As I reflect on the current state of startupland, I’m reminded that the artificial walls between companies at different stages of growth are more like a mirage than a reality. We’re all in this together, and it’s time to acknowledge that everyone is affected by the shifting landscape.
The Founder-Friendly Market: A Myth or Reality?
As the late-stage market cools down for tech companies, early-stage investors seem to be less impacted because their portfolio companies are years away from an exit. But is this truly the case? The latest report from PitchBook and NVCA suggests that venture-backed companies attracted nearly $71 billion during Q1, which may not be as impressive as the previous quarter in 2021 but still outpaces pre-pandemic totals.
Seed Stage Deal Sizes: A Return to Normalcy
While it’s true that seed deal sizes are starting to look more like historical norms rather than absurdly oversized, valuations continue to grow with a median pre-money valuation of $12 million. This dichotomy is a challenge for investors who must pay a premium for what they’re getting.
Fundraising for VC Firms: A Story of Consistency
VC firms have continued their momentum from 2021, raising $73.9 billion across 199 funds. Last year saw the closure of $230 billion in new funds. It’s clear that venture firms are changing how eager they are to deploy capital but aren’t shifting their appetite for raising money.
The Semblance of a Silo: A Disconnect Between Private and Public Tech Companies
To me, this proves that the semblance of a silo between private and public tech companies will likely continue. It’s hard to discern how startups are being impacted beyond explicit examples of layoffs or pivots.
A Nuanced Approach: VC Funds and Dry Powder
The report highlights a crucial nuance – a large portion of new money in VC is isolated to a few funds, meaning that the dry powder is only given to a select few decision-makers. This means that the insulation or hopeful protection that new capital will protect early-stage startups from an immediate slash in worth isn’t true for every startup.
The Narrative: ‘VC Is Back?’
All Raise VP of marketing Caroline Caswell aptly puts it, "The narrative that ‘VC is back?’ … It is back for the same people as it was before." This sentiment resonates with me, and I believe it’s essential to acknowledge that we’re not seeing a complete reboot but rather an evolution in how venture capital operates.
Breaking Down Silos: A Call to Action
It’s easy to confuse a silo and a semblance of one. We can benefit from the growing mindshare around decentralization and alternative assets without being a web3 company. Similarly, we don’t need to be an angel investor to adopt the idea that our advice is worthy of equity in a company.
Prioritizing Profitability: A Shift in Focus
As I’ve hopefully shown above, you don’t need to be a late-stage company to refocus on and prioritize profitability. It’s time for us to acknowledge that everyone is affected by the shifting landscape and work together to find solutions.
The Future of Venture Capital: A New Era of Collaboration
We’re entering an era where venture capital will require more than just financial acumen. We need collaboration, empathy, and a willingness to adapt. By acknowledging the nuances and complexities of this new landscape, we can create a more equitable and sustainable future for all stakeholders involved.
The Takeaway: A Call to Action
In conclusion, while it’s easy to get caught up in the narrative that VC is back, we must recognize that this is not a complete reboot. We’re seeing an evolution in how venture capital operates, with a focus on collaboration and prioritization of profitability. It’s time for us to break down silos and work together to create a more sustainable future for all.
