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The startup investment market has changed. How did we get to where we are today, from the hottest year in the history of venture capital startups to a period of pessimism?

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The following digest of materials TechCrunch aims to answer this question. We’ll start with a historic series of stories starting last December, continuing into the beginning of the year until we get the latest data from the venture capital ecosystem. We then end with stories that have some advice. That sounds good? Let’s go to.

How did we get to today

The change in the market began last year when falling stock market prices made TechCrunch wonder if the ground was slipping from under the feet of startups.

The era of super-rich software valuations may be behind us (December 2021)

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After the 2021 venture goat rodeo — companies raised two and even three times a year — it came as a surprise that the public markets began to turn bearish while the private market was still in bullish mode. Over time, our question was answered in the affirmative.

Will the latest sell-off finally change the way investors value startups? (January 2022)

By January, it became clear that something had changed. Now our question was how quickly and where the damage would be done. Startups can operate outside of public market sentiment, but the larger the gap, the less likely these different centers of gravity can hold.

Here’s how much VCs lowered earnings expectations for Series B seed (January 2022)

Alex Wilhelm studied data from Kruze Consulting to understand how startup growth has changed and how much VCs were expecting in terms of earnings before raising any particular round. essence? Things in January were still warm enough. We include this particular entry to remind ourselves that while hindsight is clear, even during the market correction there were signals pointing in the other direction.

3 Opinions: How can founders prepare for declining startup costs and investor interest? (January 2022)

TechCrunch set to work to find out just how much the startup fundraising market has changed. The data for the first quarter of 2022 turned out to be somewhat Great, but as the quarter progressed, the damage accumulated more and more. It was still pretty hot in January, even if the rumble Oh oh started to take shape.

It’s not a launch calculation, it’s a fix (February 2022)

By February, our very own Natasha Mascarenhas had already started naming the market change in terms of “correction.” It was a witty way to mark that we are going through a patch fix. First, startups slowed down when COVID hit and the economy ground to a halt; then, as 2020 and 2021 rolled around, they adjusted their position towards maximum burnout and maximum growth. By the second month of the year, it was clear that a new behavioral adjustment was making its way through the market.

So how much has things changed?

We have a lot on this topic, so we chose a few. The following should give a good look at our recent work to understand where startups and their backers are on the map today.

This is a pivotal season for early-stage startups (March 2022)

Layoffs may be one of the clearest signals that a startup is under pressure, but it’s not the only one. In this article, Natasha talks about how early-stage startups are changing—before layoffs—to be more cash-efficient, revenue-driven, and risk-averse.

If the earliest investors keep going early, what will happen? (April 2022)

Natasha has written about the mixed messages in the startup world right now: early-stage investors are becoming more disciplined and wealthy, but at the same time, early-stage investors are leaving early. Investors are pushing the founders to be thrifty, but at the same time offering them $10,000 to take a week off and try their hand at entrepreneurship. This article examines how reprioritization can cause new fund managers to change strategy (or fragment their path to failure).

How much has venture capital slowed down in the later stages? (April 2022)

The changing pace of the market is no joke, so TechCrunch has been busy trying to make sense of the data from the comments, trying to paint a more accurate picture of the new normal. The bottom line is that late-stage deal-making is experiencing a seismic shift, while other levels of the startup series are a bit more stable, if not completely healthy.

Consumer FinTech Trading Revenue Doesn’t Meet ARR SaaS (April 2022)

Part of the market change in the value of startups and their recently public counterparts is that many concerns were assigned revenue multiples that did not match their actual revenue profile. By this we mean that some software companies were valued in the same way as SaaS businesses, when in fact this is not the case. Watching these companies lose billions in valuation was a lesson that in hot times, many companies will get a valuation that doesn’t really fit. I just notice that early this is the tricky part of the investment game.

Here’s how badly startup valuations fell in the first quarter of 2022 (May 2022)

We’ve seen new highs hit over the past few years and now valuations are dropping. Alex Wilhelm looked at the Carta data to see where. Seed rounds were down about 5% from Q4 2021 to Q1 2022. Series A and B decreased by approximately 25% and 8%, respectively, from Q3 2021 to Q1 2022.

Now what?

In conclusion, a few notes on what to do in this changed world.

Crum Down is a Test of Character for VCs and Founders (April 2022)

If it came down to it, would you pay to play? Now they are back as the economy begins to change and investors are once again facing this issue. Steve Blank explains the reason why the founder agrees to the downsizing and gives advice on what they can do instead.

Does your startup have enough runways? 5 factors to consider (April 2022)

If you’re not good at budgeting, it’s time to learn it for the sake of your startup. Marjorie Radlo-Zandi explains the importance of having enough money to fund your startup. Your runway will vary depending on the industry you’re in, but Radlo-Zandi will tell you how to calculate that number and what to do if you get off track.

How to introduce me: 6 investors discuss what they need in April 2022 (April 2022)

Walter Thompson provides a timely and honest look at what investors are worried about in the current market. As he notes, Carta claims that the number of seed deals funded between Q4 2021 and Q1 2022 dropped by 41%. Dollar volume also fell, falling from $2.62 billion to $1.81 billion, a 31% decline. The survey gathers input from investors, including 500 Global CEO Christine Tao and Maveron partner Anargia Vardhana, to understand what they’re looking for when the dollar portion gets thinner.

What am I standing for now? (April 2022)

This question is probably on everyone’s mind right now. As public market values ​​shrink, how is this affecting the startup community, and more importantly, you? This part includes the applicable pricing structure and other factors that may affect your price. Depending on where you are, today could be a refresh, a reboot, or a full payoff.

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