Conscious! After every crash comes reconstruction

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crypto crash.

Tech stock crash.

lower round.

mass layoffs.

Unicorn is dying.

Recession.

Sorry folks, but now we have to show you some really bad innovation news. There are explosions everywhere. The Corona crisis in Europe, the long-term effects of high inflation and war as well as changes in US interest rates are currently destroying everything that the 2021 hype created. Pessimists may think: The end of the tech and startup world, as we know, is near.

But how do you say that so nicely? Nothing is eaten as hot as it is cooked. And from conversations with many investors and founders over the past few days and weeks, I have learned that there is no such thing as giving up. I was surprised by the optimism that most people still have. Even if one of the most important VCs in Europe said to me: “It’s going to be really bad,” he said in the next sentence: “The good founders, teams and business models will continue to get the money.”

Who will be watching the startup market with their fingers – and who will not

“Cooling is good for industry”

And that’s how you finally have to assess the situation. $330 billion investment in the United States, $100 billion in Europe, more than 1,000 unicorns worldwide. Fears of a bursting bubble have not only existed since the interest rate hike in the USA on May 4th or the invasion of Russia on February 24th. Investors had criticized the already overheated market and no longer wanted to pay for the sometimes absurd ratings. The events of 2022 have strengthened and accelerated the earlier creeping trend.

Roman Scharf, one of Austria’s most successful VCs, sees things very clearly and calmly. And speaks of a “healthy recalculation” of the market after the “absurd valuation” that many VCs paid in FOMO rounds – sometimes with sales multiples of 100x and more.

“Refrigeration is good for industry. I also don’t want to invest in founders who want the highest ratings. You don’t hire the most expensive or cheapest seller, you hire the best,” says Scharf. “There will be a downside, there will be an upside. Unicorns will disappear and there will be new unicorns. The expectation of endless boom years is unrealistic. ,

This FOMO, i.e. “Fear of Missing Out”, actually entered the crypto market in 2021. Many did not want to expose themselves to participation in the boom market, which promised substantial returns. This is especially difficult for beginners who have been lured into an absolutely volatile and speculative market with big promises and are buying crypto – now they face a dire situation.

“Healthy recalculation after absurd reviews”: 3VC launches new fund

It’s time to build

But as the saying goes, where there are problems, there are opportunities. The founder and start-up boom in the Corona year 2020 did not materialize – the support for companies was huge. There was no wave of bankruptcies, but also no wave of start-ups. This time there will probably not be as much monetary support – after all, the strong currency pressure from central banks is partly responsible for the high inflation, which led to higher interest rates and thus to market turbulence.

And that’s why more and more people are saying it in the last few days: now it’s all about diving as far as possible through the tech/unicorn/crypto winter and a lot of people will lose their fins. This phase also means focusing on strengths, efficiency instead of actual problem solving. Or, as some say, technological innovations still have a great future, as they like to say: “It’s time to build.”

How the recession affects the startup world – with investor Berthold Borek-Karlik

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