Founders, the game plan you were given to grow your startup is sorely outdated. The era of "factory farmed " unicorns is over.
Sam Lessin nominally created this deck for other VCs, but there's plenty to be gleaned for startup CEOs.
1) VCs pushed founders to trade profit for unnatural growth over the last 20 years. This works fine as long as there is someone ready to write another check down the line. Mid- and late-stage investing has gotten crushed and you probably won't find more money after your seed, so profitability is everything.
2) AI is going to be incredibly transformative, but it will benefit the current 800-pound gorillas far more than upstart competition. As Sam says, the Adobe of AI will probably be Adobe. This doesn't mean don't launch that startup, but see above for operating principles.
3) In addition to shrinking growth capital, founders can also expect a harder time hiring great early employees. This is because the pandemic caused people to radically reprioritize what matters AND the cratering of the IPO and acquisition markets has caused people to reconsider the future value of fairy dust (aka startup equity).
There will always be people who start companies, because entrepreneurship is hard-wired in some of us. And there will always be money to help the best companies scale. But please, please, please don't look to the old strategies in this new era of company building.
Are you building an early-stage company? How important is profitability to you by the time you raise an A? Are you even planning on raising one?
I'd love to hear about it in the comments below.
#startups #venturecapital #founders