Amid a downturn in public stock prices and a rise in interest rates, VCs are more cautious about investing. Founders have had to adapt — with some choosing to abandon raising altogether until a more favourable economic climate returns.
When investors say 'raise less', don't listen: More often that not, investors put pressure on founders to raise less cash because their fund size doesn’t allow them to lead the round, or because they can’t get the chunk of ownership they want, among other things — which is why Vila advocates for sticking to your guns and doing what’s right for your company.
“We understand our business, we know what we want to build and we have a strategy to do it,” she says. “If you are certain of what you need, keep looking for the right investor.”
Do investor DD: Helery Pops, cofounder of Estonian VC firm Honey Badger Capital, says that founders should think about fundraising as building a long-term relationship with an investor — one who will help you with all aspects of running a business, and will be supportive when the going gets tough.
“Everyone can talk and say they are super helpful. But at the end of the day if the investor just gives you money and disappears, that is not what you want.”
Be weary of predatory terms: Things have changed pretty drastically in the last six months, with term sheets becoming decidedly more “predatory,” said Mike Labriola, a partner at law firm Wilson Sonsini. In other words, investors are looking for more protection from a downside scenario. And that means negotiating for deals that give founders less control and put more guardrails in place.
Michiel Kotting, partner at Northzone, advises founders to talk to people they trust to get a second opinion on a deal. He also says that a downround — or raising a round at a lower valuation than a previous round — is often the better option than another solution that involves keeping the valuation but handing a big chunk of control to a new investor.
Budget for your fundraise: June Angelides, investor at Samos Investors, says startups should be smart about setting money aside for fundraising fees — and definitiely not spend money on some things. “Check when negotiating deal terms with investors whether you are required to pay for the cost of their legal fees (as well as your own!),” she says. And ask the following questions before fundraising:
Who pays the investors’ legal fees?
When do fees have to be paid? Before or after the round is completed?
What is the maximum this could cost?
Do I need a law firm or can I use a legaltech platform
Another perspective
Here are a few pieces of advice for startups seeking venture capital in difficult bear markets:
Focus on your value proposition: In a bear market, investors are going to be more risk-averse, so it's important to clearly articulate the value that your company brings to the table. This includes the problem you are solving, your unique solution, and your target market.
Have a solid financial plan: Investors will want to see that you have a solid plan for how you will use their capital to grow the business. This should include detailed financial projections, a clear understanding of your burn rate, and a plan for profitability.
Be realistic about your valuation: It's important to have a realistic valuation for your company in a bear market. Overvaluing your company could scare off potential investors, while undervaluing it could leave money on the table.
Look for alternative sources of funding: In a bear market, venture capital may be harder to come by. Consider looking for alternative sources of funding, such as angel investors, crowdfunding, or government grants.
Network and get introductions: In a challenging market, it's more important than ever to have a strong network. Try to get introductions to potential investors through mutual connections or industry events.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
It’s a turbulent—and busy—time in private markets. Portfolios are fuller than ever and there is significant dry powder across the industry. Yet fundraising and deal making for larger transactions are well off 2021’s highs. The slowdown in exits, coupled with declining public market valuations and the resulting denominator effect, has shifted investor allocations.
As a result, the current fundraising environment is far more challenging than in the past several years. The latest issue of McKinsey on Investing—brought to you by senior partners Pontus Averstad, Pooneh Baghai, Alejandro Beltrán, and others—steps back from the immediate challenge of the market, and the broader macroeconomic and geopolitical uncertainty, to present a longer-term perspective on how investment firms are evolving.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
A few key criteria define a decacorn, but what characteristics do they have in common? We take a look at what makes a winner in the world of startups.
There are now 48 decacorns, according to Failory, including familiar brands like Canva, Byju’s and SpaceX. While they focus on wildly different areas, they all have their valuation in common.
Meaningful path: Only truly original ideas can have disruptive power. Startups seeking a “quick flip” – doing something without taking the long view – are also on the wrong path, he adds. “If you’re just here for making money, then we’re the last ones to invest money”
“That’s what we have to figure out in our conversations with founders – what is the drive? What is the motivation?”
Startups who care more about their valuation or their customer typically come unstuck. Startups that focus on creating a great product that solves a valuable problem for a customer will be rewarded.
It’s about being proactive rather than reactive – constantly trying new things, finding fresh revenue streams and tapping into issues “that really matter”.
