Why founders need first believers, no matter the market.
It’s no secret that it’s a white knuckle time for startups across the planet as volatile public and private markets, rising inflation, interest rate hysteria and geopolitical unease converge to create the perfect economic storm.
For ambitious founders at the helm of capital-hungry, high-growth startups hot off the frothy back of a two-year pandemic investing boom, raising follow-on funding and holding valuation in these janky times is going to be pretty bloody tough.
Startup accelerator Y Combinator were early harbingers of the black swans to come for startups and VCs, warning in a letter to their founders: “No one can predict how bad the economy will get but things don’t look good … the safe move is to plan for the worst.”
Recent staff slashing in the US tech sector is testament to this worsening, with 17,000+ workers already laid off in mass job cuts in 2022, according to Crunchbase News.
Paul Bassat, Cofounder of Square Peg Capital, also recently commented: “All of us (founders, VC’s) have worshipped at the altar of growth and largely ignored business models. Rapid growth is a necessary but insufficient condition to building a remarkable business. The growth has to be sustainable.”
So maybe the bull market did need a correction. Perhaps some hype bubbles did need to be popped, so propped-up startups with unprofitable growth are given a reality check, and those with sustainable revenue models, robust unit economics and capital efficiency can come to the fore (and front pages). As Warren Buffet famously said: “ Only when the tide goes out do you discover who’s been swimming naked.” Yup.
But in the current dystopia of this downturn, if we batten down all the hatches and suppress access to hard-working growth capital - and critical early stage capital for those talented founders at the top of funnel - we will slow the pipeline to a trickle at a time when we desperately need to find and support ambitious, audacious and game-changing ANZ entrepreneurs who are willing to tackle big problems worth solving, and maybe just change the world. (We sure do need a bit of that right now …!)
Founders will always need first believers. And investors are pragmatic optimists who believe in building no matter the market.
That’s why alongside some incredible investors in the ANZ ecosystem I’m committed to continuing to invest in, mentor and support early stage founders in our Flying Fox Ventures portfolio, via Blackbird Giants and am also now stoked to invest in the upcoming Startmate W22 cohort (soon to be announced!) Watch this space to meet some incredible founders soon :) ✨ ▶️
So who else is doubling down as a a first believer and riding this market out?
Love to see a show of hands. 👍🏽💡❤️