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The lack of liquidity has tempered investor enthusiasm for pouring new funds into legacy VC deals. Given the high valuations that many companies received during the bull market of the early 2020s, many founders may be reluctant to accept a lower number and may be waiting for conditions to improve. However, founders should remember that valuations should be a realistic projection of future growth and not as a reward for past success. It’s also important to focus on running a sound business, which means continuing to invest in people and financial infrastructure.
The current environment of market volatility we have entered could have several implications to the venture market. If this uncertainty continues, it could create a challenge for venture capitalists looking to raise venture funds. Companies that were anticipating liquidity this year may need to return to the private markets to raise additional capital until the public market stabilizes.
Nevertheless, this remains an excellent time to start a company. Access to talent and new technology have never been better, and founders with a compelling value proposition and a knack for developing long-term relationships will find themselves poised for success in this environment and in the future.