1/ Finally some HARD data about the impact on funding and valuations for startups and VCs. Breaking down the study of @davidkelnar into key takeaways. Saddle up. https://twitter.com/davidkelnar/status/1252496283681591297

2/ In 2002 seed volumes dropped 85% and Series A 70%, but the peak was stupid. Don’t expect to see these numbers again. This time, there’s a lot of DRY POWDER around.

3/ How much of that dry powder can you get to? Around 72% of VC firms have decreased cash available for new investment from 20 to in some cases 80%! That’s without accounting for the impact of fundraising remotely.

4/ There’s a clear shift in time and capital allocated to portfolio by VCs as you’d expect. Time spent evaluating new deals dropped from 40% to 25%. If you have a big portfolio that’s probably way worse.

5/ Post 2008 - round sizes shrank 20-40% and stayed smaller for FOUR years.

Expect 25-50% drop in round sizes for a sustained period, EXCEPT at Seed.

Expect to see many convertibles (which defer pricing) and insider+ rounds (existing + one new close to existing).

6/ Post 2008 valuations declined 15-40% and took three years to recover on average - 35% on average for later stage and 15-20% for Series A and B.

I except this to be much more pronounced in Series A/B given the massive run-up in prices since 2014.

7/ Indeed - since 2013, valuations went up c. 200-240% for Series A/B/C and 360% for Series D & late stage. That’s a lot of valuation inflation for any business that showed scale.

8/ Recoveries in venture capital tend to be U shaped and can lag the real economy but ... dry powder and fairly secure liquidity means pullback is likely less than other sectors of the economy and financial markets.

9/ Post 2008 VC recovery was relatively quick - but helped by the massive rise of iPhone and digital connectedness.

Question as to whether the current waves will be as strong? I’m positive as tech is impacting every sector at full speed.

Won't be good for jobs though...

10/ There will be a marked bifurcation between clear winners with infinite access to capital and *everyone else*.

But you knew that already.

11/ Important! B2B companies should expect “shoe to drop” as current momentum has carried pipeline through but lengthening sales cycles are a precursor to hard times. Concerns about viability will rise.

12/ Finally, expect strong vintages for VC given reduced valuations and increased capital efficiency. The challenge for Seed funds is making it through the carnage without getting diluted to smithereens. /eot

Onward.