Yang Wu

🚀 Biggest VC-Backed M&A Exit in 2024: Auditing platform provider AuditBoard was recently acquired by software investor Hg for over $3 billion. This deal stands out as the largest purchase of a U.S. private, venture-backed company this year. 🎉 Founded in 2014, AuditBoard is a cloud-based platform that transforms audit, risk, compliance, and ESG management. Despite flying under the radar, the Cerritos, California-based company boasts an enviable track record, with over $200 million in annual revenue and profitability. Notably, AuditBoard raised a total of $43.6 million in venture funding over its decade of operations, with its last round led by Battery Ventures in 2018. M&A windows can be slow to open, but when they do, they create nice opportunities for exits. Let’s keep an eye on what’s next! 💼🔍 #MergersAndAcquisitions #MandA #AuditBoard #VC #VentureCapital #VCBackedExit #TechNews #BusinessGrowth #IndustryInsights

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Board of Directors - insights from "The Essays of Warren Buffett" Buffett’s principles for Boards of Directors emphasize the importance of independence, accountability, and a focus on long-term shareholder value: - Long-Term Focus: Boards should act in the long-term interest of shareholders - Board Composition: Boards with mostly outside directors and select members for business savvy, not prominence or diversity (PE insight: CROs on the Board) - Regular Evaluation: Outside directors should meet without the CEO to assess performance True Independence: Directors must have equity in the company to align with shareholders' interests P.S. This is a very insightful book structuring Warren Buffett's shareholder letters by specific categories - here are the top summary takeaways from the rest of the book: Investment Discipline – Maintain patience and discipline, avoiding speculative investments and market timing Business Quality – Seek businesses with a durable competitive advantage Management – High-quality, trustworthy management & look for managers who think like owners Corporate Governance – Transparent communication and fair treatment of all stakeholders Risk Management – Avoid excessive leverage and maintain a margin of safety to minimize risk and preserve capital Fundamentals – Focus on fundamentals rather than market trends Economic Earnings – Focus on economic earnings and free cash flow rather than accounting profits for a true picture of financial health Long-Term Focus – Long-term investments and value creation vs. short-term gains Capital Allocation – Efficient capital allocation is key - reinvest earnings wisely Market Irrationality – Recognize and capitalize on irrationality as "Mr.Market" can be inefficient in the short term #investing #markets #business #stocks #finance #pe #ceo

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🌟Innovative VC Firm Overcomes Exits Drought with Secondary Sales🌟 ⛵Navigating a challenging landscape where exits are scarce, Santa Barbara Venture Partners (SBVP) has pioneered a novel approach to sustain its growth and attract investors for its second fund: secondary sales. Instead of waiting for traditional exits like IPOs or acquisitions, SBVP opted to sell shares of its portfolio companies, demonstrating its ability to generate returns for investors and stand out in a competitive market. 🎤According to Dan Engel, founder and managing partner of SBVP, these secondary transactions have been a game-changer, sparking investor interest and bolstering the firm's credibility. By leveraging its recent successes, including a lucrative stake in sports-betting company DraftKings Inc.' acquisition of digital lottery app Jackpocket, SBVP seized the opportunity to return profits to its limited partners (LPs) and pave the way for its second fund. 💡Engel highlighted the challenges faced by young VC firms in raising subsequent funds, particularly amid a downturn in exit activity and heightened investor scrutiny. With traditional exit routes becoming increasingly elusive, the pressure is on for firms to demonstrate tangible returns and establish a track record of success. ✨"For us, secondary sales have been a game-changer. They've helped us return profits to our LPs and attract investors for our second fund," said Dan Engel. 💰For SBVP, the decision to pursue secondary sales was driven by the need to provide liquidity to LPs and validate its investment thesis in the eyes of prospective investors. By strategically offloading portions of its holdings in high-performing portfolio companies like Bark Technologies and Rad AI, SBVP not only generated substantial returns but also bolstered investor confidence in its ability to deliver results. ⚠Despite the complexities and potential stigma associated with early share sales, Engel emphasized the importance of prioritizing investor returns and seizing opportunities to unlock value for stakeholders. With a focus on profitability and transparency, SBVP remains committed to its mission of delivering sustainable growth and maximizing returns for its LPs. 🔍 "Returning profits to our investors is our top priority. By strategically selling shares, we're proving our commitment to delivering results and driving value for our stakeholders," added Engel. As SBVP continues to explore secondary transactions and expand its investor base, the firm stands as a testament to innovation and resilience in the face of market challenges. 🚀 ✅ Looking to raise capital for your #fund and increase the international pool of your LP #investors?   🤝 Need warm #LP introductions?   📝 Selling #secondaries to increase liquidity?   🧐 Looking for co-investments?   ▶ G+QUANT's link for inquiries and fund decks: https://lnkd.in/gjC_EuTE #VCInnovation #SecondarySalesSuccess #InvestorReturns #ValueCreation 

