Despite record amount of money flowing into venture capital, funding for startups is fast drying up according to some leading investors. The questions going through every investors mind is if it is a repeat of the year 2000 dotcom bubble. However, recent investment data does point towards a slow down in funding, though the appetite for entrepreneurs for starting up new tech ventures remains at an all time high.

There is a story to be told about the “Haves vs. the Have Nots”

When, I speak to VC’s and Private Equity investors they often complaint about the lack of investable companies and at the same time are worried about the existing portfolio of long term investments that should have seen a profitable exit by now.

And then, there are the start-ups, many of them with similar business models but totally different positions in terms of access to finance. Historically, American companies are the most well-funded followed by Europe. However, there is a new breed of venture-rich start-ups from India and China. There are also a lot of good companies stuck in the middle, with great technology and business models but do not have a clue about how to get investment. 

Lack of exit opportunities haunt tech companies who started up after the dot.com crash of 2000

When I speak to CEO’s of well-established tech companies on the other hand, they complain about lack of exit opportunities, damp IPO market and poor access to finance. After spending many years innovating and acquiring customers, they need to reinvent their businesses and start from scratch.

 How to value companies needs a complete rethink?

Valuation” is the biggest elephant in the room for investors, followed by return on investment. Some Venture Capitalists have been breaking their own rules while appraising investments and coming up with novel valuation models.

Time for consolidation and transformation

One thing we all agree on is that the market is ready for consolidation and a big shake out. The companies that will win are the one that can continuously innovate, scale up sales, grow and reinvent them self.

Does your company need help in growing or transforming?

If yes, please do contact me on anuj@peakstate.com