The nature of my work isn’t cyclical: VC activity has slowed down dramatically this year, but I still keep pretty busy.
According to the National Venture Capital Association, deal count for seed-stage startups decreased 52% year over year in Q1 2023. When I saw that number, I couldn’t help but wonder: What are VCs doing with all their spare time these days?
For a seed-stage investor, this might be a great opportunity to learn a new language or do some traveling. For a seed-stage startup, however, this is a time to find out how much value your investors actually provide.
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Despite the obvious power imbalance, founders need to know whether the people they’re getting into business with understand how to operate during a downturn, says Navin Chaddha, managing partner at Mayfield Fund.
In this article, he looks at different ways inception-stage investors and board members can support early-stage teams and includes a ten-question checklist that can help founders assess whether the VCs they’re talking to are a good fit.
“While it might seem daunting for founders to question potential investors in today’s climate, remember that you need to build a mutual zone of trust for the long journey,” he writes.
Thanks very much for reading,
Editorial Manager, TechCrunch+
How to prepare a hardware startup for raising a Series A
In recent months, two tech-friendly banks failed, the Fed raised interest rates, and SaaS startups started focusing on long-term profitability instead of short-term growth.
“The world we used to live in — the one that revolved around using cheap money to pump up ARR — is gone,” writes Champ Suthipongchai, co-founder and GP at Creative Ventures.
“So how can a hardware company raise a Series A amidst yet another ‘new normal’ in this post-low-interest-rate era?”
Competition concerns in the age of AI
There’s a lot of excitement about current and future use cases for AI-enabled technology, but are the companies boldly charging forth into this new world creating legal problems for themselves down the road?
According to attorneys Henry Hauser, Shylah Alfonso and Chris Williams from law firm Perkins Coie, using AI to develop pricing algorithms, make purchasing decisions, or set compensation could run afoul of federal and state laws regarding consumer protection and antitrust.
“By implementing policies and processes that preserve human control and accountability, organizations can minimize legal exposure and avoid unintended consequences,” they write.
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FedNow instant payments are about to unlock fintech investment opportunities
Launching this summer, FedNow is a new initiative by the U.S. Federal Reserve that will enable instant payments 24/7/365.
Because the platform will offer lower transaction costs and real-time settlement, Fika Ventures managing partner TX Zhuo predicts that it will create new avenues for fintech companies of every size, “the effects of which could be realized as early as next year.”
6 investors explain why they are bullish about Japan’s startup scene despite an uncertain economy
Global investment activity has cooled, but “2022 was a record year for the Japanese VC market,” reports Kate Park.
She interviewed six investors who are active in Japan’s startup ecosystem to learn why “the money managers are optimistic despite uncertain macroeconomics” and asked about the advice they’re offering their portfolio companies:
- Gen Isayama, co-founder and CEO, World Innovation Lab (WiL)
- Tsuyoshi Ito, CEO and founding partner, Beyond Next Ventures
- Katsuya Hashizume, executive officer/partner, Beyond Next Ventures
- Gen Tsuchikawa, CEO, Sony Ventures Corporation
- James Riney, CEO and founding partner, Coral Capital
- Anis Uzzaman, founder and CEO, Pegasus Tech Ventures