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https://lnkd.in/e-Cc-PhA Just wrapped up a case study highlighting some successful value creation work for a vertical software company. After a funding event, it can be tough for management teams to align on which initiatives to tackle first. Here are a few tips from my experience: 📈 Prioritize Compounding Benefits Start with initiatives that enable or build capabilities. These early projects are not the most glamorous. The long term value is the momentum they create and tone they set. They pave the way for bigger wins down the line. 🚧 Address Bottlenecks We identified and fixed a major technical bottleneck in the sales funnel. This gave us an immediate boost to revenue and win rates. The less obvious win was a finding that our marketing efforts were more effective than we thought. Many opportunities fitting the ideal customer profiles were getting stuck at the bottleneck! ✴ Find the Triple Word Score Initiatives Focus on initiatives that add value across multiple valuation categories like revenue, margins, and multiple expansion. My favorites are those that improve operating leverage and scalable unit economics. Operating leverage improves as each dollar of increased revenue earns a little more Operating Margin (EBITDA) over time. In the case study, I renegotiated two of the largest variable cost supplier contracts, leading to immediate improvements in unit contribution margins and setting the stage for increasing margins as revenue grew. This is a valuable function of a durable business model. Most teams agree on what needs to be done, but not always on the order. Choose initiatives that start building a solid foundation for future investments or the Quick Wins with high impact. A few good articles that touch on the technical concepts.. Healthtech: Show Your Magic | Andreessen Horowitz  https://lnkd.in/eGkDnkiG The Gross Margin Problem - Bottom Up by David Sacks https://lnkd.in/e9J2Eqaa

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** This is not Financial Advice, so do your own due diligence ** I have been a long time Cisco bull --like forever -- but I was disappointed by CSCO's latest earnings call. I fear, Street is over-modeling FY26 rev growth of >5% Y/Y.. if the past is any indicator, CSCO just cannot sustain over 1% CAGR growth, let alone the 5+% CAGR over a 3 year period. Opinions aside, facts are CSCO 3 yr CAGR is ~1% (70bps to be exact) vs the 5 - 7% CAGR it guided, which btw the company lowered after first offering 7 - 9% CAGR they guided to--even with the backdrop of COVID-led enterprise refresh. Hard to see CSCO's campus opportunity growing here, I'd rather argue we just went through a peak cycle as is evident from the Peak Gross Margins for both CSCO and SPLK. Plus Jayshree Ullal and team at Arista Networks are eating away share in the Fortune-100. $PANW's pjatformization play will likely take a bite out of CSCO's security story, which frankly took too long for CSCO to right! integrating point solutions and stitching them together just doesnt work in security-- CSCO should borrow a page from $FTNT on how to organically grow in security. CSCO has a lot of work ahead of them, SPLK had been on the block for so long, its previous mgmt. significantly under-invested in SPLK and so now CSCO has to step up and drive incremental Opex. Beyond incremental opex, the higher interest rate expense is gonna eat away the EPS.. Streets ~$3.70 FY26 EPS is too high.. would be lucky if they get to $3.50. You know CSCO is in trouble when they got out of their comfort zone of tuck-in acquisitions (typically less than $3B) and bought SPLK for $28B! Remember, Harvard Business School wrote a case study on CSCO's "innovation through acquisition" untill John Chambers disastrous acquisition of Linksys (to expand into consumer market). History is clear the Linksys acquisition was a disaster. Look M&A is hard, Tech M&A is even harder and large tech M&A is next to impossible to be successful. To be fair, CSCO has out executed in the past, its track record in M&A is simply outstanding, one of the reasons why CSCO is still as relevant today as it was during the hight of the "dot com" bubble. CSCO rightfully belonged in the tech leader with the likes of $MSFT, $ORCL. But with the SPLK deal odds are against them -- i suspect this deal was dont by "financial heads" vs the "product leaders". Sure SPLK was big enough to drive a step function improvement in CSCO's software revenue story.. but it also comes with a set of challenges that CSCO is not accustomed to. Odds are against CSCO this time.

