♞ Tracking Market Conditions

Tracking Market Conditions

One of the biggest problems with the VC industry is the imbalance of time investment by investors vs founders. What do I mean by that?

Investors often spend 10+ years as VCs perfecting their skills, negotiating with founders, tracking industries, etc. For founders, VC is something they aim to raise every 18-24 months, 5-7 times over a 10-year period as they build a $1B+ company.

In short investors know their industry inside and out, they dedicate their lives to it. You are just playing their game for a few months every couple of years. This puts you at a major disadvantage. That is why you need to get into the habit of tracking market conditions.

Many founders only track market conditions in Venture Capital when they initially start a company and when they are fundraising. In the times in between they are focused on building their business and not on tracking what is going on in the venture capital space.

The problem with this is that 90% of founders that I see start a raise with a complete misreading of the current market conditions. In 2021 anyone could raise with just a great idea and a tech background. Today (AI excluded), without traction, it is extremely difficult to raise. Despite that, I still see many founders who raise large rounds in 2021 entering the market today expecting the same standards.

This isn’t a problem limited to those that raised in 2021. Many founders who raised in 2019/2020, for example, missed their chance to raise significant amounts in 2021 that could have allowed them to avoid the much harder market conditions in 2022/2023. If they had actively tracked the venture capital industry they would have known that they should have raised in that prime market before it collapsed.

So this newsletter is a reminder that whether you are days, months or years away from raising, it is always important to dedicate some time (even just 30 minutes a week) to keeping track of the venture capital industry and recent raises in your sector. Doing so will allow you to understand the trends and ensure that you price and time your raise effectively.

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Onwards and Upwards,

Liam Gill