Venture capital is having a bad 2023

From the news: Venture Capital is down, bad

“At a very broad level, funding for this year is pretty much shot.”

Those blunt words from PitchBook lead VC analyst Kyle Stanford sum up the tough fundraising conditions in 2023. In the last six months, there’s been a 48% decline in investment to $173.9 billion and a 19% drop off in deal numbers. Giants like Sequoia Capital have even begun downsizing their funds.

The problem? A general lack of enthusiasm on the part of investors is now coupled with less demand as interest rates keep rising. In short, the free money is over, and investors are pulling back.

Who is winning? No prizes for this one. Generative A.I. is cleaning up, with investors pouring over $40 billion into AI startups this year. But many of these deals are small and show no signs of big exits.

Who is losing? Crypto startups are feeling the pinch the hardest. The market had a major wobble last year, with many of the biggest players caught up in legal battles or completely collapsing (looking at you, FTX). Investment continues to slide, with some reports saying the bottom is still to come.

With many VC firms pushing their timelines into 2024, could 2023 be the year of batting down the hatches and bootstrapping?

From the founder: You’ve raised a Series A — now what?

If you’re looking to raise, there’s no shortage of advice. But what happens when the fundraising frenzy ends? Thankfully, evangelist and former YC founder Gillian O’Brien created a guide for navigating the post-round aftermath with insight from 8 other founders.

Here’s the TL;DR:

1. Celebrate, but not too much — The best time to take a break is right after the raise. After all, if a vacation kills the business, you haven’t architected it the right way.

2. Manage expectations — The new fundraise does not mean the company ‘made it’, and founders are responsible for ensuring everyone is on the same page.

3. Time your press strategically — Press doesn’t lead to sustainable customer growth, but if timed properly, press can provide a nice one-time boost and help substantially with recruiting.

4. Don’t go overboard on hiring— If you’ve just bagged millions of dollars, it’s tempting to rush out and hire everyone. Slow down. When forecasting your needs, talk to someone who’s seen companies that look like yours scale a team.

5. Choose exec hires wisely — An exec sets the culture and mobilizes others. This can be disastrous if they aren’t setting the right tone or moving people in the right direction.

6. Get better at meetings — Your company has to ‘grow up’ a bit. New stakeholders will have higher standards for the way you communicate with them.

7. Get a grip on your financials — If you’ve been DIY-ing your bookkeeping and accounting, now is the time to graduate to a more sophisticated vendor, not only for your own peace of mind but for your stakeholders.

8. Switch your mindset — After the raise, get back to basics. Sales mode off, build mode on. Get scrappy, run experiments, put your head down, focus, and take a good look at what’s under the hood.

👉️ Develop your post-round strategy here: So, You Raised a Series A — Now What? I Interviewed 8+ Founders to Find Out

Sweet Tweets

Let us hear it

What did you think of this email? Tap your choice below and let us hear it