The hard talk that venture capitalists need to have with startups now

In today’s tough environment, many difficult decisions will have to be made

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Not only do founders have to convince new investors to invest, but raising at a down-round valuation means founders themselves have to be diluted substantially. They also have to convince their existing investors to mark down their investment below cost to reflect the revised valuation. PHOTO: PEXELS

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Benedict Tan

Published Mon, Jun 19, 2023 · 05:50 AM

AS AN investor, I often hear about the various ways startup founders celebrate after successfully raising investments from venture capitalist (VC) firms. Raising new funds is no easy feat, and definitely a milestone for the founders.

After all, it takes an average of three to four months of intensive investor due diligence ranging from background checks on the founder(s), verifying the business’s technological stack, digging deep into market research and scrutinising go-to-market strategies.

But receiving the cheque from the investor is just the beginning of a long relationship between the founder(s) and their investors. There will be numerous challenging decisions that founders and investors need to make until the company eventually exits. Such tough decisions are now made more difficult in the current environment of cutbacks and lower valuations.

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