s far stricter funding and operating environment.
- Lemkin argues that while great companies and growth still exist, the bar for being fundable has dramatically risen: capital efficiency, realistic paths to $100–200M ARR, and true competitive advantage now matter again.
- They explore shifting LP appetite, the slow‑motion reset of growth and marketing spend, the overhang of overvalued unicorns, and why founders must assume capital is scarce and build accordingly.
- Lemkin predicts conditions will improve modestly by year‑end, but insists the extreme valuations and easy money of 2021 are gone for good, and founders must embrace that startups are supposed to be hard.
IDEAS WORTH REMEMBERING
5 ideasBeing fundable now requires both top‑tier growth and capital efficiency.
Investors want companies that can plausibly reach $100–200M ARR within a decade while keeping total capital raised closer to ~$100M, not the $300–400M that briefly became normal; burn without efficiency is no longer tolerated.
Competition and true differentiation matter again—founders must explain why they’ll win.
The “Postmates effect” era, where several #3–#5 players could still produce billion‑dollar exits, has ended; founders need a clear, credible story about segment focus or product edge and why competitors stumbled.
Cutting marketing and sales too deeply will starve future pipeline.
Companies are over‑reacting by slashing long‑term marketing and sales capacity to protect runway, but Lemkin argues this will leave them under‑staffed and under‑pipelined when demand and multiples improve.
Founders must build conservative, sensitivity‑driven financial models.
Teams often underestimate how a small miss on growth, with fully loaded headcount, can spike burn; leaders should model downside scenarios, accept their trailing 3–4 months as the baseline reality, and plan from there.
Assume you are unfundable unless you have concrete evidence otherwise.
Lemkin urges founders to operate as if follow‑on capital won’t be available—raise as much as you can when you can, and only relax that stance if trusted investors explicitly commit to future term sheets at specific milestones.
WORDS WORTH SAVING
5 quotesFor founders, you have to understand that will never lead to a return of 2021. Never.
— Jason Lemkin
The competition slide finally matters again. Why will you win?
— Jason Lemkin
If you didn’t have multiple billion‑dollar cash exits in 2021, you’re not a good investor.
— Jason Lemkin
If you join a company with a valuation over a billion in 2023, you’re going to make nothing.
— Jason Lemkin
When I see a founder cry, I have no sympathy… it’s supposed to be hard.
— Jason Lemkin
High quality AI-generated summary created from speaker-labeled transcript.
