My answer depends on whether the company would answer yes to any of the following questions:
1) Have you raised an overpriced round in the last 18 months, one that you know was excessive?
2) Are you selling something that isn’t really a must-have product to startups or other tech companies?
3) Need to raise a large amount of growth capital in 2022?
4) Are you struggling to achieve unit profitability?
5) Is the money after your last round north of $30mm and you have yet to show significant, repeatable revenue traction that delivers positive contribution margins?
If so, yes, then I would say I would be concerned.
But you know what? I would have been pretty worried anyway. It’s never good to sell a product for a loss on every sale before even paying overhead, or to sell something that’s a vitamin and not a medicine.
Even “needing” growth capital can be problematic. Growth capital should be the kind of thing you choose to take, you don’t have to take. If your business model literally cannot function without raising another $50-100mm, then you are playing a pretty dangerous game that has always relied heavily on friendly capital markets that could disappear.
The good thing is that what I wrote above does not apply the majority companies Most companies, by number, are small, new, and cheap, or if they’re still alive, they’re probably somewhat in control of their own financial destiny and have a business model with an eye toward profitability that makes sense.
For these companies, the next round may not be at the valuation they wanted, but it will still be there, because despite what you hear about pullbacks, there are yet much more money chasing much rarer good ideas.
VCs have to invest to get their returns, and eventually they’ll want to raise the next fund to apply more fees on more fees. The incentive is too strong. Even after the worst period in history for VC: VC funds returned to the market in 2004, no more than four years after the crash, in line with the historical pace for getting back into the investment game. After the 2008 financial crash that nearly bankrupted the entire global economy, VCs took a break of about nine months before getting back to normal.
This time, I think VCs will come back in the fall and even still be somewhat active this summer.
The important thing to note is that in some respects things were not as crazy as they seemed, but in others they were much worse, and the correction, in the historical context, will not seem so onerous.
Let’s see some nice graphics.
first out everyone did not receive funds for the last year and a half. It was still pretty hard, although it didn’t look like it.
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We all know the importance of staying on top of the ever-changing market and constantly adapting to satisfy our customer’s needs. With changes in technology and customer behavior, it’s easy to feel overwhelmed and frozen by the prospects. However, at Ikaroa, we understand that the biggest challenge isn’t in understanding or predicting the market, but in learning to embrace its dynamic nature.
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To help us reach our goals, we decided to leverage technology and invest in the development of our own products. This enabled us to stay in touch with current customer trends, responding quickly to changes in customer preferences. We also adopted a data-driven approach to our decision-making, ensuring that all our policies were based on actionable insights into the customer’s needs.
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We learned firsthand that the most important part of success in the digital era was to stay flexible and embrace new trends. It’s easy to get overwhelmed, but with the right attitude, the digital market can be a huge opportunity. By understanding what customers need, staying on top of trends, and making use of technology, Ikaroa has embraced this challenge and has seen great success.
