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In 2022, a massive correction began in the startup ecosystem. Rising interest rates led to plummeting startup valuations and venture firms struggling to raise new funds. Global venture funding fell 35% between 2021 and 2022, and startup valuations dropped by an average of 34% across all stages. And it has not gotten better – in fact fast forward to the first quarter of 2024, and we have witnessed more startups go out of business than at any time this decade.
As we enter the back half of 2024, little has improved. In fact, we may be headed for an even tougher road. If you’re a startup, you might want to stay on the sidelines a bit longer before trying to raise again.
Why?
Nearly 25% of Enjoy The Work’s roster of startups intends to raise outside capital in H2. How are we advising them? With a dead-simple rubric:
At Enjoy The Work, we do believe in founder magic. We’ve seen it time and again. So we know there will be founders who find a way to new capital despite long odds. We don’t wish to sound defeatist. But our job is to provide guidance for what we believe. And in this market, we expect only the best performing startups will enjoy raising capital. For everyone else, we suggest founders save themselves some pain and sit out this round if at all possible.
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Founded in 2015, Enjoy The Work is a San Francisco-based startup advisory firm serving startup founders and CEOs worldwide.