Lavingia coast in Gumrud He broke into the world of adventure as one of the early testers of the ETF, the AngelList product that allows investors to raise capital on a subscription basis. That was in 2020. Fast forward to 2022 and a lot has changed.
One of those changes? The number of bids from founders looking to increase. “Since March, it’s down 90%,” Lavingia told TechCrunch. “I’ve probably been seeing more than most floors – about 20 to 40 well-screened groups a week – and that number is down to about two to four a week now.” It has also seen the quality of talent rise for people who want to work Gumrod — which he attributes in part to the constant scramble for layoffs — and founders’ backsliding to start companies.
The decline in the number of founders raising capital suggests that early-stage startups are not as immune to macroeconomic shifts as some investors claim; By contrast, the boom of new start-ups would support the idea that downturns – and accompanying layoffs – are when start-ups are born.
“I think the total number of founders we’ll see will be lower, but the quality bar is going up.” Redpoint Managing Director Annie Kadavi
Lavingia divides the founders’ case into three groups: “tourism founders, immigrant founders, and ‘born and bred’ founders.” Only tourist founders, he said, started companies in emerging markets, a group he said had fallen by nearly 100%.
“They are rarely funded in bear markets,” Lavingia said. “They need to hire others to build things.” In the meantime, immigrant founders do not care about the reputation and status of establishing a company, but weigh its risks and returns. This founder group was split in half, per Lavingia. Finally, “born and raised” founders are founders regardless of the market: “They have all been around and so raised money in 2020-2021, so they also don’t start businesses and raise money at the same rate.”