#64- Turning tides
Candid conversations
Met a friend over the weekend. He is looking to switch jobs and contemplating between two equally exciting offers with a very similar pay range.
Offer #1: Employee #4, Sr Associate role at an early stage VC fund with c. 500 cr in AUM including a new fund being raised
Offer #2: Senior role at a soonicorn tech startup in a growing industry that has raised c. 350 cr
Hesitation
He’s from the startup & investing industry. 12 months ago, he’d lap up Offer #2 in a heartbeat - sentiment in favour, shorter fundraise timelines with investors forming a beeline to invest, more capital, higher appetite to commit mistakes, freehand from founders & investors, and so on.
But today, he is not so sure.
Colleagues who joined growth startups in the last 6-12 months are now finding out that their Titanic maybe sinking, and there aren’t enough customers or investors around to offer boats or life jackets.
Many startups have had stressful all hands meetings over the last 2-3 months. Some have to hit 36 months worth of growth targets in the next 12. Tolerance for errors is closer to zero. Some are looking at survival rounds. VCs who propped up companies have become cautious acquaintances rather than drinking buddies. Some funding rounds fell through or are undergoing serious revisions.
The party may be over for quite a few folks.
Contemplation
He is seriously contemplating picking Offer #1. “The house always wins” he said. If the tide is turning, he might as well be on the side of the table that can have some control. A VC with a new fund will have sufficient opportunities - can invest in Series A startups today at yesterdays seed valuations. Unlikely that salaries & perks will be cut down - the fund has to deploy 75% capital in the next 2-3 years so it can raise a fund 3x the size. If it does not mess up, very likely it will be able to raise that much money.
If the situation becomes better in a couple of years, there will be another startup or a portfolio company that I can join in senior capacity with more experience and a free look in.
Today I’d rather work in a company that has 500 cr to invest, than a company that has raised 500 cr. The latter may vanish overnight along with my job.
It felt as if he was rationalizing as he was talking to us - for he’d already made up his mind to pick Offer #1.
The entire conversation reminds me of this tweet-
Only time will tell how the next 24 months evolve.