2021 Private Market Outlook

Excerpt form my 2021 Investor Letter

Below below is my excerpt from my 2021 Shareholders Letter. If you’d like to read the whole letter please just reach out to me directly. After writing this it is making me really think about how I need to look at Seed investing in 2022. I will be writing more about that in my next post.

Private Capital Markets:

Gobs of capital have been raised in private markets, particularly venture capital. Silicon Valley's share of venture capital dollars has shrunk to 20% of the total allocated in the US. The migration of VCs out of the Bay Area into cities like Austin, Miami, and Nashville indicates that capital will also follow VCs to fund non-SV companies.

Seed valuations and round sizes have increased considerably over the last couple of years. As a result, the total amount of seed capital going into companies is significantly higher – up to approximately $4M across the US. Median seed pre-money valuations have also risen from $6M to $9M over the last four years. In addition, Series A rounds have doubled during the same period. Despite the valuation increases, the data shows that multiples remain intact in financing rounds.

We strongly believe that attractive valuation entry points exist within key geographies that DWP Capital is planning on sourcing. Many of my colleagues are frustrated about their deal-making efforts and are often perplexed regarding the state of valuations. My intention is not to focus on macroeconomics and try to time the market. Instead, my strategy is to find the best companies and deploy capital in them at reasonable valuations.