20VC Roundtable: Are IPOs Back? Is Growth Dead? What Does it Take to Raise a Growth Round Today? How Do VCs Solve The Liquidity Challenge? Will We See a Massive Resetting of Valuations? AI Hype Growth Rounds?
Deven Parekh is a Managing Director at Insight Partners, one of the leading investing franchises of the last 25 years. Deven has made more than 90 investments since joining in 2000 including in the likes of Twitter, Alibaba, JD.com, Chargebee and Automattic (WordPress) to name a few.
Woody Marshall is a General Partner @ TCV, one of the most successful growth funds of the last decade with a portfolio including the likes of Facebook, AirBnB, Spotify, LinkedIn and many more incredible companies.
Jason Lemkin is the Founder @ SaaStr one of the best-performing early-stage venture funds focused on SaaS. In the past, Jason has led investments in Algolia, Pipedrive, Salesloft, TalkDesk, and RevenueCat to name a few.
In Today's Episode We Discuss:
1. The Growth Landscape Overview:
Is growth dead? Are any growth deals getting done?
How has the price changed for growth deals that are getting done?
Which type of growth companies will vs will not be able to raise?
What happens to all of the growth companies with $300-$500M in cash but little revenue?
2. The Great Reset: Valuations Need to Change:
Why should companies be actively resetting their valuations? What are the benefits?
What will happen between VCs and LPs when there is no incentive for VCs to reset their portfolio valuations when they need to go out and raise from those same LPs?
Structure is often part of these valuation resets, is structure to rounds always bad? When is it good? What type of structure is acceptable vs unacceptable?
3. Are the Public Markets Creeping Open:
Should we take comfort from ARM, Instacart and Klaviyo and assume the public markets are going to open again? If not, what will cause them to open?
How should we analyze the performance of the IPOs above? Many have been negative, are they right to suggest this is not the response we wanted?
Why does Woody believe, like Instacart taking a 75% discount to their last round, we should have more and more companies go public at discounts to their last private round?
4. Late Stage Growth is Dead and Revenue Multiples:
Why is late-stage growth dead? How long do we think this will last?
How should we assess revenue multiples today? New normal? Same as always? How will revenue multiples look in 12 months from now?
How should we analyse the large late stage growth rounds for hyped AI companies? What happens there?
ANGEL: Insight's Deven Parekh on venture tourists, cleaning cap tables & winning investments | E1679
Deven Parekh of Insight Partners joins Jason to discuss navigating markets during the dot com era and the pandemic. (1:50) Then they discuss "venture tourists" and cleaning up cap tables before wrapping up with a look back at some of Deven's winning investments. (20:04)
(0:00) Jason kicks off the show
(1:50) Experiencing the dot com burst
(10:14) LinkedIn Jobs - Go to https://linkedIn.com/angel and post your first job for free.
(11:36) Comparing Web 3.0 and the dot com era + navigating the markets during the pandemic
(18:40) Cast.ai - Get a free cloud cost audit with a personal consultation at https://cast.ai/twist
(20:04) Venture Tourists
(29:30) Unfavorable preference stacks
(37:07) Acquire.com - Sign up for FREE at https://try.acquire.com/twist
(38:32) Cleaning a cap table
(47:57) Looking back at Deven’s investments
FOLLOW Deven: https://twitter.com/djparekh
FOLLOW Jason: https://linktr.ee/calacanis
FOLLOW Molly: https://twitter.com/mollywood
Fanatics: Growing the Sports Economy - [Business Breakdowns, EP. 51]
This is Jesse Pujji, and today we are breaking down Fanatics. If you’ve recently bought sports apparel online, you interacted with Fanatics. They power the entire digital commerce experience for the NFL, MLB, NBA, NHL, and hundreds of other sports leagues around the world.
To break down Fanatics, I am joined by an early investor, Deven Parekh, from Insight Partners. Deven has been an investor in Fanatics since 2011. We cover Fanatics' unique vertically integrated commerce model, how they redefined their TAM, and how the company is aggressively entering NFTs, real money betting, and other expansion areas. Please enjoy this business breakdown of Fanatics.
