Startup Advice - What to do in a downturn?

The economic downturn is being felt in the US and Western Europe. For many of the startup founders, the macroeconomic cycle and falling gross demand are probably not of much significance, but it does impact financial institutions, portfolio valuations, and funding attitudes.

This sort of thing is generally cyclical, but we fear this cycle will be 18-24 months. Rather longer than the pandemic, and without the post-pandemic boom.  What this means for founders today is that sources of funding are drying up. VCs are becoming more cautious which means they are retreating to their home markets and they are looking to invest only in the best-performing businesses. That means if you are looking for funding outside the region, e.g. in London, and your performance isn’t stellar you can practically forget raising from VCs outside our region. Business Angels are retreating, too, and so are the crowdfunding platforms, e.g. Funderbeam, and business angel associations, e.g. Danube Angels are struggling.

The good news is that there are still well-cashed-up funds in the region. But the demands on them will be greater than ever. And, it won’t last forever. 

However, it is a new reality and you need to plan for it.

Remember, running out of cash is not an option.

You can read the entire article on the Fil Rouge Capital's blog.

Fil Rouge Capital is a private venture capital fund that will invest 42 million euros in Croatian startups and scaleups by the end of 2023.

Julien Coustaury has over 20 years of experience in manufacturing and services, much of it at the CEO level. He has worked in more than 80 countries across five continents and participated in over $1.7bn of purchase, sale, and financing transactions. He is no stranger to starting things: in his early career he traveled the world building mobile phone networks literally from the ground up, and as his career progressed he ended up building whole mobile phone companies from scratch.