2023 Asymmetric Update & Winter Offsite Recap

June 6, 2023


Rob Biederman

Over the last few months, the mid and late stage tech rut has only deepened. The pace and intensity of cost reductions has accelerated, and ensnared previously unthinkable / untouchable stalwart employers such as Google and Meta. In some sense, this isn’t overly surprising: uninterrupted (and indiscriminate) enthusiasm for anything tech-related since the GFC (aided by the cost of capital moving monotonically downward) was bound to reach an unhappy conclusion. As folks deploying Fund I in earnest from ~back half of 2021 through the end of 2023, we’d admit that the timing of the reset aligns well to our strategy. We are curious to see the impact of obviously underwater portfolios on those firms that meaningfully accelerated deployment pace in 2021, and / or for those who underwrote to a continued favorable macro that has yet to materialize. For us, 2023 to date has been the most favorable deployment environment since inception.

We remain focused on methodical business-building. We have further zeroed in on SaaS and SaaS-adjacent business models, still launched by elite founders, still at the earliest possible (e.g. first or first institutional money in) phase. In collaboration with many of our LPs, we continue to believe that backing founders matching our updated set of criteria below a ~$20 million entry valuation is most likely to produce consistent outsized returns with our capital in today’s market. While we remain vigilant for overcrowding in that stage, we’ve found in the recent market that hustle and ingenuity are best compensated prior to Series A. While we are still excited to pursue companies in digital health and fintech, the bar gets higher as business models deviate from pure play SaaS. Simultaneously, we have been unapologetic with our founders in agitating for improving unit economics, a responsible deployment pace, and elevated sensitivity to longer-term experimentation. We aren’t shy about pouring on resources when “it’s working”, but broadly we believe founders are far more susceptible to customer acceptance false positives than to under-investing post product market fit.

Portfolio Update

On the portfolio side, we are broadly quite pleased with operating results. Aggregated performance across our core portfolio showed surprising resilience in a tech sales market that was by all accounts fairly bleak. The portfolio grew 26% sequentially in Q4 (excluding roll-ups). We also had a handful of companies where we intensified our operational commitment in Q4; while there were bright spots in certain performance vectors, our assessment last fall was that two of our core check companies could benefit from expanded engagement from our Head of Portfolio, Michele, and the respective deal team.

We have counseled our founders to expect an unfavorable environment for outside capital over the next 12-24 months and to safeguard their balance sheets accordingly. Both growth and sustainable unit economics obviously matter; if forced to pick only one, however, we think the 2023-2024 follow-on markets will favor the latter. We feel grateful to have maintained discipline by investing in healthy unit economic businesses that are fundamentally utility-creating for the customers they serve, and at generally responsible prices.

New Investments

In early February, we led and co-led two yet-to-be-announced stealth pre-seed rounds, backing two impressive early founders in the software space. In each case, we believe we have identified founders who are uniquely well-positioned to execute on their business plans and roadmaps ahead.

We also continued to bolster our portfolio of scout checks, with ten new investments in the $50-250K range over the last quarter. These investments again represent many of our key existing geographies of the Bay Area, New York, Boston, and London across our existing focus areas of horizontal and vertical software, fintech, and marketplaces. Those that are out of stealth can be seen on our website’s Companies page. As of this post’s date, we have invested just more than half of Fund I, on a dollars basis, into 55 companies across the core and scout buckets in aggregate. 

We have maintained a very high bar and are happy to lean into the existing portfolio if newly sourced deals don’t hit our threshold. We have, however, elevated and expanded our weekly sourcing effort to a near-daily team rally, and are seeing the fruits of both an expanded and higher-quality pipeline. We expect to continue seeing this process deliver additional returns as we believe its impact will be cumulative and non-linear. We are also increasingly working in close collaboration with (and occasionally reaching the scene before!) two similar and well-respected early-stage firms; in many weeks of 2023 to date, we’ve been in touch with those firms every day. We have a lot to learn from folks with a seemingly permanent position on the Midas list. We’ve been pleasantly surprised at how collaborative a handful of seemingly competitive firms have been in helping us become a more established player in the ecosystem!

Winter Offsite Recap

Lastly, in early January we hosted our second annual team and founder offsite in Jackson Hole, Wyoming. We began the week with only our internal team focused on a review of Q4 and go-forward strategy sessions. The second half brought an influx of thirteen new founders and soon-to-be founders for skiing, socializing, and unprogrammed discussions around building their businesses. We find this primarily unstructured time with our founders, both on and off the slopes, has immeasurable benefits for our working relationships and has been an important driver of positive testimonials and new deal referrals from this highly connected and respected group. This offsite week has proven to be a marquee event in our firm and founder calendar, and we look forward to many more years, and many more founders, to come.


Rob, Nancy, Sarah, Michele, Matty, and Sam

Pictured in December 2022 at our team holiday dinner.

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