The Entrepreneur’s Survival Guide to a Cooling Economy
The rocky economy has certainly been tough on public markets. For venture capitalists, the story is more complicated.
On the plus side, valuations are lower. And the opportunity to get into competitive deals increases.
However, for many VCs who took the lead in a past round, it also brings hard choices on whether to support their portfolio companies with more capital and also intensified oversight of those companies to ensure they can survive. In addition, many VCs deployed their capital fairly quickly during recent flush times, with VCs less able to raise cash now.
And what about the entrepreneurs? Especially for those who act quickly and in a disciplined fashion, the news is not all bad according to these industry watchers.
VIDEO
Operating During a Downturn
Craft Ventures
David Sacks and Jeff Fluhr from Craft Ventures give some perspective on the current markets, then provide advice for entrepreneurs. Position yourself for success by strengthening your key metrics like growth, gross margins, payback period, etc. Watch your expenses, grab crash while you can, and act fast. The silver lining: Apart from raising dollars, everything gets easier, including hiring and marketing.
ARTICLE
Boom Times Are Over
Taylor Soper, Geek Wire
GeekWire’s roundup succinctly summarizes advice for startups from major VCs and links to the firms’ full blogs. Among the tips: Cut expenses, extend your runway, accept your valuation has already taken a big hit, and develop plans A-D to cope with the unexpected. Maveron’s Jason Stoffer notes that there are some tough love lessons in store for the less experienced: “Some founders never learned that ultimately businesses need to have strong underlying economics and be self-sustaining.”
ARTICLE
The Strong Survive
Kelly Bertog, Medium
For some much-needed optimism, this 2020 article reminds you that there have been plenty of tough times before…and plenty of winners in those tough times. From Disney to FedEx to Electronic Arts, many giants have launched and survived in challenging markets. I also think there’s useful perspective to be had from article’s intro. There the writer predicted “a long-awaited recession that will shake the world to its core.” Not so much. Proving that market forecasting is still not the science we like to believe it is.
Read the Article
Visit av.vc/blog to read more.
Alumni Ventures (AV) provides smart, simple venture portfolios to accredited individuals. PitchBook listed AV as the third most active VC firm in the world in 2021.
Mike Collins is the Founder and CEO of Alumni Ventures. He has been involved in almost every facet of venturing, from angel investing to venture capital, new business and product launches, and innovation consulting. He began his career at VC firm TA Associates. He holds a BE from Dartmouth and an MBA from Harvard Business School.
