YWR: Killer Charts
This week’s Killer Charts was inspired by a conversation from the mail bag.
dbergens@bigvc.com: Hi Erik. I was reading your post on The Great Front Run and wasn’t thrilled to see the data on all the money going into Venture Cap and Private Equity.
It’s true though and we see it first hand everyday. I’ve been in this business 20 years and can’t believe the competition for good deals. We are practically begging founders to take our money.
It’s not supposed to be like this. Too many Patagonia vests running around Silicon Valley. But actually it’s everywhere. Austin, etc.
I’m not sure what to do. We know it is a bubble, but we and all the other funds still have billions to deploy. My partners and I are not sure what to do with all this money or how to deploy it. We can’t change the fact we are a VC firm. Can’t wait 10 years for the next cycle.
I know it is a strange thing to ask, but I was wondering if you had any ideas.
Best,
Dave
erik@YWR.com: Dave hi. Thanks for reaching out. I’ve been thinking a lot about your problem. I have an idea.
I know a place you can go where there are 200 million hungry entrepreneurs with hustle who have never seen a VC firm or a Patagonia vest. They are starving for capital and you can invest in exciting businesses in a range of sectors at super attractive valuations. In addition there are 53 different countries which recently signed a free trade agreement which nobody is talking about.
You will love this place. It will be like the old days and make you happy to be a VC again.
I have one warning though. It’s like the old days in one other way too. The exit scene isn’t great at the moment, but money is starting to flow, it’s getting increased attention and in 7 years when you want to exit this place will be the new hot thing and the liquidity for exits will be there. Everyone will be saying how you were ahead of the trend and your firm will be the new hot thing.
If this is interesting to you and your firm let me know. We can do a trip in May to see some interesting things.
Regards,
Erik
What I didn’t tell Dave is he will be taking a plane to Lagos or Nairobi, which are the most active cities for PE and VC deals in Africa.
Everything I said is true though.
PE + VC deal flow is picking up in Africa. In the 1H 2022 it reached $4.7bn, from a run rate of under $2bn in the previous years.
Most deal value is in the venture capital space.
VC deal sizes are still small on average, but the number of super sized deals keeps increasing every year. It’s been jumping from 0 to 4 to 9.