Augustin Sayer
General Partner and Co-Founder
OVNI Capital

Seed recommendations:

• Make sure you start your fundraising with low expectations regarding your fundraising amount and aim to be oversubscribed. This will ensure you capture the interest of as many funds as possible.

• Don’t put the word profitability everywhere on your slides. Seed funds are still looking for unicorns, and you won’t become a unicorn within the 10-year frame wanted by VCs if you are profitable in your second, third or fourth year of operation.  

• Focus on your tech. In times of crisis, VC funds focus on basics, i.e. disruptive innovation. If you’re not tech-centric, don’t waste time raising from vanilla VC funds and broaden your list of potential investors to include regional funds, corporate funds, public funds and even clubs of business angels.

Aurelien Dupuy
Senior Vice President – Portfolio Operations
PSG

From previous years’ context of low interest rates and growth at all cost, the paradigm has very clearly shifted towards profitable growth. Despite current market headwinds, this has in return created a number of opportunities for companies with proven product-market. They can now further differentiate themselves from the pack thanks to a few proven operational best practices:

• Adopt a zero-based budgeting approach, challenging previous years’ practices to make sure capital is used efficiently. Aim at becoming a “rule of 40+¹” company

• Narrow down your pricing structure, further monetizing your highest ROI and least price-sensitive customers

• Improve retention rate by paying closer attention to your existing customers, setting processes to anticipate churn and increase adoption while upselling new features. Happy customers buy more

• Gradually decrease your CAC (which has likely been inflated during previous years) by doubling down on your ICP² , managing individual sales productivity closely, and sending leads to your best sales closers

• Consider M&A as an alternative path to accelerate your growth outside your borders and core product offering

Samantha Jérusalmy
Partner
Elaia

In this market, where investment pace across VC firms and stages has drastically reduced, with the average round size going back to 2018 levels, it can be a double-edged sword. On one hand, it might mean that you will have to work harder to raise less, which brings up the notion of capital efficiency. On the other hand, it leaves you more time to prepare solid KPIs to then start a more effective roadshow. In some cases, this might mean that you have to do an internal round or a bridge to stay afloat in order to search for these KPIs. 

All in all, I would say that a refocus towards your core value proposition (the one thing that works despite everything you throw at it) and cutting down any additional features or products that might distract resources from the core will be key to surviving the stormy seas. If all of the above are still quite hard to reach despite your best efforts, it is best to start thinking about exiting your company and looking up the major incumbents that are looking to bolster their offerings by acquiring startups.

Pauline Paquet
Head of Startup Success
XAnge

As we enter the second half of 2023, the tech industry continues to present both challenges and opportunities for startups and entrepreneurs. In light of current market conditions, here are five key recommendations to guide your strategies and decision-making:

1. Prioritize Growth and Build a Sales Machine:

With cash reserves dwindling for many companies, it is crucial to focus efforts on generating sustainable growth. Make growth rate your north star: investors will have a close look at it. As a reminder, a good growth rate starts at x2, and the best companies are doing > x5.

2. Manage Burn Rate and Cost Efficiency:

Prioritize cost-saving initiatives such as optimizing your tech stack, reassessing office needs, and streamlining operations. Explore alternative funding sources like debt, grants, and subsidies to supplement your cash flow. As for growth rate, investors will have a closer look at your cash spend. As a reminder, a good burn rate starts at x1 and the best companies are doing < x0,5.

3. Capitalize on Market Consolidation Opportunities:

For companies with available capital, the second half of 2023 presents a unique opportunity for consolidation. With many businesses facing financial constraints, market shares can be acquired at attractive prices. Evaluate potential acquisition targets and strategically position your company to seize these opportunities for expansion and market dominance.

4. Empower HR/Ops Teams for Effective Restructuring:

Whether scaling through acquisitions or reducing staff, the human factor is key for your company’s trajectory. Invest time, and if possible resources, in these teams to navigate restructuring initiatives effectively. Ensure clear communication, empathetic decision-making, and effective change management throughout the process. 

5. Transparent and Frequent Communication:

In times of uncertainty, open and consistent communication with your team is essential. Despite limited visibility, keep your employees informed and engaged through regular updates. By fostering a transparent and inclusive environment, you can minimize attrition, maintain a positive work atmosphere, and limit business impact.