Hello founder,
Are you having a tough time with fundraising this year so far?
I totally get it.
Oh yeah, before I forget, let me introduce myself. I’m Jackie, co-founder of BorderDollar — we’re a non-LLM startup in the B2B embedded financing space. I know, right — fintech is so 2018, and LLMs are still the rage these days. But hey, my co-founder and I are retro like that.
That said, while I’d like to say that “startup founder” is my main job, these days I just drive a bus. Speaking of which, here’s my bus.
Come onboard, the Struggle Bus
is a bit crowded but there’s still space for you. Just make some space for AI founders that missed the 2023 bandwagon — we’ll pick them up in a bit.
Where are we going? We’re gonna go on a journey and discover why it’s been so hard to fundraise this year.
The destination? An abyss of despair and darkness (probably). And maybe just a glimmer of hope at the end of the tunnel.
Regardless, it’s useful information for existing founders and those who are about to embark on their fundraising (don’t do it, fellas).
2024 is a terrible year, and I miss 2021
To understand what’s going on, here is a very handy image from KPMG (thanks nerds) on the state of funding in Asia between 2018 to Q1 2024. If you’ve noticed, life was increasingly good between 2018 to 2021 when both the number of deals and total funding amount were high.
Without going too deeply into details, this happened because the interest rates were low during 2021, which meant LPs had to allocate money to things that had higher returns, i.e. startup investments, to hedge against inflation. A greater appetite for risky bets meant that anyone with an idea scribbled on a napkin could have received pre-seed or seed funding in those days.
Post-2021, you can see that the trend is reversing, i.e. the graph went down for both deal numbers and volume across all stages. This is because interest rates increased again after 2021, and we didn’t see any high numbers of M&As and IPOs after that. Without M&As and IPOs, LPs don’t get their money, and if LPs don’t get their money…no money goes back to VCs, and subsequently, that means no money for startups (you).
Gone are the days when T*g*r Gl*b*l literally chased founders with term sheets — these days, it’s courting a VC for six months only to get a “no, you’re a bit too early for us” even though you’re post-revenue and have somewhat of a product market fit.
What’s that? Haven’t you got the memo? Pre-Series A metrics are the new seed metrics now. Your peers, whom you thought were amazing, are also going through this pain. Expectations have gone up sky-high, and that means you have to have tons of traction, signals, or tailwinds to help them build conviction in you.
How to survive 2024
My point is that if you’re having a really tough time fundraising, there’s a fair chance that it’s not your fault. Part of it lies in the funding climate these days so don’t beat yourself too much over it.
Also Read: If there is one thing investors are afraid of, it is lack of commitment from founders
To founders out there onboard the Struggle Bus, here are things you can consider to survive the following months until things get better:
- Get more revenue (crazy idea, I know)
- Charm angel investors (hit up your rich, bored, and supportive friends for checks of $5-50k)
- Find a side hustle (no problem for those who already have day jobs)
- Increase your luck surface area by telling the world that you exist (like writing an e27 article 🙂 or posting on LinkedIn)
- Become an indie hacker (let’s get SaaS-y)
- Reach out to your fellow founders and have a pity party (make sure they’re not alone in this)
Hey now, are those tears I see? Wipe your tears, and don’t despair too much, founder. Here are some comforting words from your bus driver.
Firstly, if you look back at the graph above, you will notice that VC investments do pick up in Q3 and Q4. There are many reasons for this, but if it’s of any comfort, we’re (at the time of writing this) a month away from Q3. Hang in there, bro/sis.
Secondly, if you can survive this, you can survive anything. No, seriously — those who find a way to survive under such unfavourable circumstances will be unstoppable. The implication is that you’d be forced to figure something out to survive.
You’ll be better for it, I promise you. Now go, stop reading this article and get back to work.
Don’t forget to update your progress with your potential investors as well.
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The post Confessions of a founder: There’s no fun in fundraising in 2024 appeared first on e27.