For the full show notes, transcript, and links to the best content to learn more, check out the episode page here.
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Show Notes
[00:02:40] - [First question] - What is Fanatics and the scale of the business today
[00:04:26] - What the core business of Fanatics does
[00:05:41] - The history of Fanatics and what led to its success
[00:10:59] - Michael Rubin’s story and the role that GSI played in Fanatics’ growth
[00:13:58] - How the licensing business works and how Fanatics’ relationship with the leagues differs from their competitors
[00:15:34] - The landscape of this industry before Fanatics
[00:16:36] - Why the change from the best commerce experience to a broad digital sports platform
[00:19:02] - Differences of Fanatics’ P&L compared to others in the industry
[00:21:05] - How the real-time advantage helps drive growth in the business
[00:23:12] - Whether or not the leagues participate in gross margins and how much of a focus they place on cost optimization
[00:25:25] - Distinctive things about Fanatics from an investor’s perspective
[00:26:22] - Why hasn’t Amazon stepped into this space yet
[00:27:30] - Which leagues have opted out of working with Fanatics and interesting team and player dynamics
[00:28:59] - Reasons behind getting involved with NFTs, trading cards, betting, and how it might evolve in the future
[00:32:22] - Ways they’re taking the core business and augmenting other branches
[00:34:36] - What will have gone right over the next five years for Fanatics to continue growing at the pace they are today
[00:37:59] - What will have gone wrong over the next five years that will hurt Fanatics’ growth
[00:39:59] - Lessons for builders and investors when studying Fanatics’ story
20VC: Insight Managing Director, Deven Parekh on The Current Funding Mania, Compression of Round Timelines, Fund Deployment Speeds Increasing & How To Think Through Price and Time Allocation Across the Portfolio
Deven Parekh is a Managing Director at Insight Partners, one of the leading investing franchises of the last 25 years with $30Bn+ in capital commitments, 400+ primary investments and over 200 portfolio acquisitions. Deven himself has made more than 90 investments since joining in 2000 including in the likes of Twitter, Alibaba, JD.com, Chargebee and Automattic (WordPress) to name a few. Deven also sits on the boards of Checkout.com, Calm, Saks.com, Optimizely and 1stDibs, again naming a few. If that was not enough, Deven also serves on the Board of the Carnegie Endowment for International Peace and the Board of the Tisch New York MS Research Center. As a result of his investing success, Deven has been named on Forbes Midas List 5 time and has been selected as a Top 100 Venture Capitalist by CB Insights 4 times.
In Today's Episode with Deven Parekh You Will Learn:
1.) How Deven made his way into the world of venture and how that led to his becoming a Managing Director @ Insight, way back in 2000?
2.) How does Deven analyse the current fundraising mania? Does portfolio discipline and temporal diversification matter anymore? How has Deven and Insight seen the velocity of fundraises change over the years? What can Deven and Insight do to get compress their decision-making timeliness with the compression of fundraising timelines?
3.) How does Deven assess his relationship to price and price sensitivity? What have been some core lessons for Deven when comparing deals that they did which were "cheap" vs "expensive"? How do Insight think about required levels of ownership today? Does Deven believe it is possible to build ownership over time? What is required to do so? What are the challenges?
4.) How would Deven describe his style of board membership today? How has it changed over time? What advice does Deven have for younger board members scaling into the role? How does Deven think about his time allocation across the portfolio? What is the optimal? How does this differ from reality? Why do your winners never need you?
5.) How does Deven evaluate his own insecurities and self-doubt today? In what way have these changed over time? How does Deven analyse the "weight of his words" within Insight? How does Insight structure the internal decision-making process to ensure that everyone's voice is heard? In what ways can firms foster that security for young partners to feel they can bring anything to the table?
Item's Mentioned In Today's Episode with Deven Parekh
Deven's Favourite Book: What We Know About Climate Change (The MIT Press), Draft No. 4: On the Writing Process
Deven's Most Recent Investment: TetraScience
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