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We need to learn the lessons of the 2021 fundraising bubble – Technology Flow

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Chaotic economy The market, rising interest rates and an uncertain economic future are all infusing a certain flavor of pessimism into the market, shifting the power dynamic back in favor of investors. The boom of the last decade and especially the bubble of 2021 has largely deflated and startups looking for investment need to adjust their approach and learn what they learned during the bubble.

I’ve invested in over 250 companies and founded an all-in-one banking platform for startups, and I have a front-row seat to what companies at various stages are going through. I’ve noticed trends pointing towards older ways of fundraising becoming relevant again.

Below is a mix of best practices and advice I offer to anyone trying to raise money for their startup in this climate.

Don’t fundraise in the summer or winter

During Covid, VCs started holding meetings from July to August and even in November and December. But before the pandemic it was rare. I see that changing now. Better use the extra time you have now to prepare a solid game plan that you can set into motion when investors are around and engaged.

Ownership and governance requirements are again important, so plan for that when you list investors to pursue.

Have the deck and data room ready

Capital has been abundant over the past few years, which has fostered a tendency to prepare less for fundraising.

Shortcuts are no longer a good idea. Those preparing to approach investors should have the deck, data room and projections buttoned up before going to the meeting. This allows VCs to do their due diligence and also shows them that you are serious.

Be prepared to show more progress

Regardless of the stage of your company, the expectation is that you will be able to make more progress than in recent years, so prepare to maintain your progress. In the pre-seed stage, you need to have a pattern. At Seed, you’ll need to show revenue, and at Series A, you’ll probably need to have evidence to show product-market fit.

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