Discover more from Course Notes: Continuous Business Learning
VC bifurcation and money
Seasoned/pedigreed founders are highly sought after even at the pre-seed stage
Raising $3-5m seed rounds in SV for such founders is not hard
SaaS startups (even without sexy founders) with predictable revenue are sexy [again?]
Tough luck for everyone else
Media loves hot companies and insane funding rounds. “Success” breeds publicity.
Harder to raise Rounds A/B than before.
VCs started looking at profitability [MK: look at the “rule of 40%”: your EBITDA margin % + revenue growth YoY % should equal to or exceed 40%]
Some failures of companies being unable to digest large rounds and become profitable led to this shift in sentiment.
Startups with high burn rate will hit the wall and become victims of their ease of fundraising.
Thrifty founders have a better chance of sustaining this fundraising dry spell; they also have a higher chance of becoming/remaining profitable.