Bursts of Color - Market Turbulence
As of this writing, the NASDAQ is down about 20% year-to-date. And, per this table from Scott Galloway's Down Round, some valuations are much lower than that.
What Does This Mean For Start-Ups?
I don't know. Maybe not much at the early stage. But choppy public markets typically have, sooner or later, led to slower fundraising cycles and lower average valuations for startups too. We are already seeing examples of this in Series B-C rounds.
Should We Do Anything Differently?
It depends. For those with 18+ months of cash and whose business is generally going to plan: by all means, keep doing what you're doing! On the other hand, for those who are feeling cash constrained, I would consider moving quickly to extend runway to at least 12 months, usually through a combination of:
Raising new capital on whatever terms you can, without getting distracted by last summer's multiples.
Managing expenses to stretch the dollars further.
A Tale of Two Startups, Part II
A couple years back I shared a Tale of Two Startups, which began:
Some of you know that I was at startups during the last two market downturns: Voter.com in 2000 and Yelp in 2008. Voter.com reacted slowly and imploded. Yelp reacted quickly and survived. Of course there were other differences, but reaction time was a big one.
2020 was another rough business year for some sectors like travel and local. It's no surprise that the affected companies who reacted decisively then to weather the storm (e.g., Instawork, Workstream and Bounce) are stronger than ever today.