Q4 2023 Update & Jackson Hole Winter Offsite Highlights

Our Take on the Venture Capital Industry’s New Status Quo

Asymmetric continues to gain steam. We’ve maintained momentum through and into the new year with a host of investments, founder-facing events (more on that below!), and strong revenue growth across the portfolio. We believe the industry is in a new status quo:

• Pre-revenue, pre-product investing remains largely the domain of angels and super-angel groups, micro funds (sub $25-50M), and the rare institutionalized pre-seed fund (like us). Given virtually none of the companies we back have a pre-existing internet presence (and in most cases, founders still identify at their prior role on LinkedIn), we see excess return from network-driven and founder referral hustle. While for some of 2020-2022, our stage was invaded by multi-stage funds, we’ve seen much of that competition exit. We also see this stage as an attractive one for hatching companies (as we did in Q4) and creating platforms which we can use as a vehicle for acquiring compelling assets. Our archetypal deal profile is $500K-$2M in pre-seed quickly followed by an additional $1.5-4M when we see early signs of positive momentum.
• The stage following us, in most cases Series A or B rounds, continues to be won and dominated by the most respected and hallowed names, with a smattering of more recent entrants buying market share by paying founders forward the next round price. For the true venture aristocrats (some of whom have now existed for the better part of 4 or more decades!), selection edge creates a truly unfair game. For others choosing to operate at this stage, we are curious as to how they see the opportunity set differently.
• Finally, the most battered phase, growth, has seen a true hollowing out over the last few years. But, the most pristine P&Ls continue to see no shortage of competition, and much of the (both pricing and access) edge attributable to brand melts once product market fit has been attained; Series C-E rounds have become largely exit math projection exercises. We’ve seen funding concentrate on the handful of still-ascendant companies; that focus in a fraction of the market has continued to drive robust pricing for the best names. Meanwhile, over-funded companies with messy cap tables, slowing growth, and/or shoddy unit economics are faced with few viable options today.

Where We Play

Given this context, we love where we play. In fact, we think much of the industry’s current excess return can be found in the earliest stages. As evidence, we had an incredibly active fourth quarter, investing in five new Core companies where we were lead or co-lead. With these investments, we’ve continued a narrowed focus along the vectors of location, stage, and industry:

• First, we are spending disproportionate time in the New York - Boston corridor. Both markets are attractive competitively; we have been successful in winning the deals we want to access here. Of the dollars we invested in 4Q23, 80% were in founders based in either Boston or New York. 
• Second, we remain committed to investing at the earliest stage, pre-revenue. We continue to believe it offers the most attractive risk-return profile in private technology markets. There are of course unusual situations where we see compelling asymmetry in the $0-2M revenue stage, but those are rare and typically driven by some degree of proprietary access. In 4Q23, four of our five new investments were in purely pre-revenue companies. 
• Finally, we’ve maintained our narrow industry and business model focus, with 80% of 4Q23 dollars invested in software and digital health, and the remaining 20% in a novel software-centric concept.

We also continued to bolster our portfolio of Discovery (non-lead, <$1M) checks with three small investments. These investments again represent many of our key existing geographies across our focus areas of software and digital health.

Our Sourcing OS

Lastly, on sourcing: three of the five 4Q23 Core investments came directly from existing Asymmetric founder referrals, one was a company hatched by our team where we hired the management team, and one was a referral from one of our natural VC partners. We see these deals as proof points that our strategy is working and couldn’t be more pleased to have benefitted from proprietary, exclusive access in four out of five cases. Over the last twelve months the founder referral engine has become by far our largest and best sourcing channel. Our high-touch portfolio engagement model and in-person founder events in the New York townhouse, Jackson Hole, and Napa have resulted in strong trust and NPS that we expect to continue to drive a founder-based sourcing flywheel going forward.

As of year-end, we have invested over $80 million in 28 Core and 52 Discovery companies. All companies that are out of stealth across our Core and Discovery portfolios can be seen on our website’s Companies page. 

Jackson Hole Winter Offsite

In early January, we brought together our team and the founders and leaders of our 2023 investments, as well as many of the existing founders and advisor partners who introduced us to those opportunities. This annual offsite has become a cornerstone of Asymmetric’s calendar and an invigorating way to begin each year. With a largely unstructured agenda, we’re able to spend quality time on and off the slopes to further solidify the relationships we’ve formed with our founders; we believe this will serve us well in the many years to come as we build the next generation of software and digital health companies. We also love seeing our founders come together to compare notes and help one another through the many similar challenges they are facing. Many times we find ourselves on the outside of those founder to founder discussions, and wouldn’t have it any other way.

Check out this year’s Jackson Hole highlights video to hear more from us and our founders:

Best,

Matty, Rob, Michele, Sarah, Sam, and Nancy

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