'Pre-revenue startups have zero exposure to market, and generally benefit from crises, because they can get cheaper workforce this assumes employees will still want to join a company with financing risk.'
TweetShareShare We talked with several experienced venture capitalists to get their take on what founders should expect in the next several months as they’re fundraising.
Founders need to show adaptability and that they are thinking about the long-term impact of current events. What is next and how does that impact their business and its strategy. Furthermore, it is important to realize that rounds will take much longer to close and this needs to be baked into fundraising plans. Now is not the time to optimize valuation, but to get cash in the bank and focus on solving pain points that add real and tangible value.
To that end, there will probably be a renewed focus on fundamental metrics for different stages ; some funds may have been willing to go in earlier but with budgets tightening we will want to see real proof of revenue and stickiness before we pull the trigger. What is the case for investing in technology at the earliest stage besides the fact that returns are the best and investors are seeking a long term game now? Early stage pre-revenue tech startups become in relative terms less risky.
As early-stage digital health investors, we’re watching an incredible dichotomy unfold—some of the greatest macroeconomic uncertainty we’ve ever seen, alongside urgent, enormous demand for connected healthcare solutions. With record levels of committed capital in the coffers of VCs and PE firms, investment activity may be tempered in the short term, but we expect to see a flight of capital to quality with competition for the best deals.
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