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Thrilled to announce the launch of our inaugural edition of Beyond Benchmarks at Emergence Capital. This comprehensive report dives deep into the metrics and trends shaping the early-stage enterprise cloud market. A huge thank you to our VC partners and contributors for making this possible! Here's a sneak peek of our findings: --> 60% of companies have already integrated GenAI into their service offerings, with another 20% planning to do so this year. --> While most companies use OpenAI as their primary LLM, many are experimenting with multiple models. We’re seeing a trend toward intelligently routing GenAI inference requests based on cost, performance, and security. --> Companies that have implemented GenAI are showing promising results, with a 7% higher NDR compared to those that haven’t. Beyond Benchmarks goes further with more GenAI trends, insights on the current fundraising environment, and key performance metrics. Our goal is to provide founders and their teams with valuable benchmarks to help them make better-informed decisions. At Emergence Capital, we're committed to helping founders build iconic companies. Dive into the full report here: https://lnkd.in/g6bnvAZM

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Earlier this year, we surveyed our fellow Los Angeles-based GPs to get a pulse check on the LA venture ecosystem. Here’s what we found: 💗 Deal flow is healthy, and most LA venture investors (68%) are seeing the same or more deal flow YoY. ✈ LA investors are spending time in a variety of markets, with NYC, Austin, and SF following closely on LA’s heels. 🔍 Innovation is concentrated in AI and machine learning, space, and commerce. 💸 Funding is happening, but it’s barbell-shaped, with deals concentrated at the early and late stages. Funding post-Series A has been challenging. 🚩 LA is differentiated, but not without its challenges. Key difficulties include not attracting enough AI talent (despite having the largest number of engineers graduating from our region over any other in the United States); talent relocated to more tax-friendly or less expensive locations; and the great SoCal / NoCal divide 🙏 Thank you to all our many respondents! I’m so glad to be part of a venture ecosystem that includes great minds like Anna Barber, Brent Murri, W. Christine Choi, Sarah Tomolonius, Rob Smith, Win Chevapravatdumrong, John Tabis, Jill Royster, Jesse Draper, Ashley Balla, Britt Danneman, Tram Lai, Carmen Palafox, Elaine Russell, Deborah Benton Amanda Schutzbank, Brian Lee, Petra Griffith, Minnie Ingersoll, Shamin Walsh, Gabe Greenbaum...wow, this list could go on forever...plus too many other exceptional humans to name. You know who you are! Explore our findings more deeply with our survey dashboard: https://bit.ly/3JsaLaB

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📈 Venture Growth: Largest Deals and Market Insights from second half of May! 📉 Bittersweet fortnight in the venture capital world as data points to an opening IPO window while new raises and overall exits get pummeled! Dive into my latest blog post for in-depth analysis of the biggest deals and market trends from recent weeks: 🚀 Key Highlights: - **AI Funding Boom:** Despite an overall VC funding slowdown, AI startups are attracting significant investments. - **Biotech Bonanza:** Companies like AltruBio and Ubiquity Bio secured substantial funding for drug discovery and treatment. - **IPO Window Opening:** Renaissance Capital's IPO ETF is outperforming, with strong debuts for companies like Reddit and Rubrik. - **VC Challenges:** Despite high AI valuations, slow exits and a rise in flat and down rounds are impacting VC fund returns. - **Dry Powder Dilemma:** Despite a surplus of uninvested capital, VC fundraising lags behind 2023 levels. - **Hydrogen Hype:** Startups focusing on low-emission hydrogen technologies are experiencing a funding surge. 🌟 **Mega-Deal Round Up:** - xAI ($6bn) - Anduril ($1.5bn) - ScaleAI ($1bn) - Vantage Data Centers ($750m Debt) - PolyAI ($500m) - Flipkart ($350m) - Ubiquity Bio ($300m) 🚀 **Upcoming Deals:** - Cohere (AI): $500m-$1bn - Cresta: $650m - Poolside AI (AI for developers): $450m 📈 **Upcoming IPOs:** - CoreWeave - Raspberry Pi ❗️ **Big Bankruptcy Signals:** - Brilliant - Stability AI - Cazoo 🔑 **Key Venture-Growth Funds:** - RedBird Capital Bonus! Why pension funds are avoiding VC and how much money does AI really make? Full blog post: https://lnkd.in/ep2VDkx5 #VC, #tech, #markets, #IPOwindow

