VC firms pulling back on their investing is actually a huge advantage for startups.
Founders who have a clear, crisp, compelling story gain a real edge because firms have already raised funds. Firms cannot sit on their dry powder forever. They absolutely will deploy capital if they understand why you are different and why you can do what you say you want to do.
When it’s just a feeding frenzy and the bar is a bit lower, you’re competing against founders who don’t always have their act together. It’s hard to cut through all the noise. As the bar for funding raises, founders who do have their act together become a better fit for firms’ increased selectivity.
In other words, you have to demonstrate that you know your market well enough to thrive in it by changing it.
So how can you respond to this emerging funding climate?
- Have a plan and ask everyone who can help you to poke as many holes in it as possible.
- Have a compelling founder story that shows why you care and why you can.
- Have a demonstrated point of view that shows them you understand your market in-depth and gives them unexpected insights into how that market can be better and different.
