As you are aware, the startup funding landscape has been changing over the past several months. Rather than funding growth at any cost, priorities are now rapidly shifting to achieving profitability, conserving cash, and shoring up balance sheets.
Austin Guyette, Partner at Voyager Capital, joined our weekly all-hands to share a VC perspective on the current funding environment for startups. Here are a few key takeaways from our conversation.
Lighter Capital: How do you see the current economic climate affecting the startup ecosystem?
Austin: “The last two years were not and will never be normal. Valuations skyrocketed in 2021 and riskier assets were funded. What we’re seeing now is constriction of available capital and valuations resetting back to the trend lines before the pandemic (2017-2018).
Over the last few years, capital was widely available, and it was acceptable for companies to focus primarily on growth. Now, it's important for companies to be good stewards of their capital and grow efficiently, even profitably if possible, because of the uncertain fundraising environment.”
LC: What is your guidance to your portfolio companies?
Austin: “We categorize them into 3 types of companies:
Company 1: Funded and Operating Efficiently
Recommendation: Budgets may tighten, but keep going. Stay optimistic and disciplined. Markets go up and down–this too will pass.
Company 2: Operating inefficiently and burning cash
Recommendation: Reign it in and reign it in now–cut something, lower revenue target, decrease headcount–to grow efficiently.
Company 3: Executing and burn runway is within target
Recommendation: If you can raise at a reasonable number now, do it, or explore alternatives. It’s better to have funding secured now to control your destiny instead of waiting.”
If you are similarly looking to control your destiny by raising capital, now may be the time to reconsider revenue-based financing.
In this tightening funding market–where the risks of down rounds are higher–you can still raise cash quickly with Lighter Capital. Keep your equity and get up to $4M in non-dilutive funding to extend your runway, shore up your balance sheet, streamline your cash flow, or make necessary hires to drive more growth (and profitability).
Apply today to see how much funding you may receive.
Questions? Connect with our investment team today at firstname.lastname@example.org.