This post is by Charlie O'Donnell from This is going to be BIG
“Extend your runway.”
That’s what every VC is telling their portfolio companies these days. The very important part they’re leaving out, however, is, “But keep growing at the same pace before the cuts.”
In other words, they’re telling companies that, in order to get next round funding, they’re somehow supposed to stay the same fast growers they were before the tech downturn, but just do that longer and get to higher aggregate revenue and performance numbers.
If you don’t realize that, just imagine you’re a VC fund with some dry powder in the second half of 2023. Some companies will have been able to achieve that feat—and those companies will be the first ones to generate real post-crash FOMO.
Everyone else—why would they bother? The one question every VC needs to be able to answer on the way to getting to a “yes” is, “Can this return a big chunk of my fund one day?”
If you grew 15% year over year, how are they ever going to imagine that happening, especially when you know there will be a handful of companies that have seemingly done the impossible with less resources?
I’m very worried about any company that has moderate growth plans for 2023 that expects to get another round of financing based on that result. To me, that has a high chance of putting off the inevitable—running out of money during a fundraising process.
It might work against all your instincts, but I can’t help but wonder if the (Read more...)