Hans Tung, a managing partner at Notable Capital, formerly GGV Capital, offers insightful perspectives on the current state of venture capital.
Notable Capital, with $4.2 billion in assets under management, emerged from the renowned 24-year-old cross-border VC firm, GGV Capital. Tung’s extensive experience at GGV, where investments were made in notable companies like Affirm, Airbnb, StockX, Square, and Slack, provides him with valuable expertise in understanding the market dynamics.
Recently, Tung joined TechCrunch’s Equity Podcast to share insights on valuations, the importance of long-term vision for founders, and the challenges faced by VC firms in the current landscape.
The discussion also touched upon Tung’s bullishness on fintech, highlighting specific sectors within fintech that excite him.
The conversation also delved into recent changes at Notable Capital, stemming from GGV Capital’s strategic division into separate U.S. and Asia operations. This transformation reflects a broader trend in the VC ecosystem, with other firms like Founders Fund, Benchmark, and Thrive Capital also undergoing personnel changes.
Read on for edited excerpts from the insightful interview:
TechCrunch: Last year, we discussed down-rounds, with your view that they are not necessarily negative. Does that perspective remain unchanged?
Hans Tung: In my nearly 20 years in this industry, we take a long-term view. Valuations fluctuate, but what truly matters is the ultimate exit. Whether it’s a down-round or high valuation, the focus should be on scaling the business and achieving a significant outcome in the end.
Founders must understand that the choice isn’t between shutting down or accepting a down-round. Choosing the latter is often the better alternative in the long run to sustain and grow the business.
TC: How has the investing landscape evolved compared to previous years?
HT: The trends we saw in the latter half of 2023 are continuing into this year. However, there is a notable exception with AI, which is currently overvalued. While initial enthusiasm may lead to inflated valuations, the market will eventually correct itself, highlighting the importance for founders to focus on business fundamentals rather than external benchmarks.
TC: How has the pace of investing at Notable Capital been impacted?
HT: Our investment pace is comparable to 2022 levels, surpassing the slowdown witnessed in 2023. The aftermath of a hyperactive 2021 has hindered some VC firms, leading them to reassess and slow down their investment activities. This adjustment is crucial for long-term sustainability and success.
The interview also delved into the challenges within the fintech sector, shedding light on the cyclical nature of market trends and the long-term growth potential of innovative fintech companies.
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