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Unlike VCs predicting doom, I’m bullish for early-stage startups. This downturn differs from 2000 & 2008 (see why below). If you’re an early-stage CEO, don’t panic. Don’t obsess about extending runway. Obsess about making something people want, and hire superstars to help. 1/n
While it’s similar to 2000, it’s no nuclear winter. Expect a return to saner valuations (a good thing), not a total halt to funding. The dot com craze was based on “eyeballs” with no revenue. Watch as startups with valid products & business models keep getting funded. /2
The crypto space is more like 2008. The myriad of crypto instruments built on each other is reminiscent of 2008's web of derivatives built on shady subprime mortgages. There are other similarities. /3
Many VCs with late-stage portfolios are encouraging CEOs to cut costs. The best example is by the brilliant @DavidSachs & @JeffFluhr of @Craft_Ventures. It's an A+ talk and I recommend watching it all. Late-stage CEOs should heed this. /4
In contrast, the funding environment for Seed and Series A is still strong. Great teams tackling big markets are getting funded. Early-stage valuations never got nearly as crazy as late-stage, and won't fall as much either. /5
If you're early-stage, don't stop hiring. Don't listen to “accelerators” who are telling you to slow down. Don't kill your startup with self-inflicted wounds. You can't save your way to becoming a unicorn. Hire an awesome team to build an awesome product and sell it. /6
Don't stockpile cash -- it's dropping in value! Unlike 2001, we have high inflation. Don't raise any more than you need: cash is dropping in value fast. Raise what you need now, and raise more when you need it. /7
While money is tighter, fundraising remains faster than ever, thanks to Zoom, Calendly, etc. What used to take months now takes weeks or days. You can raise smaller amounts more frequently, and you should. Don’t abide by dated advice about “default alive.” /8
I differ from Craft's view that extending runway trumps growth. Craft says to slow down if doing so would extend runway from 2 to 3 years. I disagree. Today’s dollar will be worth much less in 2025. Use it to grow faster. Let your competitors take the other path. /9
I've never been more bullish on technology. Right now is a terrific time to be building a startup. The world is full of frustrating problems that software has yet to solve. I share @TommyChavez' sentiment: https://www.linkedin.com/feed/update/urn:li:activity:6929834001432002560/ /10
There's no better place to invest money today than in early-stage pre-revenue startups. Huge winners will be born from this crash, just as Google and Stripe came out of past crashes. We at @Neo are aggresively backing them. <end> https://neo.substack.com/p/neo-deploys-125-million-into-20-new
