The VC Winter is coming (not [too] bad)

I saw multiple media outlet talking about the upcoming VC winter in a very pessimistic and negative way, but I am actually a bit more optimistic about the overall outlook of the startup world.

Some thoughts:

The Nasdaq is down more than 23% since the beginning of the year.

Global venture funding notched $47 billion in April, according to new Crunchbase data. That’s still high, but it’s the lowest figure we’ve seen in the past year. It’s 10% lower than even levels in March, and 12% lower than funding figures in April 2021.

Interest rates are going up, and borrowing money will soon be more expensive.

Some inevitable but healthy adjustments:
1) Quality company fundamentals are now more relevant (GOOD)
2) Company with $1M ARR will not be valued at $1B any longer (EXCELLENT)
3) A pullback (on valuations) and hesitation of later stage deals is coming (NECESSARY)

Founders –> Keep in mind: many Venture Funds just raised their biggest funds to date, and they will need to invest this money. A temporally slow down is inevitable, prices need to stabilize, right now is very hard to know where to price a company, and many asset managers need to make hard decision and accept down-rounds or write off investments.

Adjust your burn rate, plan at 24 months – keep innovating and do not panic!

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s