First of all, if you’re a real startup CEO, these hard times aren’t so hard if you look at the right indicators. I’m interacting with startup money people all the time — angels, VCs, superangels, family offices, even some PE these days. There is still a lot of money out there, lots of deals happening. VC is still roaring, with the exception of about 2 months of fear over the NASDAQ and Crypto Crash.
The only thing that ‘s changed is valuations, and those aren’t much different than they were 2019-2021, which is pretty high.
Early stage angel investors like to find little gems before anyone else, they look for the $10 million valuation seed or pre-seed opportunities. That hasn’t change, money hasn’t “dried up”. I get angels asking me still every week for leads one early-early deals. If seed funding is good, follow on from these same investors later should be good also, unless the world falls apart over the next couple of years.
As they always have, investors do want a few things — a very strong level of belief in the founder(s), something new and not just a clone of existing businesses, and high energy from the startup.
I saw a very strong Silicon Valley angel say the other day that, for certain founders, he would give them $1 million without knowing the product or valuation, just betting on the founders he knows will win again and again. That’s the confidence and trust that prevails in the valley — today.
It’s also a testament to the power of the momentum of the current retooling of modern business. This recession can’t stop that.
So, the valuations are lower. Is that fair? Is that VC greed taking advantage of the stock market?? A little bit, but valuations, especially for mis and late stage were they too high and needed a reset. That couldn’t have gone on forever. And they’ll come back. Depending on where your company is, it shouldn’t matter anyway.
There are angels who look for early early deals, try to find $5M to 20M valuations. Those valuations aren’t going down.
But still, you should reassess, check your priorities, tighten things up.
1. What are people doing now because your product doesn’t exist, what is the pain you will solve?
2. What is it that you know about your specific niche that other companies do not?
3. How and when does this make revenue and profits? What is the growth graph?
@tomnora