A Blistering Pace

I wrote about pacing a few years ago. I am a fan of a steady pace, not too fast, not too slow. Sometimes the opportunity set forces you to go faster. As I wrote then:

I don’t think a VC firm should manage to a pacing number. It should manage to the opportunity set that it sees.

In the last two years, the VC business has been operating at a blistering pace, the fastest I’ve witnessed in my 35 years in the business (including the 99/00 era). Whether that is because of the opportunity set or the changing dynamics of fundraising (in-person to zoom, endless capital) we will only know in time.

But it is exhausting. Every day I heard some form of this from an entrepreneur, “we got a pre-emptive term sheet and will be making a decision in the next 24 hours.”

Making sound investment decisions in a week is doable. We have done it. We have done it long before the last two years. We have done it a lot more in the last two years. It helps to have a thesis, to know what you are looking for.

But even so, the VC business has turned into a sprint. And you can’t sprint forever.

My friend Howard tweeted out this blog post yesterday and suggested that every VC read it. So I did.

The author, Abraham Thomas, wrote this:

Across every aspect of venture, timelines keep compressing.

Abraham suggests in that post that this hyperactive market has become riskier even though the numbers don’t show it.

I learned a long time ago not to try to time markets. I don’t know if the VC business is near a top or near a bottom. It doesn’t matter to me. I believe you have to just keep investing, slowly and steadily, in the best opportunities that come your way and the rest will take care of itself.

But we all need to pace ourselves. This is not the public markets. Venture investments take many years to unfold. It is a buy and hold business. It is a invest and help business. It is seeding not harvesting. If you start a marathon with a sprint, you are gonna be puking by mile ten. And that’s my concern right now.