The TechCrunch List is dead. Long live commodity capital – TechCrunch
It’s been almost exactly a year since we launched The TechCrunch List, an organized directory of venture capitalists designed to guide founders to the most relevant VCs for their startups. We have received nearly 4,000 recommendations from founders, often with complete documentation sometimes exceeding 1,000 words. From our initial edit to several in-depth updates, we ultimately selected 531 investors.
It was a great experience used by hundreds of thousands of people with surprisingly deep engagement (people really likes to read lists, apparently). Nevertheless, we are officially withdrawing the product today.
The reason is simple: the venture capital industry has changed dramatically over the past year, and the central thesis we took to build the list no longer applies.
When we designed the list – which, to be clear, was never a ranking – we organized experienced investors along three main axes:
- Specialization: We thought that investor specialization was important. We wanted to connect biotech founders with biotech investors and e-commerce companies with e-commerce venture capital firms. Much of our job reading all of these founder’s recommendations was to identify brilliant investors in 31 different market categories who could offer differentiated strategic advice.
- Step: We wanted to match the founders with investors who would invest at the stage their companies were at, going from pre-seed to growth.
- Geography: We believed that local investors would have an advantage over distant investors for founders, especially in the early stages where regular advice would be helpful in achieving product-market fit.
In other words, we were convinced that capital was not a commodity, and that the right investor could radically change the trajectory of a founder’s ambitions.
When we started making the TechCrunch List plans in January 2020, the pandemic was just starting to spread around the world, and many of those assumptions were still true. However, as I think we’ve all seen, those assumptions have been completely overturned over the past year.
The reality today is that capital has never been cheaper or more marketable. VCs invest quickly, in all geographies, at all stages, in all industries, constantly, quickly and all the time.
I have heard these comments consistently over the past few months from founders and investors. To the founders, the emphasis on terms and price consistently seems to trump almost any other factor in building a relationship with an investor. Few founders would agree to lower the valuation of their company for a more experienced or specialized investor or a locally located investor. At the same cost, these factors could differentiate one investor from another, but if not, price prevails, pretty much every time.
As a result, VCs (and this applies most strongly to deep sea of course) no longer care about guidelines or theses about investing. Any stage, any geography, any deal – if there’s a deal to be made, they do it and quickly. Tiger Global and SoftBank’s Vision Fund dominate this narrative, but there are at least a good dozen other companies with similar styles these days. And given that these are some of the biggest companies in terms of assets under management, they also dominate the lists of terms that fly in the startup world.
If the TechCrunch List was meant to signal the noise of fundraising in order to save the founders time and labor, the reality is that today the market is just complete noise and frenzied chaos. , and there really isn’t much you can do to clarify this. The result is that VCs are making decisions more quickly than ever before, so the good news is that the chaos should be short-lived for today’s founders.
So what’s the next step? We will continue to experiment with ways to help founders raise funds and find the best investors for them. That’s the premise of Extra Crunch, our Early Stage events and the Extra Crunch to Disrupt scene (which is coming in a few weeks, so get your tickets now!) As well as our Extra Crunch Live chat series. Who knows, maybe we’ll feature the TechCrunch List in another form in the future. But for today, he’s exhausted and taking a good, long post-pandemic vacation.