When Markets Correct, How Do You Optimize Your Business?

The latest market correction has everyone worried, from Wall Street to Main Street to founders trekking up and down Sand Hill Road.

- Indus Khaitan

Sure, the market is still up (dramatically so) year-over-year; ridiculously so since the start of the pandemic over two years ago. But, lately, the S&P 500 looks less like a hockey stick and more like a lightning bolt. Less up and to the right and more what the heck is going on?

I'm no market analyst, but I'm willing to bet 2022 will continue to be an... (I'm choosing my words carefully, here) interesting year for the market.

But how does this impact founders and early-stage companies?

Corrections are not uncommon, but it does raise at least a couple of questions: will VCs adjust the amount of funding they've been pumping into tech startups since 2020? And, if so, how will cash-strapped founders lower their costs and maximize their investments in an effort to extend their runway? How a correction could affect VC money Let's get one thing out of the way: VC money will not always be there like it has for the past several years.

I don't want to use the B word, but when a VC says this feels a lot like 1999. you tend to sit up and listen.

For the last two years, the number of tech startup unicorns (those worth more than $1 billion) has skyrocketed to over 900 companies. The industry is seeing a funding rush with VCs offering wild amounts of money to promising startups.

The power balance has shifted, as well. Traditionally, startups put together detailed proposals to gain the interest of venture capital firms. Today, those same firms are approaching startups before any formal fundraising has begun, sometimes multiple times a year.

Call me a pessimist, but this can't last.

We might not see a major correction this year (again, I'm not a market analyst). But we will at some point, and VCs are likely to tighten their belts in the months that follow.

Are startup founders ready for that inevitability?