have chills Although not evenly, they have entered the global startup market. Venture capital caps are declining in most regions, and the decline in stock prices of large and small tech companies has dampened sentiment about the future value of high-growth and often cash-hungry startups.
The market’s view of specific companies is changing as the end of the long-term startup boom that first formed after the 2008 financial crisis and lasted largely until the last month of 2021 is shaking.
Exchange explores startups, markets and funds.
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Every business cycle has winners and losers, heroes and villains. Some early winners turned out to be losers. The mega crossover fund Tiger has evolved from a market-dominant change agent in tech finance to a back holder. SoftBank’s various Vision Fund activities are experiencing difficulties. And some cryptocurrency investments that seemed like a huge win are gone.
Thorben FrieerCEO of wingback (YC W22) told TechCrunch earlier this year that many of the founders he spoke to had decided to hold off on fundraising in the current situation, while “across the ecosystem” other founders said, “If you have to raise the right funds, it’s basically January now.” You should cut back on what you planned to raise again. in half.”
The winner and loser scorebook is not that difficult. But hero and villain ledgers are a bit more difficult. However, the start-up market is changing so rapidly that a whip is cutting among the investment tier. And some start-up players are annoyed by accelerators, especially Y Combinator, as well as late-cap pools that have poured too much liquidity into the startup market. Let’s talk about it.
return of horror
The venture’s latest letter is once again a recession letter. We last saw these notes when COVID-19 first hit the world outside China, causing economic catastrophe and lockdowns. Investors have warned startups to tighten their belts for bad times. But bad times have never come for most of them, as we now know.
Instead, ironically, the pandemic has become a kind of facilitator, pushing more business to tech companies that have helped other issues work remotely. Accelerating digital transformation has been another tailwind boosting the tech sector, providing opportunities for startups.
The latest warnings from venture capitalists are leading ourselves to appear more often than we’ve seen in 2020. Natasha Mascarenas Over the weekend, “Everyone is taking notes on their startup Black Swan.” Among the various companies that have sent advice to their portfolio is Y Combinator.
Y Combinator or YC is the world’s most well-known accelerator. Its expanding cohort size, biannual cycle and “standard deal” have made it a trend-setting startup program. Significant enough to influence the overall direction of the early stage market for funding startup tech companies. and after start giving life “About $20,000 for 6% of the company”, YC conditions were raised In 2020, “$125,000 for a 7% stake in post-money SAFE” and prorated rights “to 4% in subsequent rounds”.
Things changed again in early 2022 when YC added a $375,000 bill to the transaction. In essence, YC preserved its ability to initially recover 7% of the startup’s stake, and additional capital was provided to portfolio companies to put them to work.
Over the past few years, YC has raised its valuation threshold for startups from approximately $333,333 (6% of businesses $20,000) to $1.79 million (7% of businesses $125,000). Moreover, the additional capital currently offered on an unlimited basis would have worked to solidify early-stage startup expectations that accelerator valuations are valid in the market.
Abinaya KonduruInvestors in venture funds focused on the Midwest M25In an interview with TechCrunch, her firm added that “even years ago, I was skeptical of the valuation practices of some national accelerators from an investment perspective.” out by name — “It made it more difficult to consider these companies as investments. [M25] Stop staring.”