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How to Get Funded in 2023

An article we liked from Thought Leader DC Palter:

How to Fund Your Startup in 2023

Be prepared for valuations and terms that are returning to pre-bubble norms How to Get Funded in 2023

The new year has arrived and many early-stage startups are gearing up to begin fundraising. The timing is not great.

With the Nasdaq down 33% in 2022, high-risk stocks like Telsa down 75%, the SPAC boom dead, the IPO market closed, and later-stage startups taking down rounds, it’s a tough time for early-stage startups to be looking for money.

This is a complete turnaround from the beginning of 2022 when it seemed that every crazy idea was not only getting funded, but at insane valuations.

The slowdown started around the middle of last year. I’m an active member of two angel groups with member funds. Both groups typically invest 10% of the fund in 10 startups over the course of the year, and raise a new fund each year. This year, both groups are still sitting on most of the money raised at the beginning of 2022. We won’t be raising another fund for a while.

Internally, we’ve been asking each other: “Where are all the good startups?” “We haven’t seen anything worth investing in since April.”

We’ve seen just as many pitches, but made far fewer investments. Has the quality of the startups gone down? I doubt it. But our enthusiasm has, especially for marginal deals. A year ago, we were jumping aboard anything with momentum. Now we’ve sobered up and become more discerning.

What hasn’t changed yet are the deal terms we’re being offered. While the stock market has plummeted, the value of our homes is going down, and the interest we can get from cash has skyrocketed, the deal terms I’m seeing from early-stage startups are still where they were a year ago at the top of the bubble. And that’s causing a mismatch between...

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Thanks for this article excerpt to DC Palter.

Photo by Annie Spratt on Unsplash

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