“Venture debt might not work for all startups but it’s definitely a very viable option for more mature startups to close the funding gap.” -Shruti Gurudanti, Rose Law Group partner and director of corporate transactions
By Forbes
CB Insights, a leading research organization that tracks venture capital financings, recently released its report on the state of the venture capital market in 2023. The long story short is: it was a terrible year for raising capital. The global market was down 30% year-over-year, to its lowest levels in six years. The U.S. market fell to its lowest levels in 10 years, down 21% in the last quarter alone. Gone are the days of “unicorn” creation (companies worth more than $1 billion), mega-sized financings, and excessive valuations. And, investors simply can’t exit the investments they have already made, with an anemic IPO market. A pretty bleak picture if you are a startup raising capital today. So, what are you supposed to do to navigate these choppy waters? Buckle up and read on, for some useful tips based on my past experience surviving markets like these.
Step 1: Batten Down the Hatches—Cut Expenses
Don’t fool yourself into thinking your story is better than all the others, and that you will have no problem raising capital. Once VC’s put their heads in the sand, it is pretty much across the board, with a few exceptions if you happen to be in a hot market like artificial intelligence, fin tech, retail tech and sustainability. So, that means you need to get your expenses down to the absolute bare minimum. And, yes, that most likely means making the tough decisions of downsizing your staff, to survive the storm.
