2022 continues to be a wild ride. We’ve seen a slowdown in the venture market due to the drop in the stock market, inflation, an increase in interest rates, and a number of other issues. Valuations are declining, funding rounds are slowing, and some tech companies are freezing hiring or laying off employees to boost profits. So far this year, only 42 companies have priced IPO offerings. That is on pace to total less than half of last year’s 399 IPOs.
With that said, it doesn’t mean a new round of funding for companies, especially SaaS-based companies, is impossible. The global SaaS market size was $282 billion in 2021 and is expected to reach $307 billion by 2026. U.S. SaaS companies received VC investments worth more than $300 billion last year.
So how do you know when it’s the right time to start a new round of funding? The short answer is: When you are ready. Here are some items to consider before making the final decision, especially when your existing investors approach you.
Questions to ask yourself
1) Do we have a clear strategy?
As you consider raising a new round of funding, strategy is vital. You, your co-founders and other executives must agree on a vision and a plan to attain your goals.
No amount of funding will overcome a lack of demand from consumers, so ensure there is a market for your product before moving forward. Research your target market so (Read more...)