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The global venture capital (VC) market is undergoing an undeniably challenging period, driven by the endless economic and geopolitical challenges occurring simultaneously around the world. According to KPMG’s Venture Pulse Q3 2023 report, global VC investment fell to its lowest level in 16 quarters in the third quarter of 2023. Many market participants have noted a historically high number of down rounds, a slowdown in the overall speed of VC transactions, and a lack of exit opportunities for an extended period of time.
9 million in 2023 was the lowest amount of funding received by startups since the same period in 2019, based on CB Insights’ State of Venture Q3 2023 report. The number of transactions also decreased slightly, with his 9 million year in 2023 he had 21,216 transactions. The number of transactions during the same period in 2023 and 2019 is 22,992.
According to the report, investors injected a staggering $465.6 billion into startups in the nine million year period of 2021, but startups received only $193.6 billion in the nine million year period of 2023. . So while 2021 was a peak year for startup funding, the current market has shrunk by more than half its size.
With no end in sight to market challenges, today’s investors are more cautious. The good old venture market as we knew it before 2022 will no longer exist. With that in mind, here are five pieces of advice he would like to share with any company seeking VC funding in 2024.
Related: Venture Capitalists Want to Confirm Product-Market Fit: Here’s How to Prove It
1. Ideas alone are not enough. Show first metrics and traction to VCs
In today’s financial climate, it’s much more difficult to sell just a noble idea or a talented team to investors, no matter how good your previous work or concept may be. These days, everyone wants more certainty, like initial engagement numbers. Most VCs want to see the first indicators or prototype of a product right away to confirm its potential. Focus on that to make your pitch stand out.
You also need to have a deep understanding of your market and its trends. Understand your competitors, envision their development trajectory, and clearly communicate your thoughts on where you overlap, where you excel, and where you can outperform your competitors.
2. Craft your marketing strategy and customer path from the beginning
Developing your customer base should start as soon as possible. Talking to potential customers is a great way to validate your concept. Their approval and insight from these conversations can prove to investors that your startup is on the right track. Additionally, startups that are already profitable give their teams more freedom and look better in the eyes of potential VC investors. The venture capital landscape has increased the demand for startups from funds. What is important now is not just the business potential, but the fundamental strength of the business. Investors are now looking for profitable growth, not just growth. They want to invest in growing companies that are close to self-sufficient.
Today’s market is saturated in many ways. Competition for the attention of consumers, talent, and investors is fiercer than ever, and the flow of information is widespread and intense. You need to know upfront how to cut through that noise and connect with your customers.
If your company serves a niche market, try reaching out to communities within that field. Perhaps the best strategy is to collaborate with micro-influencers or use targeted advertising on social media platforms. Try out specific social networks and communication methods typical of your area of expertise (gaming, his Discord, etc.). For some niche markets, it may be better to build your reach offline rather than online.
Related: Venture Capital 101: A comprehensive guide for startups seeking investment
3. Start working with the community as soon as possible
One of the most important aspects, and a sign that all investors consider to be a positive indicator of business health, is evidence that the product is in demand by customers. The more traction you can show in this area, the better your chances of getting funding and the better your valuation. Start building your future fan base as soon as possible to prove you understand the path to your target audience. Your community is paramount in this aspect.
Use all tools available. Start a YouTube or Discord channel, Twitter, thread, Facebook group, or Reddit thread to provide your startup with the latest updates. Consider expanding to new platforms and become an early adopter. Every opportunity to keep your audience informed and engaged is important.
4. Think ahead and create your dry powder
Fundraising in 2024 is likely to be a tough battle. Few things are certain, at least not for the length of time needed to secure an investment. Therefore, the best strategy is to have reserve funds for his 12-18 months of runway. That will help it weather the storm still hitting the market.
Begin the fundraising process at least six months before you expect your funds to run out. You’ll have more access to financing and you’ll be less likely to go bankrupt due to unforeseen circumstances. Additionally, in order to continue the project, it is better to reduce operating costs as much as possible.
Related: We can’t rely on venture capital funding to build a fair and prosperous entrepreneurial economy.what to do instead
5. Try to find as many investment options as possible
Plan the basics of your fundraising strategy as early as possible. The wider your net of potential investors, the more likely you are to obtain deals on favorable terms. Relying on a single source of funding can be risky, but diversifying your funding sources can ensure stability and resilience.
Look into grants and individual donations within and outside the angel investor community. Corporate partnerships and other options that align with your mission are also worth considering. Currently, many countries are trying to develop their technology markets by attracting companies and talent from overseas. They often offer special conditions to startups, such as lower taxes or several years of tax exemptions. Let’s think outside the box! For example, the UAE, Saudi Arabia, and Qatar are very keen on hosting startups such as gaming and technology companies. Introducing innovation is a core part of their economic strategy.
After all, even if the VC market is going through tough times, it’s still possible to secure funding if you can prove your product is viable. The trick is to demonstrate a deep understanding of how your product fits into the market. Be prepared to deliver community metrics, craft unique selling points and marketing strategies from the ground up, thoughtfully prepare investor pitches, and put more effort into your fundraising process than ever needed. please.
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