The venture capital landscape has experienced a monumental transformation in the past year. Just a year ago, about 90% of VC discussions with startups focused on growth, with little consideration given to the methods employed to achieve that growth.
It was irrelevant if a company was spending money at an alarming rate; as long as it had impressive growth figures, a compelling narrative, and charisma, the funding round was all but guaranteed.
However, as capital becomes increasingly costly, investors are shifting their attention to resource-conscious, astute founders capable of navigating the challenging times ahead. In 2023, the majority of VC meetings revolve around a company’s ability to deliver sustainable, efficient growth during an economic downturn. According to anecdotal evidence, many founders have yet to adapt to this change.
Startups at all stages are consistently failing to raise funds at the same multiples and pace they once did, primarily because they are deemed capital inefficient by current standards, and they may not even be aware of it.