Observers and analysts have been waiting for the tech bubble to burst in the markets for 20 years. So it’s no surprise that some bubbles have exploded in flight, even after two years of pandemics in which the all-digital company, driven by incarceration, surfed the wave of changes in business. consumer behavior.
The sector of dark shops and other home deliveries is consolidating at high speed against a backdrop of bad losses. Big pandemic winners like Zoom or Peloton are disappointed. And the great innovation financier, SoftBank, has lost more than 15 billion and announced a 50% reduction in its future investments.
Craft Ventures advises startups to reduce their burn rate to 24 months using their available cash. YC wrote to all the founders in its portfolio advising them to do their calculations to have the same duration. Therefore, the message is: “We don’t know what’s going to happen, so let’s prepare for the worst!”
The impact of this pendulum after record years, both across the Atlantic and in French Tech, is still welcomed: through conversations about the new currency and record analysis, in the press and in French Tech afterwards. of work, ecosystem players do not notice the real issues.
The good news
This is good news, then. Because flowing money does not encourage invention, innovation, creativity, disruption, oblique looks …
From senior recruitment to marketing costs, sometimes unstructured growth to pricing discounts, the money available does not encourage violent choices, which should be everyday life. of a business leader.
Instead of talking about fundraising and appreciation, which are financial concepts for financial people, we need to talk about turnover, number of customers, retention rate or profitability. Concepts almost lost in the information produced by unicorns, which only interacted with the millions raised, billions valued, and number of employees. Finally, we will talk again about the real business, from service provider to customer, from supplier to manufacturer, from partner to partner.
Of course, raising funds can be important, especially in the case of an intense need for technological change that requires capital. But recently, charges have often been spent on marketing efforts to precede, and only then, a niche or market category that is not served by current operators.
The winner in a category no longer means the startup with the most charismatic founders or the best connected to the ecosystem, but the one that truly meets the needs of the market. This is also good news, because so -called “bootstrapped” startups, which are therefore profitable, are finally getting ahead. And they deserve it as much as unicorns.
It will be stone
Investors say this: if we can predict the worst – and we should – we need to take 24 months with current cash and turnover. Therefore, there are business plans that will run, with many hypotheses of costs – and associated revenue – that will not bring in new money. For some startups that are already funded, an additional round may be considered with their current investors (but likely under the same conditions as the previous round, which will lead to greater dilution).
We need to agree to grow more slowly but by spending less money – be it marketing, development, geographic expansion, recruitment … We have to make choices. Action plans need to be written, then rewritten regularly. Founders and founders will monitor their burn rate, their cash flow, their inflows and outflows more carefully.
One last tip
If the past two years have taught us, it is with every crisis comes the opportunity. This is the right time to listen to your market again, talk to your customers, evaluate its relevance or that direction of development … or even pivot wisely to lower costs. In France, we don’t have oil, but we have ideas!
Laura Bokobza advises managers on the development of their businesses. He is a member of the board of directors of Finaqui, the business angels association of Nouvelle Aquitaine.
Finaqui’s chances were renewed on March 1st. Led by Guillaume-Olivier Doré, the Board of Directors has thirteen other members: Laura Bokobza, Lucie Corvisier, Shirley Jagle, Stéphanie Griffiths, Laurent Galinier, Grégoire Baggio, Axel Champeil, Sylvain Baret, Matthew Stolz, Stéphane Baleston and Peyo Boursier-Longy.