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We’re in a significant market adjustment with massive implications on startup funding. It feels a little like the crash in 2000/01. I was still in investment banking, and we were working on mergers & acquisitions and tech startup IPOs, when the world around me changed dramatically within just a few weeks. But what exactly is happening right now?

What is happening? Venture Capital Hits the Brakes on Startup Funding!

While the number of Venture Capital (VC) deals remained high in Q1 2022, the deal value is down $20bn or 26% from Q4. This data is for the US, but the European market should follow in Q2. At the same time, IPOs of VC-backed companies came to a complete halt after we enjoyed a phenomenal stretch of mega exits. With the path to short-term exits closed, especially late-stage investors will be very careful, and we can assume that this is going to continue for a while.

Source: Q1/2022 PitchBook Venture Monitor

Why is it Happening? Inflation, Interest Rates, Recession.

The inflation rate is rising, causing interest rates to increase, which will slow down growth or even lead to a recession. It is essential to realize that we have experienced an unusually long period of very low interest rates (price for money) which made huge funds available, incl. venture capital. Think of it as an open bar: Free drinks lead to more drinking.

Well, the bar just raised the prices.

David Sacks has posted a nice summary video that puts it all in context. Here is the accompanying deck he shares in the video.

Source: Craft Ventures | Operating in a Downturn

What does that mean for founders? Focus on Cash!

The funding environment will be more demanding. Great companies will always get funding, but good companies might struggle. While there's plenty of cash in the market, investors are careful.

What can you do as a founder expect?

  • Valuations will drop: Be realistic and optimize for cash, not valuation.

  • Deals will close slower: Build relationships early and allow for more time.

  • Risk appetite will slow: Show why your idea matters in times like these.

  • Time is not your friend: Stretch the runway to survive.

As the economy slows, your customers are likely to review their spending. The sales cycle will get longer, and you need to demonstrate why your product is a must-have. Costs are examined more closely, and renewals or repeat purchases are not a given.

Go back to the fundamentals: Who is buying, what do they buy, and why are they buying.

Dan Rose sums it up quite well.

Startup Funding in Decline: End of the World? Opportunities ahead.

A downturn is also an opportunity for change. For example, Mailchimp started in 2001 in the middle of the crash. The AirBnB founders got accepted to YCombinators in 2009, and Uber launched the same year.

Following the COVID disruption, many are looking for permanent change, and nothing fosters change better than a good crisis.

  • Aim your message at a problem relevant in a recession.

  • Focus your value prop on costs, efficiency, and profitability.

  • Adjust your tone to the changed situation of your target audience.

  • Focus on being a business, not being a startup.

If you’re not sure how to address the current climate, ping me or reach out (see below). The Moinland community includes many founders that experienced a crisis or two. They'd love to share their experiences with you!

  • Stephanie Renda

We just started our 12-months accelerator program as part of the scholarship. We are proud to support the amazing group of 111 founders on their entrepreneurial journey to build a great business. In addition to funding by, the program includes:

  • Education content and workshops on core startup skills.

  • Practical examples and breakout sessions to apply the newly learned skills.

  • Founder talks with startup CEOs who share their experiences, wins, and pain.

A Diverse Group of Founders

The kick-off was all about offering the founders a safe space to connect and collaborate. Our pre-event survey shows the various backgrounds of our founders, reflecting the full beauty of the startup community.

  • 31% Female Founders: While still too low, a 31% share of female founders is encouraging, compared to the <20% from the last Startup Monitor.

  • 77% are first-time founders and 17% are on their second startup.

  • 36% already reached MVP, and about a quarter each even have first customers or repeat revenues, respectively.

Learning and sharing across stages ensures that no one has to walk that path alone. Throughout our accelerator program, founders will share their pains and gains, which is one of our prime goals.

