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.
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!