MDSV Capital

Change is afoot…

𝗔𝗻𝘀𝘄𝗲𝗿: They both turned down $100M+ checks from competing growth-stage VCs Why would they do that? 𝗕𝗲𝗰𝗮𝘂𝘀𝗲 𝗔𝗜 𝗶𝘀 𝗱𝗶𝘀𝗿𝘂𝗽𝘁𝗶𝗻𝗴 𝘃𝗲𝗻𝘁𝘂𝗿𝗲   The very AI technologies that define this new innovation supercycle are empowering high-velocity companies to avoid traditional venture growth investment. Company A: $80M revenue with 16 employees and only pre-seed funding (aka a ‘Solo Seed’ company) Company B: $200M+ revenue and 80% YoY growth with Series C funding What do these two companies have in common? 1. They both implemented internal operational AI and automation technologies to scale their businesses with unprecedented efficiency and low headcount 2. They both turned down traditional growth equity VCs competing to write them $100M+ checks - 𝗛𝗼𝘄 𝘄𝗶𝗹𝗹 𝘁𝗵𝗶𝘀 𝗶𝗺𝗽𝗮𝗰𝘁 𝗹𝗮𝘁𝗲𝗿-𝘀𝘁𝗮𝗴𝗲 𝘃𝗲𝗻𝘁𝘂𝗿𝗲 𝗰𝗮𝗽𝗶𝘁𝗮𝗹 𝗳𝘂𝗻𝗱𝘀? Are they no longer needed in this new AI driven market? Where will those billions in raised capital be invested? - 𝗪𝗵𝗮𝘁 𝗱𝗼𝗲𝘀 𝘁𝗵𝗶𝘀 𝗱𝗶𝘀𝗿𝘂𝗽𝘁𝗶𝗼𝗻 𝗶𝗺𝗽𝗹𝘆 𝗳𝗼𝗿 𝗜𝗻𝘀𝘁𝗶𝘁𝘂𝘁𝗶𝗼𝗻𝗮𝗹 𝗟𝗣𝘀 𝘄𝗵𝗼 𝗼𝗻𝗹𝘆 𝗶𝗻𝘃𝗲𝘀𝘁 𝗶𝗻 𝗹𝗮𝘁𝗲𝗿-𝘀𝘁𝗮𝗴𝗲 𝗴𝗿𝗼𝘄𝘁𝗵 𝗳𝘂𝗻𝗱𝘀? Will they miss out on the companies defining this new innovation cycle and see a drop in investment returns? Connect with us to understand how to adapt as LPs to this new reality: https://lnkd.in/gJT_B9aR #AIInnovation #InvestinginAI #VentureInvesting #VentureCapital #VCFunds

FASTER-BIGGER-STRONGER - our version of the Olympic motto ‘Citius-Altius-Fortius’, for how we envision venture capital transforming in the coming years. FASTER With 10x the number of seed stage startups getting funded today versus in the 2008-12 cycle, investor hit rates are destined to fall. As with past cycles, technology innovation itself is making it cheaper and easier to build new startups, leading to a surge in startup formation at the seed stage. BIGGER As we are already seeing in this cycle, unicorns, once rare, will continue to give way to larger decacorns and hectocorns. The quantum of value across outliers will also be exponentially larger than in the last cycle. STRONGER New forms of AI technology are providing startups with massive operating leverage, reducing the need for traditional later-stage funding.  OpenAI CEO Sam Altman reinforces this: “Friends and I have a betting pool for the first year that there is a ONE-PERSON BILLION-DOLLAR COMPANY, which would have been unimaginable without AI and now will undoubtedly happen.” The resulting disruption to venture: • 𝗘𝗮𝗿𝗹𝘆 𝘀𝘁𝗮𝗴𝗲 may become the 𝗢𝗡𝗟𝗬 access point for getting into the outliers of this cycle • 𝗟𝗮𝘁𝗲 𝘀𝘁𝗮𝗴𝗲 𝘃𝗲𝗻𝘁𝘂𝗿𝗲 𝗳𝘂𝗻𝗱𝘀 will slowly morph into PE funds (this is already happening) • 𝗜𝗻𝘀𝘁𝗶𝘁𝘂𝘁𝗶𝗼𝗻𝗮𝗹 𝗟𝗣𝘀 who only invest in late-stage mega funds will miss out on the generational returns of this historic cycle Connect with us to learn how our 𝘌𝘮𝘦𝘳𝘨𝘪𝘯𝘨 𝘔𝘢𝘯𝘢𝘨𝘦𝘳 𝘈𝘭𝘱𝘩𝘢 𝘢𝘵 𝘚𝘤𝘢𝘭𝘦 strategy takes advantage of these disruptive changes in venture capital: https://lnkd.in/gknbjdnt #VentureCapitalFunds #VCInvesting #InvestinAI #InvestmentStrategy

