When Tailwinds Vanish

As the ROI of SG&A spend becomes more predictable, a non-VC financial layer will emerge within Silicon Valley, similarly helping to fuel its growth. This capital layer can help partially compensate for the slowing market-based growth tailwinds. This suite of services will benefit from a tech-specific approach: real-time debt offerings based on oper... See more

Why can’t a traditional bank do this themselves? 1) They don’t understand how to underwrite using tech industry metrics (ACVs, churn, LTV, engagement, et al.), and 2) they don’t have the tech DNA to underwrite programmatically, which Sand Hill Sachs will have. This may be a new company, an existing fintech player with distribution in tech, a VC fir... See more

Late-stage VCs often lament that other funds are willing to underwrite to a lower multiple – and thus give higher valuations to companies. If the growth-stage multiple expectations continue to decline, it will only accelerate the relative attractiveness of late-stage debt, both for founders (no dilution) and investors (guaranteed IRR).