2026-06-07 02:33:57
A current topic among new’ish VCs who invest at early stages of startups – such as wonderful firms we back via Screendoor is rethinking how you communicate portfolio ‘value’ to investors. Historically you would hold your portfolio at the last priced equity round, unless there was a reason to mark it down (concern over its viability/some other negative information) or in rare cases, a reason to mark it up that wasn’t specifically related to a financing (like maybe if they turned down an acquisition offer at $X you could make the case that it’s a credible market signal?). One thing you wouldn’t do is use the cap on a SAFE as a valuation because (a) it’s not equity sale and (b) a cap isn’t a company valuation.
While this might still be ‘proper’ for accounting purposes, a few realities have evolved in recent years which make it a handicap for newer early stage managers to properly demonstrate the strength of their progress to their LPs (existing and prospective). Most notably, seed isn’t a round, it’s a phase, and so you have companies raising multiple tranches of capital over the course of several quarters (or years), and these are often all at notes of different caps. There are typically two versions of this – either the startup needs a little more money to get to the “Series A” (which totally makes sense – it’s hard to forecast exactly what you should raise, especially early on) or the founders are ‘cap maxxing’ where they do rolling closes, raising the note terms to make new investors pay more over a short period of time – sometimes even hours or days (I don’t love this – yes, it’s just the market demand but I think it gets needlessly cute/distracting/bad way to start longterm relationships).
Separately, venture investors have gotten comfortable doing meaningful SAFEs in-between priced rounds post-Series A. LOTS of reasons for this – more competition means being opportunistic to get your first check into a company and/or buying up before the next round (where pro rata might be tight); fund size increases mean the amount you have into a company matters as much as the outcome multiple; big round sizes and high valuations in general make it more possible to get larger sums in-between whereas before those would look like rounds by themselves [eg $15m isn’t a Series B, it’s an A-2 note when you anticipate it’ll help get you to a $50m Series B in a few quarters].
All of this has created an environment where earlier investors don’t always have ‘markups’ to show their LPs because they are waiting longer and longer for a new ‘price’ to be set by an equity sale. The increasingly standard way to communicate this is by adding a column to your financial reporting that’s essentially “SAFE Adjusted TVPI” alongside your more standard TVPI calculations. Note the (a) date of the recent SAFE, (b) the cap/any other terms and (c) the amount of the SAFE. Then use the cap to recalculate the ‘value’ of your ownership stake (or previous note, which technically isn’t yet true ownership), as if the company had completed an equity financing at the valuation cap. This is not accounting/auditor approved and you should not be claiming this as your TVPI in a vacuum without the other information, but it does feel like a fair enough way to chart ‘progress’ in a young portfolio. If you wanted to be really conservative you can also *not* calculate a valuation increase if you feel like a note was ‘strategic’ in purpose or otherwise not representative of the financing market, just be transparent and consistent.
Separate from the SAFE scenario, I’ve had a similar question asked to me by investors who see companies that are likely increasing their enterprise value via fast-growing revenue run rates while using this capital to delay fundraising. That is, why raise more money from investors now if you don’t need it? Just keep building! This is awesome and a very enjoyable trend.
Unfortunately, my advice to VCs here is that while you can certainly emphasize this data in your updates, it’s difficult to ‘price’ the company and you should avoid trying to do so: I see people try to apply ‘market comps’ to suggest where the startup would be valued related to peers – again, this is an interesting exercise to do and perfectly find to share this logic but I wouldn’t build TVPI around it because it’s just too dynamic and approximate an estimation. The exception might be if this is literally your fund strategy – back founders who raise investment capital early and then eschew it for years to come. In those cases, showing your investors that (a) it’s working! and (b) having some agreed upon way to calculate ‘price’ ahead of an exit/financing is a good LPAC/back office/accountants discussion.
Good luck!
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2026-06-04 02:08:33
“The game on the field is changing, my competitors are raising bigger funds and so I need to as well.” I hear this from legacy and new VCs all the time. It’s true but insufficient as an operating principle and the fact almost everyone is reacting the same way speaks to the commoditization of capital (as well as the people writing those checks).
Yes startup funding is a marketplace where you need the resources necessary to deliver an attractive product to founders (capital, conviction, support), but for many, thinking about this as just a byproduct of AUM is slow motion regression towards mediocrity (albeit while collecting larger and larger paychecks from fees).