Founder Talk with Tim Grossmann

We invited Tim Grossmann, founder of Explo, to talk about the ups and downs of his startup journey. He supports GenZs, in finding and sharing their travel inspiration using short videos. The app is already in the app stores, and his priority is to grow the creator base and get new users with appealing content and offline guerilla marketing tactics.

His key takeaways in promoting his product and building a company are:

  • Don’t be afraid of making mistakes: Analysis paralysis is real. However, you can read all the books and articles and still make mistakes when implementing what you learned. Failing is part of the process.

  • Delegate, delegate, delegate: As a founder, it is your job to grow the business and keep your team together (especially when you are all working remotely). Leave specific operational tasks to your experts.

  • Your network is your net worth: Finding the right people for your business can be challenging. Tim found a team of developers and designers through friends and colleagues: Your network is one of your most important assets as a founder.

  • The 5-minute rule: Finding investors is not easy and very time-consuming for both sides. Once they acquire a qualified lead, Tim and his team keep their pitches short and sweet to keep investors engaged. There is no need to push every piece of information onto the investors; if they are intrigued, they will ask questions about the business.

Tim already benefited from the experience of founding his own company. “I am all in because I know what’s there to gain. You're not just growing a business; you grow as a person”.

Preview: Collaboration with experienced founders

Working with Tim Grossmann and his experiences are a great example of our accelerator program and coaching; it’s not only about the growth of the business but also the growth of the person, our victories, our failures, and learnings. Throughout that journey, we’ll combine a mix of education, practical learning, and collaboration with experienced founders of the Moinland community.

Thanks to the state of Rhineland-Palatinate for supporting the startup community; we are grateful for the opportunity to accompany the founders on their entrepreneurial journey.

Do you need support for growing your startup?

Have you already started your company, are generating your first revenues, and are now ready to grow your business fast? Get in contact with us, and let’s find out if our coaching may also be helpful for you and your startup.

  • Stephanie Renda

Die fabelhafte herCAREER hat mir gezeigt, wie toll es ist, endlich wieder in persönlichen Gesprächen Bekanntschaften zu pflegen und neue ergeben sich leicht via Small Talk beim Warten auf den Café. Wie habe ich das vermisst. Und wie viele inspirierende Frauen waren vor Ort!

Was mich nachdenklich gemacht hat, waren die Ausführungen von Katharina Mayer, Founder & CEO Kuchentratsch, die von ihren Erfahrungen berichtete, dass Netzwerken mit Männern schwieriger sei als mit Frauen “wegen dem Männer - Frauen-Ding”. Sie könne nicht so leicht mal eben auf einen Café gehen mit Männern im beruflichen Kontext.

Ich habe versucht, meine spontanen Café- Verabredungen nach Geschlecht aufzuschlüsseln und habe da kein Muster erkannt.

„Behind every woman is an army of women (and men) hyping her up!“

Ich erinnere mich aber an Panel- Diskussionen u.a. mit Franzi von Hardenberg zum Thema “Netzwerken”, dass sie wie ich der Meinung war, “frau” müsse neben dem Latte Macchiato zwischendurch, nach einem Konferenz- oder Messetag auch mit zum After Work, sprich `auf ein Bier gehen´ für ein effektives Socialising mit den mehrheitlich männlichen Ansprechpartnern in der Tech - Szene.

Also ist das so, dass wir in der Gründer:innen-Szene noch in den Stereotypen verhaftet sind? Dass man/frau sich nicht einfach auf einen Café treffen kann? Dass frau sich den Ritualen des “männlichen” Netzwerkens anpassen muss, wie in den 90ern, wo Managerinnen ganze Kerle sein mussten?

Für mich sind Frauennetzwerke perfekt zum Auftanken und Courage stärken. Es tut gut unter Gleichen zu sein und die Energie mit in den Alltag zu nehmen. Aber sie dürfen nicht zur Ausrede werden, denn mindestens genauso brauche ich den Austausch mit der Vielfalt aller, die mich und mein Netzwerk stärken. Also auch mit Euch liebe Männer. Der nächste Café geht auf mich.


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