A common precursor to "...it's going to be a bumpy ride", buckling up isn't meant to scare you. Instead, it's meant to remind you of what you already have. With the 10x-valuations-to-revenue-bubble popping, founders need to stop strategizing on who their next investor will be and instead focus on absolute alignment with their current shareholders. Does changing the world mean the same to you as it does your investor? Once the answer to that question is yes, startups will have the foundation, support and advisory needed to weather the storm.
In Sickness or in Health.
For better or for worse, investors and founders now have identical problems. While many investors used to focus on growth ratios while founders focused on the next raise, both parties are now focused on survival. Again, this is not meant to scare you, but to remind you of what you already have. Founders and investors can now sit at the table to address a mutual challenge and find a solution.
What about the single-and-ready-to-mingle companies who are looking for their first investors? This is not only a list of takeaways for already-betrothed investors and founders, there is also knowledge to be had for the single folks!
Having a commonality with VCs may be a huge advantage in finding a first round of funding. Fundraising startups can now leverage this commonality to find a perfect match in an investor with a mutual list of needs. Besides, European investors raised €20 Billion last year (Dealroom.co), so there's still hope!
Employees Are Friends, Not Food.
Remember that venture capital is a partnership, and to work, it needs the right people.
VCs are no longer looking for the next non-differentiated grocery delivery company that will compete with a diluted market with hundreds of millions in marketing budget. They're looking for a team that will solve real problems. And that all starts with a startup's people.
Founders should be asking themselves:
- Do we have the right staff in place, or do we have a hiring strategy that indicates how and when we will?
- Do we have our team's buy-in on the vision?
- Do we have a plan for how we will include employees in the cap table via an ESOP, SARs or other equity plan?
Having concrete plans for how the company will generate staff buy-in and curate a powerful culture is a great first impression for VCs who are looking for some stability.
A Surprise Ending.
TNW Conference culminated with a buzz around how the startup-killing economic slowdown will end. The answer is...entrepreneurs?
That's right. Almost a Catch-22, there is a valid argument to be made that the economic slowdown needs startups to recover and rebound. That is, despite global supply chain issues, massive inflation and a slowing of capital investment, ultimately it will be positive relationships between startups and investors that create new markets and market-changing solutions that can change the tides of the global economy.
I mean did you really expect an ending where the good guys lose?
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