- You have to go twice as far on each dollar of venture capital as in 2021. With public market valuations down 70%+ from their peaks, for startups, that means going twice as far on each dollar.
- It’s 3x-5x harder to raise a Series A, and 4x-10x harder to raise a Series B, C or D, than it was at the peak. With public decacorns now mostly unicorns, that means it’s just harder and harder to raise rounds after the seed stage.
- Discretionary categories are hard hit. Some categories in SaaS are holding up well, e.g. Cloudflare, Adobe, etc. But a lot of startups that sell nice-to-have products, especially in sales, are deeply struggling right now. That buying has been put on hold.
- Gross margins matter again. In the peak of 2021, no one cared if your gross margins were 20% or 80%. Now, they care again. So pseudo-SaaS products and other products with lower gross margins are commanding much lower valuations.
- The unicorn age is over, at least for now, but many still don’t totally get it. So many of the things we learned from mid-2020 to early 2022 … just don’t apply anymore.
- Employees still have very high comp expectations even though efficiency is critical now. This can be tough to solve for. If you have to stretch each dollar twice or even 3x as far, it’s hard to pay employees top of market, especially if attainment or performance is low.
- Many things are just a Default No. As they always used to be. Folks are still struggling to get used to it. It’s not so much that things are a lot harder now. It’s just they sort of have reverted to in many cases as hard as they were around, say, 2018.
- A lot of folks just don’t want to work hard anymore. It’s tough to say this “aloud”, but the truth is, a lot of folks just didn’t work all that hard from mid-2020 to late 2022. Most of them don’t want to work hard anymore. Even in tougher times.
(sticker image from here)
Published on March 21, 2023