Question: What's The Scenario? The 8th "Late" Edition (May '24)

Welcome to the 8th Edition of Public School Ventures' School Bulletin!

In this month’s ‘Bulletin’ you will find:

1. Raising Questions 101 - Dive into a reflective exercise I undertake each May, where I question the evolving dynamics of the venture capital landscape. This year’s introspection focuses on the immediate, mid-term, and long-term challenges and opportunities facing founders and VCs alike. From what Series A and B founders really need, to how the VC industry itself might transform, this section invites you to ponder the critical aspects of our industry's future.
2. Off-Campus Excursions - [Only for enrolled students. ]

1. Semester Reflections: Question Everything

As we approach the end of May, the rhythm of the traditional school year begins to decelerate, signaling a time for both students and teachers to look forward to summer—a period for relaxation and a refreshing of perspectives. In the venture capital realm, a similar seasonal downshift occurs, a reflective pause where the frantic pace of early-year ambitions gives way to a more contemplative review of the year's progress and strategic redirection for the upcoming months.

A Ritual of Reflection

Every summer, just before the flurry of tech weeks, major conferences, and annual gatherings begins, I pause to pose nine critical questions. This tradition, which I have upheld since my early days at Prologis Ventures and continued at GreatPoint Ventures, helps me align my goals with the evolving landscape of venture capital.

This annual shift into a more introspective gear has always been significant for me. This isn't just a professional exercise; it's a deeply personal one that shapes my strategic positioning within the industry for the remainder of the year and beyond.

Raised in an environment that cherished deep questioning—my father a computer scientist turned pastor, and my mother a public school science teacher—I learned early on that the right questions could unlock learning and insight. Thus, every May, I revisit the goals I set at the year's start, and integrate learnings from recent transactions, board interactions, and dialogues with founders and fellow investors to craft questions that will guide my strategic focus.

This Year’s Critical Questions

Here are the nine pressing questions I’m contemplating. I encourage you to weigh in with your insights and perspectives:

Short-term Pressing Questions (Until June 1, 2025)

I. What do Series A and Series B founders really need that they are currently not receiving from the VC market?

Many founders express a need for more than capital: they seek strategic support to navigate the complex tension between visionary aspirations and practical operational metrics. How can VCs better provide this balance in a proprietary way?

II. What milestones define readiness for raising a Series A in today's shifting landscape?

The criteria for advancing to a Series A have evolved significantly (i.e. $1M ARR is not so clear cut). Beyond product-market fit, founders now need to demonstrate scalable unit economics, a clear competitive edge, and a viable path to significant market penetration. How have these criteria shifted, and what new benchmarks are emerging?

III. Who are the emerging Avengers (Spinout candidates from Tier 1 firms) and X-men (top talent from Tier 2 or CVC firms) forming the next Benchmarks and Sequoias?

The venture capital industry sees frequent formations of new teams, as stellar performers and dynamic spinouts merge to challenge the status quo. This shifting alliance landscape could reshape future venture dynamics significantly. I’m particularly eager to connect with those who align with my vision for enhancing early-stage venture support.

IV. How pivotal is a solid 'track record' in the current climate of raising a venture fund?

While a strong track record has traditionally been a cornerstone for fund-raising, the narrative is expanding. Today, the alignment of a VC's vision with their operational acumen and the strategic fit within an LP's portfolio are gaining prominence. How are these factors reshaping the prerequisites for successful fund-raising?

Mid-term Pressing Questions (Until June 1, 2027)

V. What will the Seed stage landscape look like as institutional players become more involved?

With an increasing influx of institutional capital at the Seed stage, will we see a consolidation similar to later stages, or will the Seed stage continue to be a fertile ground for diverse and dynamic investment approaches?

VI. How and why will cornerstone industries intensify their technology adoption?

Key US industries are under increasing pressure to rapidly innovate and integrate technology into their core operations. What catalysts are driving this urgency, and how can venture capitalists facilitate faster and more effective technology adoption across traditional industries?

VII. How will data define VC (and allocator) strategies/advantages?

Data-driven decision-making is set to redefine how VCs identify and support high-potential startups. How will emerging data tools and analytics reshape the landscape of venture investing? Will most of these products be built internally or will they be offered to the entire VC community??

Long-term Pressing Questions (Until June 1, 2034)

VII. How will the consumer sector define the next generation of Tier 1 firms?

Consumer behaviors are rapidly evolving, particularly at the intersection of AI and consumer technology. How will these shifts impact which VCs lead the next era? Every Tier 1 firm of the last two decades can all say they have at least one outlier investment that was a consumer deal that put that firm on the map. Will this remain the case for the next generation of venture firms?

IX. Will the distinction between coastal and midcontinent venture activities continue to blur?

The democratization of technology and venture capital, accelerated by remote work and distributed teams, is challenging traditional geographic boundaries in investing. Will this lead to a more uniform venture landscape, where Tier 1 firms will have an advantage in all ecosystems, or will regional focus continue to define the earliest stage of venture success?

2. Off-Campus Learning: Field Trip Reports

[Only for enrolled students. ]

With gratitude,

Earnest Sweat