Capital Chronicles #13

Hello there! Welcome to Capital Chronicles, saving you hours every week with ~2-3 minute summarised insights from the best venture builders, investors and capital allocators out there. This week: three PMF archetypes with Sequoia, the data-driven VC landscape for 2024, the playbook for hiring and managing with Index Ventures, and Coatue’s public and private market analysis from their EMW 2024 conference.

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Now, read on for the latest…

🛠️ On venture building…

Sequoia’s framework for Product-Market Fit. Sequoia outlines three distinct archetypes of product-market fit: Hair on Fire, Hard Fact, and Future Vision. Each archetype describes a different relationship between the customer and the problem the product solves.

• Why you should read it: as I previously mentioned in editions #11 and #12 respectively, it's tough to find actionable advice on getting to product-market fit. Sequoia’s version forms the basis of their Arc program (company-building immersion for pre-seed and seed-stage companies), and comes with case studies to illustrate what each of these archetypes looks like in practice. Most companies erroneously assume they fall into the ‘Hair on Fire’ archetype and consequently make suboptimal strategic choices.

🧭 On venture investing…

The Data-Driven VC Landscape for 2024, a survey conducted by 300+ VC firms across Europe, North and South America, Asia, Oceania and MENA. The report highlights the growing trend of venture capital firms adopting data-driven approaches to venture investing.

• Why you should read it: a fascinating study on the future of venture capital. The report provides insights into the current technological maturity of investment processes, including market benchmarks, tools used, and future outlook. The report identified 190 firms ‘leading the data-driven VC transformation’ with dedicated engineering resources, community nominations and proven internal tooling in at least one segment of the value chain. You can check out the full list of data-driven VC firms here.

📖 Learning resource…

Scaling Through Chaos, authored by Index Ventures. A comprehensive guide for entrepreneurs building, leading and scaling teams, based on an analysis of 200,000 career profiles at 210 VC-backed companies.

• Why you should read it: it’s one of the most complete resources I’ve seen on hiring and managing teams for venture-backed companies, an end-to-end playbook for hiring and managing teams over the full lifecycle. This includes establishing the founding team, developing as a CEO, building your leadership team, and tactical advice to make specific hires across all the key functions within R&D, GTM and G&A. You can also buy a physical copy and download the accompanying app.

📊 Market insight…

Coatue’s View on the State of the Market in 2024. Coatue recently held its 8th annual East Meets West (EMW) technology conference and kicked it off with an outlook on the current macroeconomic environment impacting public and private markets.

• Why you should watch it: a dense amount of market analysis packed into 50 minutes. The keynote highlights AI's dominant role in driving market returns and funding. For example, AI-driven companies have been responsible for 90% of S&P500 YTD returns, showing 20% median returns vs. 2% for non-AI companies. In the private markets, AI company funding has grown 100% since the EMW 2023 conference, representing ~3% of total deals and ~15% of total capital at ~5X the valuation and ~6x the round size.

🎲Lucky dip essential reads…

• How to answer the question ‘What is your market size?’

• How are AI startups building moats? By paying for them

• Is it now T3D3? Probably. But 10-100-110 is good enough.

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Have a great week!

Josh