HL: Valuation Compression...The Opportunity

Howard Lindzon, a well-known VC who isn’t cut from the usual sociopathic mold of John Galt wannabes, tells us what he’s looking for in seed investing going forward:

JULY 1, 2022
Howard Lindzon headline:Valuation Compression…The Opportunity


As valuations compress it is most important that founders and investors honor the power of momentum by holding it close. That means lower valuations early so that there is more optionality as the company builds momentum and more optionality if momentum is slow to take hold. I believe it is much harder to build momentum in 2022 because of the costs of customer acquisition and the lack of new platforms to harness inexpensive acceleration.

In the early days of web 2 we saw hints of what we will see in web 3 with Instagram and WhatsApp. They both took advantage of the platforms of the era and grew really fast with very few employees. They chose to sell because the platforms they relied on made advertising their best/only business model.

The opportunity/promise of Web 3 is that it allows for new business models.