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Are Investors Right To Be Bearish In The Shifting Startup Landscape?

originally published: 2023-09-13 15:19:48

I had a great conversation with Karen Grant and David W. Wright, ICD.D about investor confidence in our current startup landscape. We’re still in a period of uncertainty and from two investors’ viewpoints, founders should follow some sound strategies in developing a sustainable business including attracting the right investment.

Some key points:
💰 “When interest rates go up, valuation multiples come down. The glory days of the VC era are behind us”

💹 “Interest rates have just recently spiked, pushing down valuation multiples. This makes it difficult for investors to secure excess returns, even if a company’s valuation increases over time”

– Why there is less propensity for VC’s to invest in Pre-seed: “The valuations are usually too small for VCs”

– Angels and Pre-seed: “Angel investors are willing to invest based on the potential of a business idea and the capabilities of the founding team”

– “Investors have been gradually exiting the scene, with historical levels of returns becoming less common lately…. They either age out; they actually hit a point … where it just doesn’t make sense to make new investments that may take ten years before they see the return.”

– 🏦 “The value of bootstrapping: the best source of capital is sales because it does two things: it keeps your staff fed and watered and it adds value to the company at the same time.”

– As you grow and bring in investors, expect equity dilution – “You may not own 100%, you’ve still expanded your own net worth. And that’s why you take on the dilution as long as you can expand the value of the company.”


Hessie Jones – Innovations Manager at Altitude Accelerator

This article originally appeared on Forbes

Altitude Accelerator
Altitude Accelerator is a not-for-profit innovation hub and business incubator for Brampton, Mississauga, Caledon, and other communities in Southern Ontario. Altitude Accelerators’ focus is to be a dynamic catalyst for tech companies. We help our companies grow faster and stronger. Our strength is our proven ability to foster growth for companies in Advanced Manufacturing, Internet of Things, Hardware & Software, Cleantech and Life Sciences. Our team consists of more than 100 expert advisors, industry, academic, government partners. The team helps companies in Advanced Manufacturing, Internet of Things, Hardware & Software, Cleantech and Life Sciences to commercialize their products and get them to market faster.

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