When one of the leading early-stage Venture Capital firms hosts a discussion about “Here’s what we want to see in a startup’s technology,” you can bet I’ll be there.
Here’s a good “take-away” message:
“Some technical debt is good. It’s faster to make a demo without coding all the formal unit tests. But that debt has to be managed; companies fall down when they fail to transition from “quick-and-dirty” to solid production practices.”
The discussions also focused heavily on the 2023 investment climate. Key lessons:
- Many VC firms have substantial funds under management which need to be deployed.
- When the public equities markets are down, Venture Capital becomes an attractive asset class. So even though high-net-worth investors may have less capital right now, they are still interested in placing bets on venture investments.
- However, VCs must be mindful of the exit price of the companies in which they invest. The next IPO surge could be distant, and low share prices mean that companies making strategic acquisitions will be lowballing.
- Therefore, expect company valuations to be much lower than the highs of 2021 and 2022.