Despite Airtable's $400M ARR, its slowing growth to 20% led to an 80% valuation drop. VCs prioritize hyper-growth above all else, as their model relies on exponential returns, making even profitable, large-scale companies unattractive if they aren't growing fast enough.
The Airtable founders were praised for selling at a loss rather than prolonging a slow-growth "zombie" state. This move frees up valuable founder time and investor capital for new, higher-potential ventures, which is more valuable than clinging to a stagnant cap table.
Firms like Bending Spoons provide a viable exit for venture-backed businesses that have product-market fit but stalled growth. Their playbook involves aggressive cost-cutting, implementing AI for efficiency, and running the asset for profitability, creating a new "acquirer of choice" category.
A company built for hyper-growth cannot easily pivot to a lean, profitability-focused model on the same cap table. The culture, team incentives, and investor expectations are misaligned. This "calcification" makes an acquisition or spin-out the only logical path for the legacy business.
Allowing founders an early, limited secondary sale (e.g., $1-2M) to buy a house is strategic, not just 'founder friendly.' It removes personal financial pressure, enabling them to focus on ambitious, long-term goals for the company rather than seeking a premature, safe exit.
With companies staying private for 15+ years, the traditional VC model of waiting for an IPO or M&A is obsolete. Early-stage investors must now actively manage their portfolio by selling positions in secondary markets to realize gains (DPI) and return capital to LPs.
Rather than making emotional decisions, top VCs now use a formulaic approach to secondaries (e.g., "sell 15% of a position to return 0.5x of the fund"). This codification makes the process transparent to both LPs, who want to see distributions, and founders, removing guesswork.
When investing in controversial sectors like gambling, the key challenge isn't just LP approval. It's having the conviction to publicly stand by founders when they face regulatory attacks, as seen with the New York AG's attempt to shut down DraftKings.
South Park Commons exemplifies a new trend where VC firms operate like tech companies, dedicating 20% of their staff to an in-house engineering team. They build custom AI agents for sourcing, diligence, and portfolio support, creating a significant competitive advantage.
AI tools are eliminating the most tedious aspects of venture capital, like manual sourcing and research. VCs describe the new workflow not just as more efficient, but more fun—like a "jamming" session with an AI partner, which has reinvigorated the day-to-day job.
With AI tools enabling anyone to build a product, technical execution is no longer a reliable signal for VCs. This creates a rise in "grifters," forcing investors to filter for deeper traits like authentic obsession, high learning velocity, and a compelling "why" behind their mission.
VCs use a founder's email response time and quality as a key heuristic. A quick, thoughtful reply indicates urgency, organization, and a deep command of their business. It serves as a simple yet effective proxy for evaluating a founder's overall capability and dedication.