TechCrunch List is Dead: The Rise of Commodity Capital

The TechCrunch List: A Year Later and a Shift in Venture Capital

Approximately one year has passed since the launch of The TechCrunch List, a carefully compiled directory of venture capitalists intended to connect founders with the most suitable VCs for their ventures. We received close to 4,000 recommendations from founders, frequently accompanied by detailed explanations, some extending beyond 1,000 words in length.

Following an initial release and several comprehensive updates, a total of 531 investors were ultimately selected for inclusion. The project proved to be a valuable resource, utilized by hundreds of thousands of users who demonstrated remarkably high levels of engagement – it appears lists are particularly popular with readers.

However, we are announcing the official retirement of this product today. This decision stems from a fundamental change within the venture capital landscape over the past year, rendering the core principles upon which the list was built no longer applicable.

The Original Framework

When we initially conceived the list – which was never intended as a ranking – we categorized experienced investors based on three primary criteria:

• Specialization: We operated under the belief that investor specialization was a significant factor. Our goal was to facilitate connections between biotech founders and investors specializing in biotechnology, and e-commerce businesses with VCs focused on e-commerce. A substantial portion of our effort involved analyzing founder recommendations to identify exceptional investors in 31 distinct market sectors capable of providing unique strategic guidance.
• Stage: We aimed to align founders with investors who invested at the appropriate stage of their company’s development, spanning from pre-seed to growth phases.
• Geography: We posited that local investors would offer an advantage over those located further away, particularly during the early stages where consistent mentorship would be beneficial in achieving product-market fit.

Essentially, we maintained a strong conviction that capital was not a uniform resource, and that the selection of the right investor could significantly influence a founder’s success.

As we began planning The TechCrunch List in January 2020, the global spread of the pandemic was just beginning, and many of these assumptions remained valid. However, as events unfolded, these assumptions were fundamentally challenged.

The Current Landscape

Currently, capital is more readily available and has become increasingly commoditized. Venture capital firms are investing rapidly, across all geographic regions, at all stages of development, and in all industries, with remarkable speed and consistency.

This sentiment was repeatedly expressed to us in recent months by both founders and investors. Founders increasingly prioritize terms and valuation over other considerations when establishing relationships with investors. The willingness to accept lower valuations for access to more experienced, specialized, or locally-based investors is diminishing.

Price is now the dominant factor, with other considerations only becoming relevant when valuations are equal. Similarly, VCs – particularly larger funds – are largely disregarding previously held investment guidelines and theses. Any stage, any location, any market – if a deal presents itself, it is pursued swiftly.

Firms like Tiger Global and SoftBank’s Vision Fund exemplify this trend, but at least a dozen other firms are adopting similar strategies. Given their substantial assets under management, these firms exert considerable influence over the term sheets circulating within the startup ecosystem.

If The TechCrunch List aimed to distill valuable insights from the fundraising process to save founders time and effort, the current market is characterized by overwhelming noise and frenetic activity, making clarification difficult. Fortunately, the accelerated decision-making process of VCs suggests this period of chaos may be relatively short-lived.

Looking Ahead

We will continue to explore innovative ways to assist founders in securing funding and identifying the most appropriate investors. This commitment is reflected in Extra Crunch, our Early Stage events, and the Extra Crunch stage at Disrupt (tickets are available now!). We also offer the Extra Crunch Live series of discussions.

The TechCrunch List may be reintroduced in a different format in the future. However, for the present, it is being retired for a well-deserved break following the pandemic.