Ashneer Grover, co-founder and former director of fintech platform BharatPe, has advised venture capital and investment firms to first think about themselves “target size” in the wake of current economic downturn before telling their portfolio companies and startups to do so .
Grover’s tough approach to VC companies came as several large investment firms such as Sequoia Capital, Lightspeed Venture Partners, Craft Ventures, and Y Combinator etc. sent memos and footnotes to their portfolio companies and startups on how to endure the ongoing crisis. .
“It’s ironic that VCs are singing a good measure ‘of portfolio companies in chorus. The fact is that VCs companies have to direct their own teams by 80. I have not yet figured out why you need more than 5 people in a VC- company. If they were tight themselves – portfolio, because will not be that far away, “tweeted Grover, who is also a famous judge on Shark Tank India.
Sequoia recently created a 52-slide deck, first reported by The Information, entitled ‘Adapting to Endure’, for the founders of their portfolio companies.
“Our intention in collecting today is not to be a beacon of gloom. But we also believe that winning in the years to come will depend on making tough, decisive choices that are faced with uncomfortable challenges.” t may have been masked during the abundance and distortions of free capital over the past two years, “reads the deck.
The VC companies advise startups to focus on sustainable growth, reduce cash consumption, cut costs and understand that an economic recovery can be 18-24 months away.
As capital became scarce, Sequoia Capital told the community of its founders to tighten the belt and focus on profitability.
“We’re just starting to see the rising cost of money flowing through to affect the real economy. If you go back and think twice, it’s not just you. third order, because the costs of one company represent the revenue or purchasing power of another, “said the leading VC fund.
Startups are confronted with the heat as the funding winter is here.
Supported by SoftBank and Tiger Global, Unacademy, which recently laid off more than 600 employees, has announced a funding winter that could last as long as 18 months, saying it will cut costs where needed to dry up time to waste and become profitable.
In a letter to staff, Unacademy’s co-founder and CEO Gaurav Munjal said that “we need to learn to work under constraints and focus on profitability at all costs”.
“Winter is here. We need to change our ways. We will focus on organic growth channels instead,” he wrote.
“Some people predict that this (funding winter) could last 24 months. We need to adapt. This is a test for all of us. We need to learn to work under constraints. We need to focus on profitability at all costs,” Munjal told staff.
“We have to survive the winter.”
Realizing that ‘financing winter’ is finally set after a strong rally of more than two years in the pandemic that could drive internet-driven startups exponentially across the spectrum – edtech, healthtech, e-messenger, food delivery and online home services, large investment companies have decided to park their money elsewhere, such as in Web3.0 and gaming.
na / vd
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