Navigating the Icy Coulds of Fundraising in 2023

Strategies to Warm Up Your Fundraising Efforts Amidst Market Chills

The investment landscape of 2022 and early 2023 has been challenging, marked by significant tremors in big tech, staff reductions, and several other disconcerting signs.

In my interactions with 405 startups (yes recorded in my trusty Evernote), I've gleaned valuable insights from investors and founders alike. There is more than speculation and sentiment at play; the numbers themselves reveal a somewhat dark outlook. Despite the anticipated economic rebound post-COVID, private equity investments have been on a downturn.

Global VC investment in 2022 reached $483 billion, according to Crunchbase,?down from $681 billion in 2021, a decline of 32%. According to PitchBook Data, VC investment in the United States fell to $132 billion in the first half of 2023, down from $147 billion in the same period last year. This dip still affects even the most promising projects gaining momentum with VCs.?

It is possible that VC investment in 2023 could reach $400 billion, but it is also possible that it could be lower. Of course that the slowdown in the digital market and the volatility (fallacy/fraud/ BIG BOOM) of cryptocurrencies are not helping, but are we over??

"Nops" , the market is still receiving shock waves ( 谷歌 the bank crisis in USA), but it's a fact that I am not in my area when discussing global economics and finance, so I hope you don't mind a bit of speculation: Yes this author thinks that the global outlook for private equity investments will lower more before it rises.?

Getting back to the things I know and can help. What are the trends I can perceive in my daily activities? (Discover, meet, mentor, pitch sale, sale, sale, follow-up, pitch, sale, sale, sale,?and so on! )?

#1 – The "Wait and See" Approach

Amid geopolitical instability, economic recession fears, and monetary tightening, investor confidence is at a low ebb. More expensive debt and increased scrutiny of a company's exposure to inflation and rising rates have led many investors to adopt a "wait and see" stance.

#2 – Valuation Rationality

With fewer deep-pocketed investors, valuations are being examined more critically, fostering a much-needed sense of rationality. This could be viewed as a market response to the inflated valuations of recent years. I am not seeing the big NUMBERS. And the sad news is, even if you have a significant project and ask big, you will be left alone on stage.?

#3 – Experienced Founders, Fewer Risks

In challenging times, experience matters. An increasing share of investment is flowing into startups helmed by seasoned founders. LAVCA venture investors cite that in H1 2022, repeat founders raised 43% of venture capital dollars, as compared to 24% in 2021 and 27% in 2020.?

Projects with more experimented teams are now investor favourites. This a fact also pointed out a few months ago here in Linked in by a great entrepreneur and dear friend @paul.?

#4 – Market Performance

Market dynamics are interlinked globally. When one region slows down, demand dwindles elsewhere. Recession fears and ongoing global conflicts further add to the volatility. Even tech giants like Microsoft Azure, Google Cloud, and Amazon Web Services are experiencing up 21% average decline in revenue growth. (2022 numbers)

Additionally, many high-flying tech companies have reported losses, job cuts, or downwardly revised revenue projections.

#5 – Capital Shifting Geographies

Emerging regions like the UAE are attracting significant VC attention, according to MAGNiTT 's MENA Venture Investment Report 2022. In 2022, VC investment in the Middle East reached a record high of $2.6 billion. This was up from $1.5 billion in 2021, a growth of 73%.?

Can I feel it? Yes, especially if you live in the United Arab Emirates. Is this number pumped? Initiatives are all around us, with ventures spanning diverse sectors from prop-tech to agri-tech, from aviation to space initiatives, with no signs of stopping.?

Given this challenging climate, what steps can entrepreneurs take?

I am sure there might be other recipes for success in a world of Exponential Experts and Gurus. Nevertheless, my contribution might increase your project's performance when pitching for equity or partnerships.?

1. Embrace bootstrapping and focus on building solid partnerships and a robust pipeline. Aim for conservative valuations and surround yourself with industry experts who can validate your ideas. Be ready to demonstrate flexibility, cost-effectiveness, and readiness to pivot when needed.
2. Consider focusing your efforts on regions where capital flows and growth is promising, such as the Middle East. According to Arabian Business, the MENA region attracted $2.2 billion in investments from January-August 2022
3. Lastly, pay attention to large corporations as potential investors. Despite layoffs due to perceived stagnation, they will have funds to invest in promising projects that could boost their revenues or expand their customer base.?

Aviation and Travel in UAE or Saudi are experiencing spectacular growth.This might be the time for you to change geographies.?

If your project is related to Aviation, Travel, or Hospitality, and you're considering the Middle East as a potential market, feel free to contact me on LinkedIn or in any other Incubation or acceleration Initiative I partner with,?like the exciting Vista Program at Dubai Airshow

See you Soon!?

Article Written by me.

Photo from OpenAI : This is the prompt I used: a photo of a white and cut fur monster with a bag of money in a frozen room overlooking a window with a warm sunset?