E141: State of Series A's, VC dry powder, IPO window opens + more with Bill Gurley & Brad Gerstner

Bill Gurley is not retiring: he remains on nine Benchmark boards, has begun occasional angel investing, and is writing a book about finding and succeeding in a dream career. He said the book grew from his University of Texas talk and that he no longer wants new board seats, making angel investing deliberately low-intensity.

Venture funding had stabilized near 2019 levels, yet Sacks expected one to two more years of distress for companies funded at 2020–21 peak prices. Gerstner simultaneously saw $400–600 million AI and data deals for firms with little or no revenue, showing the reset was sharply uneven.

“Dry powder” was far less deployable than headlines implied: VC commitments remain in LP accounts until called, often across five or six drawdowns over a decade. Gurley added that private marks stay sticky because GPs dislike markdowns and some LP staff are compensated on paper performance, though he described this as emergent rather than coordinated.

LP retrenchment threatened a delayed capital squeeze, with participants hearing of venture commitments being cut by 50%, two-thirds, or even entirely. Sacks tied this partly to the “denominator effect”: falling public portfolios plus lagging private marks left institutions overallocated to venture, forcing new commitments down.

The software recession was severe enough that one startup reportedly renewed a Twitter contract at only 20% of its previous value after Twitter cut roughly 80% of staff. Sacks said his investment standards were unchanged; far fewer companies met them because enterprise customers were cutting seats, consolidating vendors and delaying purchases.

Many 2021-era unicorns had become structurally hard to refinance because stacked liquidation preferences and conflicting investor marks made fresh private rounds unattractive. Gurley said an IPO can clear that logjam by converting preferred shares to common; Instacart, then discussed around $10 billion after a $50–60 billion private mark, was the example.

Gurley argued venture’s long-run outperformance is concentrated in brief boom windows, so failing to sell at peaks can erase exceptional paper gains. He estimated only 10–15 companies in venture history justify “hold forever”; Sacks said Craft’s default is to distribute SpaceX shares to LPs after an IPO.

Gerstner’s preferred measure of monetary tightness—the San Francisco Fed’s effective-funds proxy—was above 7%, its highest level since May 2000, even as core CPI slowed to 0.2% monthly. He read that combination, alongside record consumer debt and heavy Treasury refinancing, as evidence that lagged tightening could still force a meaningful slowdown.