Sahil Lavingia of Gumrod Rolling Fund entered the venture world as one of the early testers, an AngelList product that allows investors to raise capital on a subscription basis. That was in 2020. Fast-forward to 2022 and a lot has changed.
One of those changes? The number of pitches from founders looking to increase. “Since March, it has gone down about 90%,” Lavingia told Meczyki.Net. “I was probably seeing the most — about 20 to 40 well-checked decks a week — and that number has now dropped to about two to four a week.” They have also observed that the quality of talent increases for those willing to work. gumrod — which he attributes partly to the steady stampede of layoffs — and the decline of founders starting companies.
The decline in the number of founders raising capital suggests that early-stage startups are not as protected from macroeconomic changes as some investors claim; Conversely, the boom of new startups would support the idea that a recession – and the accompanying layoffs – is the time when startups are born.
“I think the number of founders we’re going to see will be low, but the quality bar is rising.” Annie Kadavya, Managing Director of Redpoint
Lavingia divided the status of founders into three buckets: “tourist founder, immigrant founder and ‘born and raised’ founder.” Tourist founders are the ones who start companies only in bull markets, he said, adding that a group has lost almost 100%.
“They are rarely fundable in bear markets,” Lavingia said. “They need to hire others to make them stuff.” Immigrant founders, meanwhile, care less about the reputation and status of starting a company but weigh its risk and return. This founding group has been cut in half, according to Lavingia. Finally, “born and raised” founders are founders regardless of the market: “They all existed and therefore raised money in 2020-2021, so they are also not starting companies and raising money at the same rate.” Huh.”