Some Sunday night thoughts:
1) We @HustleFundVC made some tough calls last wk. We moved our annual investor mtg (for our LPs) to all-online this yr due to COVID-19. It won’t be as fun as in person but we are taking precautions.
But more interestingly...
1) We @HustleFundVC made some tough calls last wk. We moved our annual investor mtg (for our LPs) to all-online this yr due to COVID-19. It won’t be as fun as in person but we are taking precautions.
But more interestingly...
2) We also sent out an email to all our founders telling ppl to take note of the new fundraising landscape we’re about the enter.
We debated sending that email because I don’t believe in inciting panic. At the same time, I truly do believe there’s going to be a change.
We debated sending that email because I don’t believe in inciting panic. At the same time, I truly do believe there’s going to be a change.
3) We already see the public markets crashing at this time. The public markets are highly correlated w angel investments in startups.
If angels see their net worth dropping, they are less likely to invest in startups. And vice versa. We expect to see less available angel $$.
If angels see their net worth dropping, they are less likely to invest in startups. And vice versa. We expect to see less available angel $$.
4) In addition to angels being worth “less” because of the public markets, when ppl become fearful, they tend to be less risk averse. This of course means that ppl are thinking less about investing in startups during times like these & are going more into wealth preservation mode
5) There are other effects too. There are a lot of funds out in the markets raising money right now. Established funds will have no problems raising. But most new funds - who often invest early - also are backed by angels. We expect to see funds become more conservative as well.
6) So what does this mean for startups? If you are currently raising, we encouraged our companies to prioritize the raise and get it done ASAP. Prioritize speed over things like valuation. Don’t take bad deals but don’t try to over-optimize.
7) For companies that were thinking about raising in a month or two. Consider raising some money right now. You can never time the market but my hunch is that the market will comtinue to get worse over the next quarter or so. It is just beginning.
8) Above all - reducing burn and prioritizing revenue and profitability has never seemed so important as now.
9) Lastly, there will still be great companies built! I am super optimistic about the long run despite this current time in the public mkts. Great cos will weather these times. Cos & consumers will still buy. Although selling TP to Costco may be the next unicorn Co these days :)
