Dire times for early stage

Startups are always going to be risky. The majority of early stage startups never find product-market fit and end up shutting down before they ever get the chance to get started. The statistical risk of bankruptcy goes down with each successive funding round.

Of course during a down market like right now, the companies at the biggest risk of not making it out will be the earlier stage companies. I’ve been speaking to a lot of investors lately to get a pulse on the market and they say the situation is dire.

They’re busy in all the wrong ways right now. Many of the VCs I spoke to said that many of their portfolio companies are months and sometimes weeks away from going bankrupt. Many are looking for emergency debt right now to stay afloat. One investor I mentioned said that he was called twice on Sunday from two different startups desperate for some capital to stay afloat.

We’re probably not going to hear about a lot of these companies in the mainstream tech media. Early stage startups that have yet to make a major dent typically do not get a lot of media coverage.

Regardless, this is yet another domino that will fall in this down market. Unfortunately I think there’s going to be a lot of these startups who do not make it out of this “recession”. I expect things to be pretty brutal in 2023. All of us working in tech should brace ourselves.