Navigating The Contradictions: The 2023 Venture Capital Landscape | by FirstMark | Oct, 2023

While all of the above could lead to many VCs checking out for good, it’s undeniable that “great companies get built in down cycles,” and there is So much love to you all Get excited about the present moment, given where we find ourselves.

Compounding innovations will lead to more “Renaissance” moments

Cloud computing, mobile technology and other innovations developed at around the same period in early 2010s. These technologies created trillions in value and revolutionized the way we live. When multiple technologies are combined, they can create a Renaissance moment that feels like magic.

In the past few years, massive amounts of money have been injected into markets to fund multiple innovation curves. These curves continue to grow at an exponential or near-exponential rate. While LLMs are enjoying a mini hype cycle of their own, breakthroughs can have a dramatic impact on the return dynamics in venture scale startups. They enable new disruptive products that change everything from cost to distribution.

The cost and ease of starting a new company has never before been so low.

Hundreds of billions of venture dollars have funded innovation over the last decade, from building out infrastructure to new platforms and point solutions — the result of which is an environment in which it is easier than it’s ever been before to start a business, hire across the globe, communicate with that team, and then build on primitives ranging from foundational AI models to compliance-as-a-service for fintech.

The tech ecosystem has a high level of resilience

The combination of Luna ThreeArrows SBF Binance and the SEC was a catastrophic event for the crypto market. The NFT has become more of a joke than an investment. And the Larry David FTX advertisements have surpassed Pets.com in terms of the most cringe-worthy Super Bowl moments.

Bitcoin’s market capitalization has increased to more than $500bn after only 18 months. Paypal, Fidelity, BlackRock, and others have made significant crypto-related announcements over the last few weeks. still You will have to pay $50k for a Bored Ape. This proves that technology is disrupting markets in a way we never imagined. These markets have more staying power and are larger than the dotcom crashes.

The benefits of consolidation are greater

The last companies standing will find bigger returns because of the market dynamics I’ve described above. Venture capitalists and companies benefit from the impact of compounding over time. And while innovation continues to compound, either through actual consolidation (M&A) or simply consolidation of the best talent in a given market, these companies may be able to drive the talent and capital density that was hard to come by in the frenetic spread of the last bull cycle.

Markets are won by products, but it is people who build them. With many employees with underwater equity and stale values, talent that was once untouchable has now returned to the marketplace and wants to avoid the mistakes made in the past. They want to join the small group of companies which have been able to attract this talent. working.