We’ve all seen the news: the startup world is navigating challenging waters. As a founder myself, it’s hard to talk about these topics, but we have to for one reason: I’ve noticed that the headlines fail to dive deep into what’s happening and why it matters.
The past 13 years have been booming for startup investors. After the 2008 crisis, investment was bullish, to say the least. Until 2021, startup funding had reached more than a trillion dollars in total, and the effects were visible. All the funding rounds increased in size, from seed to late-stage, and so did the valuations. This created thousands of unicorns, and massive IPOs soon followed.
Well, nothing lasts forever, and investment is no exception. There were warning signs in the past, but even in 2021, the money didn’t seem to stop. That’s until 2022 came alongand a drop in venture investing was visible in Q1 which continued dropping in Q2, and it hasn’t stopped.
Now, why did this happen? The pandemic did shake the economy, but it was only the start. Rampant inflation, rising interest rates, and other geopolitical challenges have taken a toll on fuel prices, supply chain, and economic uncertainty. The conditions are now adverse. They place a lot of pressure on investors, who in turn, pile the pressure on startups. Trust me, it’s not easy; I’ve been there, facing budget cuts and investors tightening their grip. Things are changing at a drastic pace. Big names such as Tiger Global Management and General Catalyst have reduced their investments by more than 77%. They aren’t the only ones; 60% of the world’s biggest investor firms saw a drop in deal sizes.
This behavior pinches the funds going to startups, affecting them in different ways. Late-stage startups, which have seen significant funding in recent years, don’t have an advantage. These startups were entering an aggressive growth stage, which involves spending, but now it’s the total opposite. It’s penny-pinching, job cuts, and dire consequences for future valuations.
It gets a bit more interesting with early stage startups. They need funds to set themselves up for growth, and now it’s not there. Companies like Tiger Global Management are looking to invest in early stage startups instead of later stages bu t with a caveat: investors will most likely dish out more deals, but with smaller amounts. So, in an already competitive for early-stage startups it’s about to get tougher.
The smaller deals mean a drop in early-stage valuation, and the snowball continues. This is the correction that everyone is talking about. Investors have to correct what they perceived the market was worth. It will shake us to a point where several articles tell us what to do in these challenging times. I hate to say it: it’s time for moderation, but don’t let that slow you down. As a startup founder, it’s not an easy road, and I want to see you on the other side.
How a teenager raised $700,000 for his startup
The idea began as “Airbnb for stuff” in 2021. Zachary Laberge created a platform where people could rent, well, stuff. From tools to Kayaks, to anything else you can think of and, at first, it worked. This first iteration grew but not enough, so he faced the tough decision of pivoting. That’s how he created Frenter — a business-to-business operating system for rental companies. Oh, and he did all this by the age of sixteen.
Laberge breaks many rules in the startup world, and his age is the one that stands out the most. In fact, he recognizes that investors worry about his maturity and skill, but not everyone feels that way. As a result, the teenager raised $700,000 in the company’s latest funding round. Before that, Laberge managed to raise $80,000 in cold calling alone.
At the same time, Laberge is confident that, when he’s eighteen or nineteen, age will matter less. Instead, he wants people to focus on his startup, which already has eight employees. As well, Frenter plans to use this latest funding round to expand all over Canada. As for Laberge, he plans to graduate from high school, and that’s a great goal.
More than $250 million raised
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Is this the perfect Ponzi scheme?
A Canadian man entered the Fortis hospital in India with intense vomiting and diarrhea. Hours later, he was dead. The next day, his body was on its way back to Canada.
Local authorities saw nothing suspicious. Instead, they labeled the death as an acute case of gastroenteritis and intestinal perforation. But, the moment this man died, he took hundreds of millions of dollars with him.
Foursquare founders want a mirror-world
Dennis Crowley created what would become the most popular social network for a little while. Even President Obama had a Foursquare account. Now, Crowley is back at it. Only this time, mystery surrounds his idea, and people are intrigued.
LivingCities wants to change how we interact with the world. You can think of it as a mirror world. It will be an alternate reality in which virtual spaces merge with real-life elements, such as cities and natural formations. Plus, it will integrate stores that only exist in said universe, and that’s all we know.
Cryptic descriptions aside, the idea has potential. After all, web3 has seen a dramatic rise in popularity in recent years, but there is one clear challenge. Speculation has caused seismic shocks in the crypto-economy. So, Crowley and his team need ways to dive into the future without relying on the present. That’s quite a challenge.
Originally published at https://slidebean.com.
