Tech Tuesday: The Current Funding Climate

Must-reads from the desk of our Principal of Tech and Innovation, Cheryl Foil.

Rest in peace, Gene Wilder. [Image via ign.com]

“There’s no earthly way of knowing

Which direction we are going

There’s no knowing where we’re rowing

Or which way the river’s flowing…”

— Willy Wonka

1. Start-Ups Once Showered With Cash Now Have to Work for It: Most data points in 2016 suggest that startups have to work harder for money than before, especially early-stage. I don’t think that’s a bad thing. Good diligence pays off for both sides. [The New York Times]

“The balance of power is shifting across tech start-up land.”

2. Silicon Valley’s Venture Capitalists Are Raising Money to Protect Their Unicorns: For the rest, some say winter is coming, but there will always be room for good businesses and investors alike. It just won’t be as easy. [Fortune]

“Venture capitalists are raising money at the fastest rate in a decade, raking in about $13 billion in the first quarter of 2016. But much of that cash won’t flow into new startups anytime soon. Rather, venture firms are bracing for a downturn and boosting reserves to keep companies they have already backed from going bust, said venture capitalists and limited partners.”

3. All deals on AngelList will soon be private (plus other updates you should know): Funding is not inherently a public activity, but it’s interesting to see the winds shift back in the direction of privacy.

“Seventy-five percent of the deals are now private, up from 45 percent a year ago… that public-private dichotomy is always really hard for entrepreneurs [in fundraising mode] to figure out, so they start associating our brand [with a place to share information publicly to accredited investors], which is a negative, so they don’t want to go on here.” [TechCrunch]

4. The unicorn hedge: There’s a bubble… but it ain’t in tech: Liquidity events happen for a lot of reasons.

“This might be risky, but it’s no more risky than not doing anything and expecting to keep your CEO job intact and the stock price rising.” [Tech Insider]

5. The next $1 billion startup acquirer won’t be a tech company: There’s some interesting acquisition activity taking place. In another 10- years, will all big companies be tech companies? [TechCrunch]

Unilever HQ in the Netherlands.

“Will we see more old-line consumer businesses buying their way into innovation in the coming years? I think so.”

6. BONUS ARTICLE :: Uber Loses at Least $1.2 Billion in First Half of 2016: Is it worth it for marketplace startups (or other labor-intensive scaling concepts) to push towards ubiquity at any cost? [Bloomberg Technology]

“You won’t find too many technology companies that could lose this much money, this quickly.”

“‘I think what Uber is trying to do is, ‘Hey, look, we’re going to take the losses up front in order to get to disproportionate scale,’ said Robert Siegel, lecturer in management at Stanford’s business school. ‘The question is when they can get to profitability.’”


You can follow Cheryl on Twitter @CherylFoil, and follow our firm Kiddar Capital on Twitter, Facebook, and Instagram.