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It is a great privledge to be backing Stella Garber for a second time, as well as her sensational co-founders Brian Schmidt and Justin Gallagher. It’s also great to working with Index Ventures again, too. One thing I have learned in my venture career is that humans are lazy, and software that does simple things can feel like magic. Hoop uses AI to automatically harvest to do items from all of your communication channels. Today it’s single player, and in the future it will be your whole team. Read more about why we invested: https://lnkd.in/geTy-kyZ

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What can we learn from the five recent “take private” acquisitions of public SaaS companies by private equity acquirers? Takeaways: 1️⃣ Sharks are circling:  Companies that have not accelerated or stabilized revenue growth since the COVID-Tech bubble peaked in 2022 are on the discount menu for acquirers to take private. Companies that do not get acquired may have to do a reverse stock split like Edgio (EGIO). 2️⃣ Revenue growth > FCF margin: Squarespace did accelerate its YoY revenue growth from a year ago, but still received a median-ish valuation even with a 20% FCF margin as its revenue growth is still below 20%. Context: Acquisitions in chronological order Startek Technologies (SRT), a digital customer experience and call center software - Taken private by Capital Square Partners on Jan 16th - 1.3x LTM Revenue Multiple for $217m - $160M in LTM Revenue  - (-8%) YoY Revenue Growth & 2 yrs of declining revenue Everbridge (EVBG), a critical event management communications software - Announced an agreement to be taken private by Thoma Bravo on Feb 5th - 3.3x LTM Revenue Multiple for $1.5bn - $451M in LTM Revenue - 3% YoY Revenue Growth down from 8% a year ago Agiliti (AGTI)i, a health tech firm that provides a medical equipment management software platform - Announced an agreement to be taken private by Thomas H. Lee Partners on Feb 26th - 2.1x LTM Revenue Multiple for $2.5bn - $1.1Bn in LTM Revenue - 4% YoY revenue growth up from -3% a year ago - Growth driven by new customers but caused decreased Gross Margin and FCF Alteryx (AYX), a data engineering and analytics platform  - Taken private by Clearlake and Insight Partners on on Mar 18th - 4.5x LTM Revenue Multiple for $4.4bn - $970M LTM Revenue - 16% YoY Revenue growth down from 73% in the prior year Squarespace (SQSP), a no-code website design platform - Announced an agreement to be taken private by Permira on on May 10th -  6.9x LTM Revenue Multiple for $6.9bn - $1bn in LTM Revenue - 18% YoY Revenue Growth up from 14% a year ago - Growth driven by recent Google Domain acquisition & price increases Why is this important: 🅰 M&A activity is picking back up which means valuations will pick back up 🅱 The Rule of 40 is outdated. The Rule of X guides the way as revenue growth drives valuations at least twice as much as FCF margin. Follow me for more on #PrivateEquity #Software #Tech #SaaS #Strategy #Valuations #HealthTech #acquisitions #RevOps #GTM #RuleofX

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We see this very often in deals, the request of a staple, but I personally think there are ways to navigate this, with everything being above board , both for the selling LP, buyer and the GP. We have had situations where the GP preferred buyer who could also do a staple, actually price the fund better... because they want to strengthen that relationship, and ultimately of course have had situations where the GP preferred buyer is the bad actor in the equation, leveraging their preferred position to down play price for the seller... it's all part of the negotiation process. #secondaries #setterstrong

