There is a collision happens in the early phase of the market.
In one world, late-stage investors respond to tech-stank corrections by yelling at the early-stage investing world, forcing novice investors to go even earlier to defend property and potential returns. This trend was underlined by companies like Andreessen Horowitz, which launched a pre-seed program months after launching a $400 million seed fund. In fact, Techstars, an accelerator literally launched to help startups get off the ground, introduced a fund to support companies that are too early for their traditional programming.
While all that is going on, early stage investors persist a valuation adjustment and portfolio write-downs. Some admit to telling portfolio companies to refocus on cash preservation, profitability and discipline, not just growth.
Let’s pretend these two vastly different worlds are in the same universe: early stage investors are getting more disciplined and cash rich, but at the same time the earliest investors are going earlier. Investors push founders to be lean but also green, but at the same time offer them $10,000 to take the PTO and try out entrepreneurship for a week. Growth, gross margin and burn are the new top priorities for CEOsbut at the same time, venture capitalists are pushing to offer more funds sooner in newly invented subcategories of early stage investments.
The tension between these two worlds looks different depending on whether you’re a Stanford founder starting a SaaS company or a budding entrepreneur trying to disrupt agtech. Anyway, the growing spotlight and early-stage discipline make me wonder one thing: what else can early-stage investors focus on?