Entrepreneurs and investors are currently experiencing very crunchy times this period. Equities are going through market adjustments which cuts across tech and crypto and this has tremendously affected investing and supporting tech-related businesses.
The prevailing market conditions is taking a downward toll on company valuations, and this has complicated the process of fundraising for companies. Fund managers are experiencing more difficulty to successfully raise funds just as those who aspire to work in tech companies are finding it more difficult than ever to secure jobs. These conditions seem unlikely to be resolved anytime soon but there is a a ray of hope out there.
There are investors having the experiences described above who find it to be expedient in order to usher in a much needed reset in the ecosystem. Company valuations are somewhat a thorny issue and the bull market is a handful. The ability of companies to secure funds and their measuring their business progression are sometimes different and almost unrelated endeavours.
It is not unusual for entrepreneurs and investors to become super wealthy during a bull cycle to the detriment of their counterparts with unattractive but firm footed businesses. Less attractive enterprises like accounting and logistics have it tougher when it comes to fundraising compared to counterparts during a bull cycle but this is gradually changing because investors are now experimenting on business fundamentals.
What is the latest?
The unattractive is becoming the new attraction. The discarded metrics of organic growth, margins and capital efficiency are receiving attention from VCs as the core outstanding qualities of entrepreneurship. Although such businesses receive lower valuations in comparison to those “more fashionable” businesses, entrepreneurs who are committed to building real businesses are commanding more attention and ate the new bride of investors right now.
What has changed? Most businesses which were hitherto considered less fashionable by modern standards command lower valuation watermarks compared to the SaaS businesses. This has made them the more attractive option based on current business realities. Investors are paying the price to demystify business models and this is helping them eliminate distractions and channel their focus appropriately.
The tech labour market is passing through a most shocking period, nonetheless, leaving the money laden big tech companies for startups is not risk most people are willing to take. This trend is expected to favour entrepreneurs in the hiring market subsequently.
A lot of people with startups naturally prefer to remain at startups. However it is quite unfortunate to note that if a startup does not fully discover its product market fit, surviving is unrealistic. It is easier for companies with a humble beginning and with adequate room for growth to hire conveniently than those which raised a lot but experience more of transient success.
It is time to put in the work
All the enormous capital that has accumulated during the bull cycle will be put into judicious use for the next few years to come. Investors are more cautious about how they invest in companies and divert their funds based on the strengths and weaknesses they associate with these companies. This is the time for the entrepreneurs who are fully committed to building real businesses to really put in the work and flourish.
As originally reported in (https://news.crunchbase.com/venture/overlooked-startups-thrive-fonseka-tuesday-capital/)