i'm an early-stage vc - the author's analysis on "number of funds" (specifically VC funds) is accurate. the overall volume of venture allocation has also slowed considerably if not decreased (which is totally expected in a higher interest rate environment).

2021-2022 was a total blip on the screen zero interest rate era thing.

i'm not seeing considerable slowing of new startup development, quite the opposite actually w/ AI. this is for a few reasons:

- accelerators are filling the gap; the accelerator model is actually quite efficient in the early-stage spectrum (it needs some further innovation). there are a huge number of AI accelerators and programs now; and further

- most of the capital going into VC is just being further concentrated into the large Multistage firms like A16Z, Accel, Sequoia, General Catalyst, etc... all of these firms are realizing they need to win deals as early as possible so have multiple seed programs: accelerators, incubations, scouts, fund-of-fund allocation, geographic funds, university focused sub funds, etc...

- overall great founders & startups are truly just exceptional so statistically there just won't ever be that many. venture will always be a cottage industry of sorts. in this form - "venture" equates with "growth"; there can only be 1 category leader by definition and venture is meant to capture this. 2021-2022 overall venture market was too big.

- AI is making startup creation many multiples more efficient. we saw this w/ the advent of the cloud, where startups used to need $2-3M "to buy servers" and 2-3 years to ship a product in 2010, by 2015-2020, they really only needed $3-500k to get a product to market. we're going to see that number come down considerably (unsure if it will be 30-50k, but definitely a lot lower).

- we're also seeing the new wave of the 10-person unicorn (billion $ company); these companies will raise a lot less cash, so will result in higher multiples on the original investment.

- i think the overall distribution of returns will look different on a portfolio basis in 2025-onwards. with power law, we expect to see super long-tail concentration on the 1-2 companies that yield 99% of the return to a portfolio, but i suspect we'll start to see some mitigation of that effect with more companies yielding positive outcomes. this might mean that there's less of a reliance on portfolio construction to generate risk-adjusted returns and that there could be more of a democratization of early-stage investing where we see 10-100x the number of startups and founders. that warrants a longer analysis, but as someone just bullish on startups and everyone being a founder that possibility is very exciting to me.

With so much money flowing into the massive funds, do you think more and more unicorn startups will just stay private? It seems like there are liquidity opportunities for employees/founders via tender offers, secondaries, etc.

If you are a profitable unicorn who can raise money in the private markets when needed, is there really a benefit to going public? Maybe I am missing something, but going public doesn't really seem to be as important as it used to be.