Michael Downing’s experiences as an entrepreneur and investor over 25 years, including both hits and misses, have led him to see the opportunities in today’s early-stage outliers. Michael co-founded 6 software companies in Silicon Valley since 1994, of which 4 were acquired or went public, and has advised and invested in over 60 tech ventures trying to make a dent in the universe. He often funded these companies at the pre-seed stage, backing entrepreneurs when they needed it most. His outlier investments include AngelList, Notion, FalconX and Mercury. Michael noticed the success with which emerging managers identified tomorrow’s unicorns and also their inability to invest in follow-on rounds due to capital constraints. This led him to create the MDSV Emerging Outliers Fund as an opportunity fund that partners with emerging managers while giving family offices and LPs access to tomorrow’s potentially iconic companies. At MDSV Capital, we focus on key verticals like AI, B2B Enterprise, Defense Tech, Deep Tech and the automation economy that are poised for explosive growth in this current Innovation Supercycle. Learn more about our approach to investing: https://lnkd.in/gXmWrvpE #MDSVCapital #Founder #Investors #EmergingManagers #OutlierFund

Huge congrats to Amr Awadallah & Team Vectara on this big milestone of your $25M Series-A and the launch of Mockingbird delivering a new level of retrieval-augmented-generation (RAG) for regulated industries !

Over 1,400 unicorns emerged from Silicon Valley’s 2008-2012 innovation cycle, of which 92% had an emerging fund manager on their cap table at the earliest financing. These sub-$100M emerging venture capital funds have become legendary scouts of some of the world’s greatest companies, with many of them outperforming larger funds in the frequency of outliers in their portfolios. These emerging fund managers represent an untapped access point to the hypergrowth tech outliers starting to emerge in the current AI-driven Innovation Supercycle. Join our upcoming webinar to learn how to get early access to outlier companies. Register at the link: https://lnkd.in/g--k3-Cu #InvestmentStrategy #InnovationSupercycle #VentureCapitalFunds #EmergingFundManagers

How do the unprecedented revenue growth rates and capital efficiency of today’s startups impact the tech investing playbook? Join us for a webinar on July 17 where our Managing Partner, Michael Downing, talks about the key factors to consider when investing in the current AI-driven Innovation Supercycle. Michael will dig deep into the unique nature of AI-centered and AI-enabled startups, and share how family offices, wealth managers and other LPs can access this cycle’s hypergrowth outliers more efficiently for greater alpha. We look forward to your participation! Check out the link for more details and to register: https://lnkd.in/gQhq9Mkk #VentureCapital #InvestingInAI #AIgrowth #AIinvesting #webinar

Emerging managers are legendary at scouting and discovering outlier startups, yet they often lack the resources to participate in follow-on funding rounds, forfeiting a tremendous amount of the value unlocked by being the first investor in these outliers. As a panelist at the 2024 Liquidity Conference, our Managing Partner, Michael Downing, presented this untapped pro-rata opportunity as part of the ‘playbook’ for family offices and wealth managers keen to invest in these tech outliers. The MDSV Outliers Fund serves as an opportunity fund that gives our LPs access to these follow-on rounds, in partnership with emerging manager funds. Connect with us to learn more. #InvestingInTech #Outliers

How do the unprecedented revenue growth rates and capital efficiency of today’s startups impact the tech investing playbook? Join us for a webinar on July 17 where our Managing Partner, Michael Downing, talks about the key factors to consider when investing in the current AI-driven Innovation Supercycle. Michael will dig deep into the unique nature of AI-centered and AI-enabled startups, and share how family offices, wealth managers and other LPs can access this cycle’s hypergrowth outliers more efficiently for greater alpha. We look forward to your participation! Check out the link for more details and to register: https://lnkd.in/g2hYJECN #VentureCapital #InvestingInAI #AIgrowth #AIinvesting #webinar

Today, the annual number of seed-stage investments is about 10x higher than in Silicon Valley’s last innovation cycle of 2008-12. And unicorns, once rare creatures, are giving way to higher value decacorns and even hectocorns. More startups being funded + bigger unicorns suggest that a smaller percentage of startups will drive the vast majority of venture returns. In other words, the power law of venture capital will apply more than ever. 𝐉𝐨𝐢𝐧 𝐭𝐡𝐞 𝐌𝐃𝐒𝐕 𝐰𝐞𝐛𝐢𝐧𝐚𝐫 𝐡𝐨𝐬𝐭𝐞𝐝 𝐨𝐧 𝐉𝐮𝐥𝐲 17 by our Managing Partner Michael Downing to learn the implications of this heightened power law effect for investors, and how it changes the startup investing playbook. Register here to secure your spot: https://lnkd.in/g2hYJECN #VentureCapital #ThePowerLaw #InvestingInAI #Startups