no doubt About it: The market going into 2023 won’t be what it was at the end of 2021, when growth at all costs sometimes trumps common sense.
But the market isn’t as “sluggish” as it seems. There is plenty of money to invest, and founders with the right purpose, business model and traction need to remember that funding opportunities can still be found.
Sky-high valuations and questionable investments in 2021 have brought investors back to their senses and prompted a more thorough analysis of investment opportunities. This return to discipline, with a more moderate and steady volume of pitch deck interactions from investors on a weekly basis, is not surprising. The pace in 2021 is not sustainable, and the money invested is bound to slow down. However, it wasn’t for lack of money.
As of September, there are About $290 billion of “dry powder” Floating around — enough to drive venture capital for the next four years — but founders are finding it harder to raise money than in years. Instead of demanding growth at all costs, VCs took a deep breath and preferred to wait.
Unlike in 2021, unsuccessful early decks today don’t get as much investor time as successful decks.
In this environment, founders may be discouraged, but they need to remember that they also have “currency”. Founders should do their own due diligence by identifying the investors that best fit their needs and focus on their core strengths and value proposition.
Due diligence isn’t just for investors
Founders should always be eager to meet with investors, but they should also aim to reach a variety of investors.
Just like a product is dependent on the market, founders are dependent on their investors. Not all investor meetings are created equal, so founders need to research their potential investors thoroughly.
DocSend Recent pre-sowing report It found that by 2022, the average number of investors contacted decreased from 69 to 60, but the average number of meetings scheduled increased from 39 to 52. This could be a sign that early founders are starting to do their due diligence too, vetting investors and bringing different expectations to each meeting.
