"Many investors are now pushing their companies to turn a profit."
While this may be shocking to some in the world of start-ups, as a regular person I find this to be change I can believe in.
Perhaps another blow-up followed by a meltdown can be averted this time. I doubt it, but I want to believe that it's possible.
When a startup called "Fairygodboss" is getting $14,000,000 in funding, it's probably a sign that a correction is a'comin.
7
The Dot com bubble was all about companies with no revenue being over valued. This bubble is about companies with no pathway to profitability being way over valued. This bubble is about to be burst.
6
Cash is always king. The idea that leveraging others' money was better has been disproven. In bad times, the interest eats up profits and even operating capital.
2
I am sadly old school where a path to profitability was so ingrained in me that I advise my clients to never not know how they will get there in the event of a funding desert.
I was raising capital in 2000 and had closed a round just prior to the melt-down. I was able to survive the 9/11 funding because my team and I had built a 'get profitable now" plan so we did not have to fall into the chasm of denial while so many others did. We survived, many did not.
I continue to pound this table with clients for that same reason. You just never know.
9
A recession, even a moderate flatening in the economy... is death for many startups.
Further... it is also death for many startups that have gone public as well.. because in many cases they simply have not planned and adjusted for when times are less rosy and instead keep diluting their stock with huge borrowing to continue to finance operations in a non-profitable company AND continuing overly generous stock grants to it's employees.
6