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Private Equity operators juggle 10 portfolio companies that are lost about hiring. (but here is the quick fix) Hiring is hard. Even for the best. It’s not their fault, as they have never received training on how to build a leadership team. Easy to understand, hard to execute. Imagine being the operator who needs to help ten portco’s solve this problem. No easy feat. Over the years working with PE firms, I've learned that it is not HOW but WHO. The quickest way to solve this problem is to find the right WHO. Hire the one who can hire the many. If you don’t help your portfolio company with its hiring bottlenecks, then bad things will happen: - The company will not hit revenue growth targets - Then, the PE needs to extend their holding time - The company experiences high talent churn - The CEOs themselves need to be changed out Usually, this means helping your portfolio CEOs hire a great senior leadership team. This is why I created a 1-pager senior leadership scorecard. It will help you figure out: - What CEOs need to hire - What is the biggest hiring gap - Who is the ideal first hire that will create the most leverage If you want a copy, Comment below “scorecard” or DM with the message “scorecard.” And then, I’ll get it to you.

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Interesting new surrvey about the VC industry by PitchBook: 13% of VC firms are not planning to raise a new fund and 27% of VC firms have been pushed further thier plans to raise a new fund. That means a 40% decline. No wonder that startups are haveing tough time to raise funds. See article below. https://lnkd.in/exYYyCPu

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As part of a recent #SaaSTalks session, I had the pleasure of speaking to two seasoned #GTM experts, Girish and Charanyan, and we had a very engaging discussion on GTM for SaaS firms focused on SMBs. Our discussion inspired me to put down a few thoughts of my own to guide startup founders venturing into the SMB space. If you’re a SaaS founder looking to get started on GTM, here are some suggestions! Arpit Maheshwari Sayantan Sarkar Naman Jain

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Spot-on article in TechCrunch about the revival of the venture capital SPV market and all the deals swirling around by intermediaries / wheeler-dealers who have or gain access to VC's and other direct allocations to companies such as Anthropic, Groq, OpenAI, Perplexity, and #ElonMusk's xAI. It feels like the '20/'21 era and the article quotes my friend Jack Selby - ""it boggles my mind that just a few years after the excesses of the 2020 and 2021 period, when people were essentially investing blindly into SPVs, with fees on fees on fees, into vehicles that were totally opaque, people are doing that all over again with everything that is a shiny toy: AI.”" I have come across several people wheeling-dealing start-up SPVs in #Miami. Instead of narcotics at the bar, it is SPV access into the "hot" AI start-ups. SPVs are generally formed by investors who have direct access to the shares of these startups and then turn around and sell a part of their allocation to external backers, often charging significant fees while retaining some profit share. In many cases, the VCs will offer access to the SPV to their existing #limitedpartner investors, but they also may use brokers to offer access to a much larger universe of potential investors. The same AI startup may have multiple SPVs on their cap table, representing lots of small investors. While SPVs may be a suitable mechanism for buying shares of hot companies not available to investors by any other means, some investors warn that it comes with high risk. Unlike venture funds, backers of SPVs don’t receive direct information on the companies. Sometimes, but rarely, SPVs are created in association with primary rounds of companies still in fundraising mode. That means that the small investors can get in on a startup, or a coveted private company, at the same time the major investors do. I know of many family offices in the Americas, Asia and the Middle East evaluating and investing in these SPV vehicles of high-potential, high-risk companies. Just make sure, amongst many things, that you understand the limitations of the information flow and governance, and trust the SPV arranger. I still get mocked for passing on these types of opportunities. I think I am getting old and prioritizing middle-market #privateequity and #EBITDA generative-businesses. #privatemarkets #alternativeassets #venturecapital #ai #startups #capitalmarkets #spv #fundmanagers #familyoffices #fees #openai #anthropic #information

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This is fascinating. My two portfolio companies on the fastest path to Series A have kept the leanest teams. Both of them are lingering around cash flow positive on a monthly basis. One is growing gangbusters, one is growing nicely. Good data below to show that these activities are being rewarded. We're still in cockroach times. Also fwiw, I'm constantly amazed by and learning from Peter Walker. If you're interested in the data of venture funding (AND IF YOU'RE A FOUNDER, YOU SHOULD BE), then follow Peter.

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May is when many private companies finalize mid-year comp plans 💵 Need a reliable 409A valuation? Or has it been over a year since your last? We've got you covered! Scalar's 409A valuations keep you compliant, protect employees from tax penalties, and come with a team that supports you all the way through an audit. https://lnkd.in/gs_CtPNS

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