Timecoded Guide:
- [00:00] Start of episode
- [01:41] Current investing environment
- [06:56] Surviving businesses and VC’s
- [11:35] Why a ‘recap’ is okay
- [22:06] Three challenges in current funding environment
- [23:50] How can entrepreneurs build relationships with VC’s?
- [33:18] Venture in 10 years
How can entrepreneurs build relationships with VC’s?
To answer this question, Aziz hits one key factor: deal velocity. In “the gauntlet,’ Aziz says that the period of time from the first phone call from an entrepreneur and signing the term sheet has greatly decreased. In 2020, this time period was around four weeks for Aziz. Around 2009, it could take up to a year to work through the process. He says that now VC’s have the luxury of building relationships before a deal is struck and that it can be forged through entrepreneurs simply seeking advice.
“I have a number of entrepreneurs that I actually talk to about their business pretty frequently where I’m not on their board, where I’m not an investor, but we’re having those conversations. And that’s where you start to build those types of relationships.”
Common themes with founders exiting
Aziz says that if there’s one large theme on founders exiting it’s that it takes a long time—especially in the current economy. But sometimes, they happen super fast, he says. In the current environment, with things dragging out fairly long, he says that you should be prepared for an extended conversation.
“The name of the game now is give the market what it wants. Because the market is being extremely selective about the types of companies that folks are looking for.”
Valuations of thriving versus surviving businesses
With a lot less cash in the system right now, investors can be quite picky Aziz says. They have the privilege of only investing in businesses that are as friction-free as possible. With that said, the number one step should be to fix the business, if possible, he says—but that all in all, it’s important for founders to have a pragmatic approach toward both what the market can and what the market can’t do at the moment.
“When you’re thinking about outcomes, your enemy is time.”
What will venture look like in 10 years?
Looking forward, Aziz says that the industry will change drastically. However, the one constant, he says, are entrepreneurs. From time to time, the industry may skyrocket and fall but entrepreneurs stay constant. Aziz says that they always find a way to fund entrepreneurs—and that they’ll find a way to work with them.
“Entrepreneurs are the most resilient people that I’ve ever met in my life. They’re the folks that you put in front of a wall, and they just find a way to walk right through it. ”