Disruption never happens from inside,” he warns, adding that companies like Google stay abreast of new trends and technologies by essentially incubating startups to continue innovating, and then synergizing these findings into their own business models.
Global focus: By scaling globally, companies quickly spread geographically, which has a “multiplier effect” on an international scale. There are very few unicorns/decacorns that are not global.
They usually leverage technology to support hypergrowth and scale – hence why unicorn status is disproportionately centered around software technology startups
Meanwhile, the development of a “digital ecosystem of partners” can also boost a startup’s chances of success. They tap into external stakeholders with complementary capabilities for collaborative development of products, services and offerings, which have global appeal and market potential.
In America, when you fail, you come back, you do another startup, nobody blinks. But elsewhere, the risk appetite is low,” he says. “You must be prepared to go through anything, go to the wall, walk through fire. It’s about survival. It’s about longevity.”
Another perspective
Decacorns are privately-held startups that have achieved valuations of over $10 billion. Some factors that contribute to the success of these companies include:
Strong leadership and management: Decacorns are often led by visionary and experienced leaders who are able to navigate the challenges of growing a startup into a large, successful company.
Disruptive technology or innovative business model: Many decacorns have developed new technologies or business models that disrupt existing industries and create significant value for customers.
Ability to scale: Decacorns have been able to rapidly scale their operations and expand into new markets, often through a combination of organic growth and strategic acquisitions.
Strong financial performance: Decacorns have typically demonstrated strong financial performance, with revenues and profits growing at a rapid pace.
Strong investor support: Decacorns have often attracted significant investment from venture capital firms and other investors, which has provided the capital needed to fuel their growth.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
The chief executive of one of Europe’s biggest insurance companies has warned that cyber attacks, rather than natural catastrophes, will become “uninsurable” as the disruption from hacks continues to grow.
For the second year in a row, natural catastrophe-related claims are expected to top $100bn. Amid growing concern among industry executives about large-scale cyber-attacks, Mario Greco, chief executive at insurer Zurich, one of Europe’s biggest insurance companies warned that cyber-attacks, rather than natural catastrophes, will become “uninsurable”.
“What will become uninsurable is going to be cyber,” he said. “What if someone takes control of vital parts of our infrastructure, the consequences of that?”
There is no doubt that the cyber threat landscape continues to grow, as insurance executives fret about the risks from pandemics and climate change, which test the insurance sector’s ability to provide suitable coverage.
Zurich’s Mario Greco praised the US government’s steps to discourage ransom payments. “If you curb the payment of ransoms, there will be fewer attacks,” he told the Financial Times.
Spiralling cyber losses in recent years have prompted emergency measures by the insurance sector’s underwriters to limit their exposure. As well as pushing up prices, some insurers have responded by tweaking policies so clients bear more of the losses.
He called on governments to “set up private-public schemes to handle systemic cyber risks that can’t be quantified, similar to those that exist in some jurisdictions for earthquakes or terror attacks”.
Mario Greco, chief executive at insurer Zurich: praised the US government’s steps to discourage ransom payments.
If you curb the payment of ransoms, there will be fewer attacks.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
Creativity breeds originality. Originality is key to any successful startup. It gives your brand an edge over its competitors. How? Because your service or solution is different from what has already been before.
It helps us understand other people's points of view by encouraging us to think outside of our own comfort zone. When we're able to express ourselves through words or ideas, it opens up our minds to limitless possibilities.
Innovation: Creativity also helps us get unstuck when we're stuck in a rut by helping us think outside of the box. That way, we can find new ways forward. Even if those ways aren't directly related to what we were originally working on. It's also one of the cornerstones of innovation —keeping your business ahead of the curve and helping you stay competitive in an ever-changing marketplace.
That's because creativity can have a positive impact on our internal systems. With expanded thinking, companies can have a well-rounded process in place for solving unexpected issues.
It can help you find ways to resolve unconventional problems. In turn, this should help your company grow, which will increase profits.
OpenAI on 'Creativity and entrepreneurship'
Creativity is essential to entrepreneurship because it allows entrepreneurs to come up with new and innovative ideas for products, services, and business models. This can be particularly important in highly competitive markets where standing out from the competition is key to success.