If you’re a VC and feeling pressure from the evolving landscape please start with first principles. Why do you even exist? What’s the playbook you are best suited for and what does it take to execute that strategy with excellence? How much of those resources do you already have? What do you need to acquire? What do you need to shed?
These are questions we ask Screendoor managers as they grow their own firms, and is generally part of our underwriting decision in the first place. Fund size is your strategy but not your reason for existing.
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2026-06-03 07:40:33
There’s an old saying that ‘illiquidity in startups’ is a feature, not a bug, because it keeps everyone [founders, team, investors] focused on the longterm outcome. They have a shared incentive and ‘skin in the game’ – whether it be sweat equity or capital equity.
In the year of our lord 2026 this idea seems quaint and outdated. VCs are getting rich off of fees whether they’re any good at their job. Everyone on the cap table can figure out how to monetize private company stock, whether it be via secondaries, SPVs, or forward sales. Your best team members – whether they are fearing the permanent underclass or just out to get theirs – can jump from your startup at any time if there’s a higher NPV option. Basically if they’re any good they have offers.
Some of this is positive for our community, some is not. But doesn’t matter, it’s reality.
Skin in the game is no longer sufficient. Now I look for heart in the game.
The founders who want their companies on their tombstones not just bank accounts and speaker bios. Who won’t ditch their startups for job offers that screw their angels and remaining team members. Who gives a shit?
The team that wants to show up each day (actually, symbolically, metaphorically) because the problem they’re solving is something they care about, and the people alongside them are folks who are committed to them. Not to the sacrifice of economics, but with a double bottom line.
And the investors who actually have courage. Who are willing to put something at risk for a startup. Who are about the outcome not the markup, not the content marketing. F those folks who run towards a success and away from a failure.
In my world Ambrook is a Heart in the Game startup. Bunch of super sharp people building financial tools for farmers – for the real world economy. Everyone there could likely earn more in a different job, join one of the frontier labs or Magnificent Seven. But they’re not. Because they want that double bottom line outcome – satisfaction and dollars. Read their blog – you’ll see how they’re ‘legible to talent’ not just capital. Oh and trust me, the capital is there (more news tk) but today they care more about touching grass and whether their customers can keep growing their own businesses. And it makes me so happy to support them because Heart is in the Game there.
Is your Heart in the Game? Is your CEOs Heart in the Game? Your VCs? If not….
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2026-05-10 05:29:44
Happy May! Happy URLs!
When Your VC Leaves, You Are Fundraising Again [Oana Olteanu/MotiveForce] – “You are likely screwed if I leave my venture firm,” is, not surprisingly, among the most popular topics that our industry chooses to content market around. But these transitions are increasingly common, which caused me to write “Oh Shit, Your VC Just Quit Her Fund! What a Good CEO Should Do Next.” in 2019. Oana provides her own perspectives on how founders should react to circumstances like these – there’s a lot of consensus between the two posts so read them both!
How American Dads Became the Parents Their Fathers Never Were [Derek Thompson] – My joke about the post-economic version of the ‘American Dream’ is that our children go to therapy for something less significant than we do! Being a great dad is a centering priority in my life. It doesn’t necessarily occur to the detriment of other pursuits but certainly if it had to, well, I’d make the tradeoff for my daughter. The ‘rise in fathering’ as it’s called here, can be tied to a number of societal developments, and while still most pronounced amongst high-education cohorts, the trend line is consistent regardless of degree status. Thompson theories that it’s not just driven by touchy-feely love for your kid, but also the ‘keeping up’ fear – spending time with your child to drive them to the performance levels that the future will require for school, economic stability, and so on. And perhaps spending more time with your family results in less socialization generally, which also can be tied to a host of ills, especially once your child is out of the house.
The Camel, the Straws, and the Bagel Shop [Darcy Burner/Burnery] – The subtitle on this one is “Why progressives need to be honest about what their policies cost small businesses, and strip out every cost that doesn’t serve a progressive value.” PRAISE THE LORD! Darcy, a former SMB manufacturing owner, claims when “progressives talk about small business failures, there is a tendency to treat each failure as an individual story of personal responsibility while ignoring the environment those businesses are operating in.” And advocates for reforming the unnecessary – or least important – ‘straws’ which can break the camel’s back.
