20VC: Lessons from Investing in Uber and Airbnb, How To Think Through Bundling vs Unbundling, Late Stage Funds Moving Earlier, Early Stage Funds Moving Later& The Mechanics of Venture That Founders Should Know with Derek Zanutto, General Partner @ Capital

Inflation Impact

Derek Zanutto expresses concerns about the potential impact of inflation on interest rates and growth equity valuations. He explains that if inflation rises, the Federal Reserve might increase interest rates, affecting valuation multiples in both public and private markets. This could lead to a decrease in valuation multiples as higher interest rates increase the cost of capital 1.

If interest rates increase, valuation multiples could take a hit in the public markets, and that could filter back into the private markets as well.

--- Derek Zanutto

Derek also agrees with Bill Gurley on the challenge posed by the oversupply of capital, which has been a persistent issue for over a decade. He notes that this abundance of capital makes it difficult for entrepreneurs to navigate the competitive landscape of investors 2.

   

Market Timing

Derek Zanutto discusses the importance of market timing when making venture investments. He emphasizes the need to understand customer pain points and market demands to avoid investing in ideas that are ahead of their time 3.

Many good ideas were well ahead of their time and created a graveyard of poor investments.

--- Derek Zanutto

Additionally, Derek highlights the complexities introduced by the COVID economy, where distinguishing between temporary and long-term shifts is crucial. He points out that while some companies like Zoom have clearly benefited, others present more challenging investment decisions due to the lack of pre-COVID benchmarks 4.