Matt Murphy, partner, Menlo Ventures<\/h2>\n

Did your investing cadence meet your expectations? Did you exceed your targets or undershoot them?<\/strong><\/p>\n

The back half of 2022 was dead. Things suddenly picked up in late February, and we felt it across the board. We made investments in Anthropic and Typeface and have continued at a fairly rapid pace since then. In Q2, we made several commitments, including two life sciences companies, one digital health, one hard tech company and a few SaaS companies. So, the end of Q1 picked up and Q2 really accelerated. We even had a term sheet in on a company and we won the deal, but it got acquired.<\/p>\n

Is your firm planning on accelerating its dealmaking cadence in the back half of 2023? Why or why not?<\/strong><\/p>\n

Q2 was already busy and active for us, but mainly at the early stage. We have three funds: an incubation fund (Menlo Labs), which has been steady state; our Venture Fund, which picked up significantly in Q2; and our Inflection Fund (defined as early growth in companies with $3 million to $10 million ARR), which was still slow in Q2.<\/p>\n

We expect Labs and the Venture Fund to remain just as busy as they have been from a pacing standpoint, but [we] expect the Inflection Fund will accelerate significantly in the back half of the year. About 80% of the companies in our sweet spot haven\u2019t raised in two-plus years, and many will need to come back to market in 2H 2023. We\u2019re excited about that segment of the market, where there is early but predictable scale and where valuations have settled substantially.<\/p>\n

There will be many flat and down rounds, and there should be no stigma around that. The multiples VCs will use to value companies will be different, but that doesn\u2019t change whether a business is good or not. So we\u2019ll all get past valuation and focus on building great companies.<\/p>\n