… even as VCs, with larger pools of capital, pay up for deals resulting in lower ownershipĪs a result, there has been both a decline in DPI (distributions to paid in capital, which is the dollars actually paid back to limited partners) as well as TVPI (total value to paid in capital, which includes DPI, as well as gains that have yet to be realized). … in a high interest environment where revenue multiples for both public and private companies were crushed in 2022 (though we’re seeing a bounce back in 2023), leading to lower outcomes One of the things that’s been frequently discussed has been that the VC industry as a whole “over-raised” on the promise of high returns (especially when funds were smaller & there were a smaller number of funds), leading to a situation now where a large number of funds are:Ĭompeting for a limited number of deals that can actually be considered “fund returners” The curse of scale in venture capital, and why we’ll see lower returns going forward Heightened CVC/cloud hyperscaler activity, and why massive funding rounds in foundation model companies probably won't continue How “calm funds” might make a comeback in a world of capital-efficient, AI-native startups VCs becoming more like a “traditional” asset class (but with a bit of a twist) How Solo GPs and smaller/nimbler firms could harness AI to rival much larger investment platforms The second section, meanwhile, will be a series of predictions of where I see VC potentially going VC becoming “higher frequency” despite being generally a low frequency game ![]() The curse of scale on venture capital, and lower returns going forwardĭata science & AI making a resurgence of sorts in the VC investment process, but in potentially interesting ways The first section will highlight some of the trends happening across the venture ecosystem, which include: This post will be broken down into two sections. ![]() I can’t help but feel that this time things really are different, and that we are sailing into uncharted waters. What I kept on coming back to was Howard Marks’ Sea Change memo, where he highlighted the three major sea changes during his decades as an investment professional. But casting a healing wave without the tidal waves proc is a bad thing (because its soooo slow), and casting a lesser healing wave without the tidal waves proc isn't quite as much fun because of the decreased change to proc an ancestral awakening heal.One of the recent “shower thoughts” I had was around how macro trends in venture capital, coupled with the avalanche of new AI research announcements, will profoundly change the broader venture and startup ecosystem. Often Riptide & Chain heal will be sufficient and the Tidal Waves proc will go unused (which is not a bad thing). The way to use tidal waves properly is not to try to use it, but to try to have it always up in case you need to cast a Healing Wave of Lesser Healing Wave. Chain heal is often an effective spell, especially when casting it on the tank. That will help keep the Tidal Waves buff up for any of your Healing Wave or Lesser Healing Wave spells. It is nice to have HoTs rolling on people, so I recommend using Riptide as often as you can (unless mana regen is an issue). A chain heal that doesn't bounce to a 2nd target is a waste - a lesser healing wave which could proc an ancestral awakening heal (with a 40 yard range instead of a 12 yard range) is a much wiser way to heal a range or healer IF the chain heal is going to only hit 1 target. ![]() I recommend using a lesser healing wave on ranged & healers unless you KNOW that there is another person within range of your target that also needs a heal. Using the tidal waves proc is not necessary, but it is very nice to have it around incase you need a big heal on the tank, or one of the ranged or healers needs a heal. ![]() Riptide also works quite well when healing ranged & healers. Lesser Healing Wave is often the heal of choice on ranged & healers who are likely to be more spread out than tanks and melee, so that a chain heal is far less likely to bounce to a 2nd target when cast on a ranged or healer. Healing Wave is rarely useful on dps or healers and is primarily only used on tanks who have the big enough health pool for healing wave to be effective Comment by 450260Chain heal is best used on tanks & melee because of its high chance of having someone else in range to bounce to.
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