You don’t have to be an economist to understand the myriad of forces exerting downward pressure on startups today.
Aside from the legions of investors keeping their powder dry, are your annual sales growing faster than inflation? What percentage of your sales force has experience working during a recession?
Amidst the fear, there’s also good news: Investors are adjusting their expectations to meet the new reality, meaning “sharper methods for evaluating success will emerge,” predicts Lonne Jaffe, general manager at Insight Partners.
Rather than chasing growth the way a plant reflexively bends to the brightest light, he says founders should prioritize more meaningful “efficiency metrics,” such as:
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- Gross retention rates
- Lower CAC
- Average sales per seller
- High gross margins
Looking ahead, he recommends founders consider M&A options now before a predicted wave of consolidation hits private markets in the coming months, and also examines why startups in “areas of tangible innovation” such as generative AI will have it “relatively” easy to collect money. .
“We enter 2023 with a large number of known issues and a limited ability to predict what lies ahead,” says Jaffe. “One thing’s for sure, though, this year is more about nailing it than scaling it.”
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Editorial Manager, australiabusinessblog.com+
A timeline for M&A startup processes: key steps and factors to consider
I’ve worked with many early-stage founders, and they all had one thing in common: They were absolutely, completely convinced that they could successfully build and scale our business.
In reality, “not all companies are best positioned to go it alone, and that’s okay,” writes Vishal Lugani, general partner and co-founder at Acrew Capital.
In a detailed guide to the M&A process, Lugani provides a week-by-week deal timeline that breaks down each step between the search for offers and the post-closing integration.
A lot can happen in the months it takes for a deal to close, so the article includes strategies for selecting an acquirer, maintaining product momentum, and managing your team (and investors!).
How can fintech startups survive the VC winter?
“All else being equal, embedded banking startups and new fintechs will live and die based on the user experience they provide,” said Peter Hazlehurst, CEO and co-founder of Synctera.
With so many fintech investors looking for startups that already have “concrete customer appeal,” Hazlehurst shares tried-and-true user feedback gathering tactics that can help companies get an MVP out the door in weeks, not months.
“Drilling through to a lean, mean, meaningful MVP helps startups position themselves to reach the next leg of their journey,” he writes.
5 cloud trends to keep up with in 2023
Despite the downturn, Gartner estimates global IT spending will reach $4.6 trillion this year, up 5.1% year over year.
Josh Berman, President of C2C Global, has identified five trends that cloud technology startups should consider as they build product, fundraising, and recruiting plans for the new year.
“The promise of these technologies is too important to ignore,” Berman writes.
A flat year for crowdfunding isn’t a bad sign at all for fledgling startups
The global equity crowdfunding market slowed in 2022 but certainly outperformed venture capital, reports Rebecca Szkutak.
Although crowdfunding dropped from $486 million in 2021 to $426 million last year, “I’ve seen a lot more Y Combinator companies, Techstars, and venture backed companies,” said Krishan Arora, CEO and founder of the Arora Project.
“They’re looking at getting another $2 million, $3 million in a bridge round,” he said. “There is more higher quality deal flow trickling into this space.”