As public markets falter and people clam up at rising interest rates and inflation, the ripples are being felt throughout all levels of the financial world – including Silicon Valley.
In 2021, venture funding reached an all-time high of $669 billion. That’s almost twice as high as the 2020 figure. Much of this momentum was on account of the overwhelming optimism garnered by the tech sector.
Yet for some of these startups, this optimism belied reality.
Regardless of the present bottom line of these companies, money flowed freely into their pockets on the back of forward-looking projections.
After all, that has largely been the name of the game in startup investing (and public trading in all too many tech stocks).
However, as the tech-focused NASDAQ finds itself in a freefall, the optimism surrounding private tech startups felt throughout the pandemic has begun to erode. Venture funding is drying up as a result.
So, where there was once a rat race to fund startups out of a fear of missing the next big thing – which meant money going to companies without any real traction to support projections – there is now a horde of cautious investors.
But caution doesn’t preclude success…
If anything, it often precedes it.
More often than not, there’s danger in growing too big too fast.
Just ask Cameo, OnDeck, and Gopuff, all of which achieved valuations of at least $1 billion in the past few years but recently announced layoffs on account of the economy’s slowdown.
It’s one thing when growing profits spur a company’s growth. It’s another thing entirely when the company can’t sustain that growth without outside investment.
So, where some startups previously hosted another round of funding to continue on their current trajectory, those same ones now find they must shed weight to maintain altitude.
As a result, there will be increased focus – and likely investment dollars – paid to those startups able to demonstrate tangible growth as opposed to those touting ethereal gains.
What this means is that the need for discernment between those with inflated value and those with real value is greater now than ever.
Where there will undoubtedly be angel investors who lament the lack of inflated valuations regardless of legitimate cause, savvy investors will recognize this new landscape for what it is: An incredible opportunity.
All that’s needed is due diligence and an understanding of positive and negative indicators…
The lack of mirages can be beneficial. In their place are startups demonstrating their value on balance sheets.
Lucky for you, balance sheets are practically bedtime reading for the Angels & Entrepreneurs Network research team.
In fact, finding startups with legitimate claims to success is our bread and butter.
So you can rest assured that the deals we deliver to your inbox on a monthly basis aren’t built upon a foundation of toothpicks and bubble gum.
Because while this recent economic downturn may have impacted the outlook of Silicon Valley and venture capitalists, it hasn’t done a thing to our rigorous vetting standards.
That means you can be confident knowing your investment portfolio isn’t comprised of snake oil, but rather startups growing sustainably.
And that, despite the overall industry’s slowdown, your quality deal flow will be unaffected.
The Research Team
I am very excited to join the A&E Network and looking forward to working with you all on this incredible opportunity.
Sincerely,