“If you’re going to load the camel (and you are, and some of those loads are worth carrying) then you owe it to the camel to take off every ounce of weight that doesn’t need to be there.”
Some Thoughts on Employee Stock Options in 2026 [Bijan Sabet] – Spark Capital’s cofounder [stepped away a few years ago; did a term as US Ambassador to Czech Republic] looks at the state of startup employee equity in 2026 and suggests two things are true: companies should be more transparent around all the factors that can let a team member assess value [not just ‘number of shares’] and early folks need more stock. Agreed – in 2017 I suggested Founders Should Set Aside More Equity for Their Team & “Split the Pain” With Investors. My lived experience right now is it’s pretty split – some founders go by standard benchmarks and ‘best practices’ while others use compensation plans as ways to set their culture. For example, giving all early engineers the same generous equity regardless of seniority level [these aren’t exec level hires so more among 2-5 years of experience].
‘They Said A.I. Saved Me’: How South Korea Is Checking on Its Seniors [Choe Sang-Hun/New York Times] – As someone deep in ‘sandwich generation’ complexity it’s exciting to see other countries embracing technology as a productive tool to assist their elderly population. This absolutely going to be an important area of development – not dystopian and deserving of public research/funding in addition to private markets. Everything from wellness checks, to cognitive exercises, to plain ole companionship.
“The bot has become a genuine helper, flagging hundreds of emergencies. In one instance, social workers said, it reached a woman with mild dementia who had wandered off and lost her bearings; she answered the bot’s scheduled call, allowing officials to locate her.
To prevent scammers from mimicking the service with a human voice, the bot intentionally sounds slightly mechanical. For Park Jong-yeol, an 81-year-old Vietnam War veteran, none of that matters. The bot, he said, is “better than a human.””
Enjoy your weekend!
Tip DON’T LET AIRLINE RIP YOU OFF ESPECIALLY AS OIL PRICES CLIMB: I’m using Junova to track purchased airline tickets I’ve taking and auto-reclaim credit if the price drops. It was started by a friend and so far has recouped $2000+ of American and United credits for me [update: WHICH I’VE SUCCESSFULLY APPLIED TO FUTURE TICKETS!!!]. Their business model is: service is no cost, but if they successfully get you credit, they charge 20% of the value to your credit card. If you use this referral link, your first $25 of fees (ie $125 of flight credit) is free. Let me know how it works for you!
2026-04-19 00:47:39
LinkedIn could save most VCs a step by adding a post template called “AI Dinner.” You upload a picture of the full table and a picture of the custom menu card with your firm’s logo on it. Then it pre-fills the text of “Still buzzing from bringing together all these AI Builders last night,” while also auto-tagging the attendees. Magic!
Snark aside, I do think it’s wonderful that people are spending more time together and supporting local businesses. But it’s clear that many of the hosts are first-time event planners so here are some of my suggestions, guidelines and rules.
What am I forgetting?
2026-04-18 02:05:41
Was talking with a fellow VC the other day who had just decided, after substantial deliberation, not to invest in a startup he was evaluating. “I hope I’m right [to pass],” was his comment, reflecting the uncertainty in his mind.
“Really? I hope you’re wrong,” was my reply.
Not because I’m an asshole (that’s besides the point), but instead it’s so much more fun to root for a team’s success regardless of whether or not you’ve backed them. The number of founders who I truly am excited about as people is so much greater than total investments we make each year (~15) — we leave many pitch meetings honestly hoping they build something meaningful, regardless of whether we’re able to participate in that outcome.
We’re investing our own personal capital in Homebrew IV so when we do commit to a company, it’s as close to literal skin in the game as you can get without being on the org chart. But regardless, false negatives in decision making is definitely part of being in venture. As I’ve found, if you haven’t passed on some billion dollar companies you probably haven’t backed any either. Homebrew has invested in a bunch, passed on an equal or great amount, and even lost several in competitive situations.
I wonder how transparent this is to founders? When they hear a ‘hey, we’re not going to participate in this round’ can they tell whether the investor is still rooting for them or not. Is the offer to ‘help if we can anyways’ sincere or not? How many of us actually ‘root’ from the sidelines versus just say it?