E146: Did the Fed break the VC model? Plus IPOs, M&A, revaluing unicorns & more

The week’s IPOs were not a clean market reopening: Instacart floated 6.7%, Klaviyo 7.6%, and Arm 9.4%, with no anchor lockups. The panel argued those tiny floats let institutions sell into retail demand, leaving all three near or below issue prices within days.

Instacart’s fall from a $39 billion private valuation to about $8 billion showed how brutally late-stage venture returns were reset. The episode noted 2020–21 investors were underwater, while a 2018 Series F dollar returned 13% versus 68% in the S&P 500.

Limited partners are already responding by shrinking venture exposure and moving earlier. Jason Calacanis said roughly two-thirds of his fundraising meetings involved institutions cutting managers or commitments; they increasingly want seed or Series A access plus a defensible sourcing edge, not another undifferentiated fund.

Airtable exemplified the zero-rate valuation trap: its $11.7 billion mark implied roughly 78× sales on about $150 million ARR, versus roughly 7–12× for public peers. Companies trapped below their preferred-capital stack can require discounted recaps that sharply dilute founders and drive management out.

The Fed’s “higher for longer” stance moved the panel’s startup-survival timetable from mid-2025 to 2026. Chamath Palihapitiya said portfolio CEOs may need another year of layoffs and burn cuts, while David Sacks described a broader shift from capital abundance to scarcity that could persist for years.

AI is already changing hiring plans at an operating-company level, not merely in demos. Calacanis said Kayak’s CEO expected no hiring for one or two years because developers were 30–40% more productive, with juniors performing like seniors and top engineers becoming dramatically more leveraged.

Klaviyo combined roughly $650 million ARR, 50%+ growth, 119% net retention and only about $15 million burned, making it a strong SaaS benchmark. Yet about 70% of its business depends on Shopify, which owns roughly 11–12%; their equity and revenue-sharing relationship helps reduce that platform risk.

A University of Chicago “inverse vaccine” stopped MS-like disease in animals by teaching the immune system to tolerate a targeted protein rather than suppressing immunity globally. Glycosylated antigens were routed to the liver to trigger tolerance; related animal work covered type 1 diabetes and egg allergy, but human safety and efficacy remain unproven.