How to Make Sure Your Startup Survives 2023
Fundraising markets may get worse before they get better
Hey y’all 👋
There’s a lot of uncertainty in the market right now.
Investors are feeling it too and writing fewer checks at lower valuations. Signs point to this potentially being the “new normal” for a while.
AI is exploding, but basically everything else has slowed down. At the same time, there’s a lot of startups that raised in 2021 - 2022 who will be in need of additional capital in the next year.
The hard truth: a lot of startups will die, or be acquired for lower valuations than they last raised at.
Here’s how to make sure that doesn’t happen to you (and no, it isn’t to just start mentioning GPT-3 in your deck) 👇
Read time: 5 minutes
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⚡️️ 9 Ways to Keep Your Startup Alive
Know Your Existing Investors
If you’ve raised capital already then figure out what will make your existing investors excited to put more in.
Don’t know the answer to this question? Ask them what they want to see from your startup.
During a downturn, investors bias more towards supporting existing portfolio companies. Part of this is the sunk cost fallacy, but it’s also true that doubling down on existing bets can be less risky for them because they have access to more datapoints about how the startup executes.
The same is true from the founder’s perspective — it’s often easier to secure additional capital from existing relationships than trying to form new ones.
Regardless, they’re going to have a lot of portfolio companies asking them for follow on capital later this year, and limited capital to use for following on.
Make sure you’re a bet they feel good about making again.