How can startups fundraise in a market downturn
Despite the current market conditions, there are still opportunities for those with a great product and a solid business plan. If you have what it takes, don’t let the current state of the market deter you from seeking out funding and bringing your vision to life.
At The 200 Billion Club, we’re passionate about supporting women founders accross verticals. We believe that financing startups led by women founder is paramount to drive innovation and progress in the world. That’s why we’re sharing with you some thoughts targetted towards startups that are currently raising a funding round.
We hope that this blog will provide valuable insights for those looking to navigate the current market conditions. So whether you’re a startup founder or an investor, we encourage you to read on and learn more about the state of global venture funding.
The current state of startups fundraise in market downturn
A recent report by Cbinsight shows global venture funding falling to $142.4B in Q1’22. This number is down by a fifth from the previous quarter’s total. As economic uncertainty lingers on and investors tighten their belts, the private market’s downward trajectory appears to be continuing full force in Q2’22.
In fact, at the current pace of activity, global funding for the second quarter is projected to decrease by 19% quarter-over-quarter. If these investment trends continue, Q2’22 will see the lowest total for quarterly funding since the end of 2020. Additionally, deals are on track for a 22% drop from Q1’22, reaching a level last seen in Q3 2020.
This climate of decreased funding and deal activity presents a challenge for startups. Especially those that may be seeking new rounds of financing.
While markets could shift meaningfully during the second half of the quarter, the first half of the year is shaping up to be one of the slowest periods for private market activity in recent memory.
What does fundraise in market downturn mean for startups?
With deal activity and funding decreasing quarter-over-quarter, it may be more difficult to secure the capital you need to grow your business.
If you’re a startup founder, there are a few things you can do to weather the current market conditions:
–Focus on business fundamentals. In times of uncertainty, it’s important to focus on the basics. Make sure your business is running efficiently and that you have a clear path to profitability. This will make you more attractive to investors and help you weather any bumps in the road.
-Be realistic about your funding needs. It’s important to be realistic about how much capital you need to grow your business. In the current climate, investors are more likely to be conservative with their financing. Therefore, it’s important to have a solid plan for how you will use any funding you do receive.
-Look for alternative sources of financing. If traditional venture funding is out of reach, there are other options you can explore. Government grants, crowdfunding, borrowing and angel investors are all potential sources of capital.
-Know when to pivot: In a down market, it’s important to be flexible and willing to pivot if necessary. If your original plan isn’t working, don’t be afraid to make changes. This could mean changing your business model, product, or even your target market.
If you’re a startup founder, it’s important to be strategic about how you’re approaching the current market climate. By focusing on business fundamentals, being realistic about your funding needs, and looking for alternative sources of financing, you can position your startup for success.
So what are you waiting for? Get out there and make your startup dreams a reality.