Gurley says venture firms now proactively push money on working companies rather than waiting for companies to raise.
“They all now believe in network effects and power laws. And so if a company's working, they proactively go to them and ask them to take money, which is what you just referred to.”
Gurley contrasts old fundraising where companies decided timing versus today where investors proactively offer money with implied competitor threats.
“And today people are just showing up at the door and saying, take the money. In many cases, with the implication, if you don't take it, they'll give it to the competitor.”
Gurley explains liquidation preference allows VCs to treat investments like debt, getting paid first in sales.
“So venture capitalists typically take preferred stock, and it has a term called liquidation preference, which means in a sale, they get the option to basically treat it like debt.”
Gurley acknowledges VC's AI-only focus may be rationally correct behavior but creates hardship for non-AI founders with good economics.
“But I I think it's unquestionably true. Like there's just zero interest. And so that's a tough call for someone that's in a business that may have good unit economics that's not AI.”
Gurley describes current venture capital as sport of Kings fight to the death, different from past era.
“I say it's not your father's venture capital. This is a sport of Kings world we've evolved into and it's fight to the death.”
Gurley warns disciplined fundraising means irrelevance when competitors each have $500M to deploy.
“Well, if you're the disciplined one and there's six players with $500,000,000 each hiring salespeople, you're not going to matter.”
Gurley notes committee members fundraise across jurisdictions, which he finds inappropriate.
“One thing that's really amazing that most Americans probably don't realize is once your senator or congressman goes on a committee, they start fundraising in other jurisdictions.”
Gurley notes congressmen on committees can fundraise from relevant industries nationwide, which seems inappropriate.
“Like if you're on the finance committee, you can go raise money from every bank around the country. That just doesn't seem appropriate.”
Gurley criticizes founders obsessed with clearing their last round valuation when raising new capital.
“Yeah. People get overly, focused on this last round valuation thing. Like, it is I can't tell you how many founders I've had a conversation with where it's clear the number one objective in their function about the next financing is to clear the bar of the last round. And it just shouldn't matter that much.”