Is 2024 The Year of Investor Restraint and Startup Resilience? 8 Experts Weigh In (Part 3)

For Speakman, whose venture fund invests in later stage clean tech companies in the plastics and polymer upcycling and energy storage to name a few, cash flow will always be king but states, that “in periods of uncertainty like we are facing, managing cash sets you apart and keeps you in control of your destiny.”

Melo, Managing Director of MATR, investing in deep tech, concurs. It’s about optimization and encourages founders to “continue doubling down on understanding where the growth is coming from, practicing through their metrics” and remaining lean.

Sarkar, of Advaita Capital, which invests in later stage companies in deep technology and decarbonation, emphasizes startups need to prioritize their profit margins with continued pressure on those currently in the growth stage to be IPO ready. More specifically, “their valuation needs to reflect their ability to generate cash. We may see some named late-stage startups like Stripe and a few others IPO depending on macro market volatility.”

Shambhavi Mishra, formerly of McKinsey and IBM, who has executed high value venture capital investments and exits globally within consumer tech, education, and gaming, likewise counsels startups to aggressively focus on capital efficiency with a sharp focus on measuring revenue growth, customer retention and a path to profitability. On valuations, she advises, “Given the lack of easy accessibility to capital, founders should not get fixated on valuations, but solve for capital availability and opportunities to extend their runway. It cannot be growth at all costs.”

Nishimura, who advises companies through a cultural lens, reminds us that in previous year the question has been, “how can I build and grow a great culture as I scale my team from 50 to 200?” He argues this has fundamentally changed to “how can I maintain a great culture as my team shrinks from 50 to 20?” Nishimura sees the layoffs having direct impact on the cultural sustainability of the organization,

“In a year where burn rate, belt tightening and layoffs will likely continue to be heard over and over, startup founders should pay careful attention to the impact all of that is having on their people and on their culture. Are you noticing people are taking more time off? Is there less laughter? Does the office feel less vibrant than before? Especially during times of great change and duress, it’s critical to take a pulse of how every person on the team is feeling. Don’t assume that just because people show up for work, they’re happy. Don’t assume that if someone has a problem, they will come to you. Think of culture as your company’s immune system and take steps to boost it this year. Just as your body’s immune system is made up of different parts like lymph nodes, white blood cells, and your skin; your company culture is comprised of leadership, communication, and hiring practices, among others. When they all work together, you’ll enjoy a stronger, healthier and more resilient company, and be better protected against the bad things that can and will happen.”

Duarte, of BlackTech Capital, a social venturist with over 30 years in the energy industry, sees the eventuality in Artificial Intelligence and advises startups need to gear up for a more effective use of AI and focus on its seamless integration into their products or services. He encourages startups to take advantage of substantial grants and government funds for climate initiatives like the The Inflation Reduction Act (IRA) of 2022 in the US, which has allocated $400 billion in federal towards substantially lowering carbon emissions in the next decade, through tax incentives, grants and loan guarantees. In addition, Duarte points to Breakthrough Energy to help the planet reach zero carbon emissions by funding work on climate technologies. They have partnered with the Department of Natural Resources, Canada making available up to $40M for breakthrough energy technologies.

Duarte adds those founders who are fundraising should “continue (or start) to be more capital efficient–be prepared for deeper diligence and longer time to fundraise.”

Meyer, an expert in life cycle assessment and who looks at startups through an operator mindset sees food technology as vital in 2024, expressing, “Food will always be important to people, but proving differentiation from a tech perspective should be the focus in 2024. Some of our most promising investments were made in times of economic uncertainty. Resilient companies and founders will find themselves in a strong position if they can stay lean, focus on the science, and push through.”

Cruz, of Good & Well, urges startups to be mindful of the capital available as 2024 will reveal eager, but more discerning, investors. She adds founders must emphasize scalability, “by potentially venturing beyond Canada’s borders, especially for industries facing limitations. Demonstrating resourcefulness and traction through… waitlists, distribution agreements, and active customer engagement will be crucial for success in the evolving market.”

She adds, for those aspiring to be entrepreneurs, recognize that 2024 is a “call to action.” She encourages founders to “embrace sustainability… dedicating themselves to tackling the world’s most significant challenges that not only resonates with the prevailing spirit of the times, meets urgent societal needs and aligns with the increasing investor appetite, which will continue to be strengthened as the $755 million Social Finance Fund, backed by the Canadian government, is deployed.”