To read the many, many excellent (and often elementary) posts about the developing ‘uni-pocalyse’, you would assume that VCs have decided to double-up their fleece vests and hole up in Montana.
This fear is largely untrue, especially when it comes to FinTech funding.
First, remember that PayPal launched in a down year. Carry that bit of information like a talisman against the darkness: in slow economic times it’s the folks who save consumers money or enable small transactions without friction that come away winners. This is important. Help people when they need it most and they will thank you.
Second, remember that VCs made a lot of goofy bets. Like really goofy. Check out TechCrunch for the past few months and you’ll find startups that do everything but tie your shoes before you leave the house. Heck, there’s even an Uber for pumping gas.
But those goofy bets aren’t truly contaminating the rest of the markets. Think of this as a reset in the mindsets of big money. The VCs who were patient over the last few years, made strategic bets early and didn’t overpay on multiples are still looking for solid businesses that are investable.
Fresh funds are being raised and they need to be invested.
There is one rudimentary concept that we should never ignore: a great business concept plus strong execution equals an investable business. Strong, diligent investors – regardless of the overall funding environment – will always fund those types of businesses.
A solid VC I spoke to said two things were happening – unicorns (which Wikipedia says are companies “whose valuation has exceeded the somewhat arbitrary value of $1bn”) are finally being accepted as overblown and many investments in AdTech and e-commerce have borne no fruit.
Did you ever have an inkling that a well-funded company that sends boxes of snacks or clever bow ties on a monthly basis wasn’t really going to set the world on fire? You were probably right.
Should you be panicking? No, but you’d better start working. I’m doubling down on Freemit’s financing efforts right now in San Francisco simply because we are looking for a solid partner with lots of experience in the money-sending space.
We are looking for solid partners, not just a check.