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Last week, distributed a memo to founders and CEOs of its portfolio companies about the worsening economic situation as coronavirus spreads, and many other media outlets reported.

I’ve also seen posts all over from people cautioning about a slowdown in VC funding and reacting with concern to the tumultuous state of the public markets.

So I decided to ask around myself.

I didn’t get as many replies as I expected. Perhaps folks just don’t want to share their revised strategies. Perhaps they’re still trying to figure it out. I’m not sure, but for now, here’s what , general partner of Austin-based, told me on the topic. (For those that don’t know, Silverton Partners is arguably one of Austin’s most active early-stage VC firms with $384 million under management.)

Warning to executives

Flager shared with me some highlights of a note he sent out to key executives across Silverton’s portfolio this week.

Essentially, Flager said it is “prudent to assume that fundraising velocity will slow from the fast pace we’ve seen as investors take time to process the new macroeconomic environment.”

He pointed to what transpired economically in 2001 (after 9/11) and 2009 (after the economic downturn) as a reference to what people should likely expect to happen this year.

“Most investors react to uncertainty with increased caution. Travel restrictions will also make it more difficult to meet investors,” Flager wrote.

Additionally, he said that valuations will likely see pressure from multiple angles.

“First, volatility in the stock market and declining multiples will inevitably play through to the private markets. Companies that haven’t ‘gotten the memo’ and are still recklessly buying growth and burning lots of cash doing so will increasingly be viewed as risky and will see that risk premium reflected in their value,” Flager continued in his note to executives across Silverton’s portfolio. “In some cases these businesses will not be able to attract additional investment at any price. Do not be one of them.”

He also suggested that if a startup in Silverton’s portfolio is in the middle of closing a round or in the latter stages of a fundraising process, “it may make sense to take additional capital.”

“More runway in this environment could mean the difference between life and death for your business,” Flager said.

In September 2019, we covered how Silverton had filed paperwork signaling its intent to raise not just one, but a pair of new venture capital funds. The firm was reportedly aiming to raise $120 million for its sixth fund, as well as for a $20 million “opportunity fund.”

In May 2018, we reported on the firm closing on its fifth fund, in which it raised $108 million in an oversubscribed round of funding.

Silverton has made 131 knownover its 14-year lifetime at least 42 of them – and had 28 known . Startups it has backed include insurance comparison marketplace , as well as and , a woman’s shaving products startup that was recently acquired by P&G.

Some of Silverton’s more recent investments include participating in Austin-based last-mile delivery startup $10.5 million and cybersecurity company $21 million Series B raise (which was led by , ’s venture arm).

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, now a year past its $250 million deal with Silver Lake, has $132 million in annual recurring revenue (ARR). According to WP Engine, the new revenue metric comes on the back of 20 percent customer growth over the past year.

The figures are eye-catching for a few reasons. First, it’s rare for private companies to share hard revenue figures as they are not required to do so. And, we have a few other data points regarding WP Engine that we can string in a line. Let’s examine, starting with the firm’s 2015 funding round:

• March 2015: WP Engine raises a $23 million Series C, valuing the firm at $120 million, pre-money. (, ).
• Late 2017: WP Engine crosses the $100 million ARR mark. ()
• January 2018: WP Engine sees $250 million Silver Lake transaction, buying out at leat some extant shareholders and providing primary capital for its own use. (, )
• January 2019: WP Engine crosses the $132 million ARR mark. ()

There’s some market quibbling about what to call WP Engine’s $250 million funding event. Given that one of the firm’s co-founders that “[t]he majority of the funds pay back our early investors who believed in us enough to trust us with their money,” it could be called an exit. Or partial-exit. What matters, of course, is what valuation was used when the new monies came in.

We don’t know what the firm was worth at that time, or what it’s worth now. But as a data point, venture capitalist and burgeoning conference magnate . When it reached that valuation mark isn’t clear.

So, what can we tell from all the above? That WP Engine grew its ARR around 30 percent in 2018, depending on how “late” the $100 million ARR mark occurred in 2017; the later the metric was reached, the better its trailing growth rate is.

All told, it’s an interesting set of figures from a firm that I . It’s all grown up!

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