After many years in which capital for early-stage companies was widely available, funding for these companies is drying up. With the threat of an economic downturn looming in the near-term coupled with rising interest rates, many private-equity funds and venture capital funds that early-stage companies have traditionally turned to for funding are putting the brakes on investments. This is the most significant slowdown in funding for early-stage companies since the Great Recession in 2008-2009. The Wall Street Journal describes this as “a mass extinction event for startups.”
Many private equity firms have reduced staff to deal with the lower volume of investments being made today. This has hit technology focused private equity firms the hardest. Many early-stage companies have had to pivot their focus from growth to survival for the near-term. Some early-stage companies have had to take drastic actions to control costs, reduce their burn rates to get the most mileage out of available cash. Some CEOs have drastically reduced their salaries, while other CEOs have eliminated their salaries altogether. Other early-stage companies have had to lay off staff. A number of early-stage companies have shut down, while others have been forced to sell before they were ready. Many early-stage companies have turned to debt financing to provide liquidity since equity investments have been harder to come by.
Regardless of where or how your company is looking for cash, you will need a solid business plan and a pitch deck that has a strong impact will help prospective investors understand the value of an investment in your firm. An up-to-date cap table shows prospective investors where they would stand in relation to earlier investors after the funding takes place.
I can help you in all of these areas. I have a long track record of assisting early-stage business in preparing business plans and putting together pitch decks that demonstrate to investors, whether equity or debt, what your company is all about and potential returns for funds invested. I can put together cap tables that track funding sources since the inception of your company and project the impact of future investments. I can also help you implement cost controls that will help reduce your burn rates.
Please contact me so that we can discuss how I can help you navigate these turbulent times in capital markets.
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