Entrepreneurs who are able to think creatively are often able to identify untapped opportunities and develop unique solutions to problems, which can give them a competitive advantage in the market. Creativity can also help entrepreneurs to adapt and pivot their businesses in response to changing market conditions or shifts in customer needs.
Additionally, creativity is often a key factor in the success of marketing and branding efforts, as it allows entrepreneurs to develop compelling messages and differentiate their businesses from others in their industry.
Overall, creativity is an important skill for entrepreneurs to cultivate, as it can help them to identify new opportunities, develop innovative solutions, and stand out in their markets.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
How can you scale a marketing strategy effectively?
Invest more money. First, you could consider spending more money on the strategy itself. This can manifest in any number of different ways, depending on the type of marketing you're pursuing. In SEO, you might spend more money on link building or content development.
Conquer new territory. Another option is to conquer new territory — contending with some of your top competitors, changing your geographic location or placing your ads in new areas.
Expand to new audiences. Some marketers expand their strategy by trying to target new audiences. Businesses can target new audiences by creating and promoting marketing content that appeals to those audiences. One type of content that can be particularly effective in this regard is video marketing that can be used to showcase a product or service, demonstrate its features and benefits, and tell a compelling story that resonates with the target audience. To create an effective video, businesses can work with explainer video production agencies that specialize in creating videos tailored to a business's needs and target audience and can help generate interest and leads.
Scale gradually (when possible). Don't hemorrhage all your marketing dollars on an uncertain strategy; increase your efforts one step at a time.
Do your market and competitive research upfront. Do all your market research and competitive research front so you have a much better understanding of the contextual environment you're about to enter. For those seeking a deeper understanding of market analysis, exploring the concept of 'what is technical analysis of stocks' can offer valuable insights into the world of stock trading.
Keep your processes consistent. Don't lose sight of the principles that made this strategy successful in the first place.
Be cautious with repetition. Repeating your message is a great way to make it stick, but it's also a great way to annoy people if you aren't careful. Don't overwhelm your customers.
Keep a close eye on your ROI. Throughout the entirety of your scaling operation, keep a close eye on your return on investment (ROI) and see if it goes through any changes. Are you getting as much value as you expected? If not, why?
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
How AI gets built is currently decided by a small group of technologists. As this technology is transforming our lives, it should be in all of our interest to become informed and engaged.
In some way, it should be obvious how technology can fundamentally transform the world. But while we have seen the world transform before, we have seen these transformations play out over the course of generations. What is different now is how very rapid these technological changes have become. It has become common that technologies unimaginable in one’s youth become ordinary in later life.
The majority of surveyed AI experts believe there is a real chance that human-level artificial intelligence will be developed within the next decades, and some believe that it will exist much sooner.
What's at stake? All major technological innovations lead to a range of positive and negative consequences. For AI, the spectrum of possible outcomes – from the most negative to the most positive – is extraordinarily wide.
AI systems can cause harm when people use them maliciously. For example, when they are used in politically-motivated disinformation campaigns or to enable mass surveillance.
But AI systems can also cause unintended harm, when they act differently than intended or fail.
For example, in the Netherlands the authorities used an AI system which falsely claimed that an estimated 26,000 parents made fraudulent claims for child care benefits. The false allegations led to hardship for many poor families, and also resulted in the resignation of the Dutch government in 2021.
Negative impacts at scale: As AI becomes more powerful, the possible negative impacts could become much larger. Many of these risks have rightfully received public attention: more powerful AI could lead to mass labor displacement, or extreme concentrations of power and wealth. In the hands of autocrats, it could empower totalitarianism through its suitability for mass surveillance and control.
Can’t we just tell the AI to not do those things? It is definitely possible to build an AI that avoids any particular problem we foresee, but it is hard to foresee all the possible harmful unintended consequences.
If we fail to develop this broad-based understanding, then it will remain the small elite that finances and builds this technology that will determine how one of the – or plausibly the – most powerful technology in human history will transform our world.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. 
It’s a turbulent—and busy—time in private markets. Portfolios are fuller than ever and there is significant dry powder across the industry. Yet fundraising and deal making for larger transactions are well off 2021’s highs. The slowdown in exits, coupled with declining public market valuations and the resulting denominator effect, has shifted investor allocations.
The chief executive of one of Europe’s biggest insurance companies has warned that cyber attacks, rather than natural catastrophes, will become “uninsurable” as the disruption from hacks continues to grow.
