The message is out: Investors in young tech companies are warning founders of dark times ahead. Watch your unit economics, keep a close eye on headcount, get some contracts on the books now.
The targets of this message are companies that are expecting, or even worse, depending, on a big fundraising round to achieve their goals. We’ve already begun to see some layoffs of tech workers at companies ranging from Netflix to Meta.
But the nature of venture capital is that investors raise funds well in advance of deployment. Unlike the flood of money into publicly-traded blank check firms (commonly called SPACs) in 2020 and 2021, which is likely to flood back out again, the cash raised during the previous VC funding frenzy is still ready to be put to use. Heck, Andreesen Horowitz raised $4.5 billion last month to put into Web3 companies.
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