Gumroad’s Sahil Lavingia entered the venture world as one of the early testers of the Rolling Fund, an AngelList product that allows investors to raise capital on a subscription-like basis. That was in 2020. Fast forward to 2022 and a lot has changed.
One of those changes? The number of pitches from founders who want to scale up. “It’s down about 90% since March,” Lavingia told TechCrunch. “I’ve probably seen more than most — like 20 to 40 well-reviewed decks a week — and that’s down to about two to four a week now.” He’s also seen the quality of talent for people who wanting to work for Gumroad has risen – which he attributes in part to the steady stampede of layoffs – and a decline in founders starting companies.
A decline in the number of founders raising capital suggests that early-stage startups are not as immune to macroeconomic changes as some investors claim; In contrast, a boom in fresh startups would support the idea that recessions — and the wave of layoffs that accompany them — are the time when startups are born.
“I think the overall number of founders we’re going to see will be lower, but the quality bar is going up.” Redpoint CEO Annie Kadavy
Lavingia divides the status of founders into three categories: “tourist founders, immigrant founders, and “born and raised” founders.” Tourist founders, he said, are those who only start companies in bull markets, a cohort he says grows by about 100 % had decreased.
“They’re rarely fundable in bear markets,” Lavingia said. “You have to hire other people to build things.” However, founders with a migration background care less about the reputation and status of a company and more about weighing risk and reward. According to Lavingia, this founding cohort was cut in half. After all, “born and raised” founders are founders regardless of the market: “They all existed and therefore raised money in 2020-2021, so they too do not start companies and raise money at the same rate.”
https://techcrunch.com/2022/08/06/investors-prepare-for-a-founder-downturn-or-influx-wait-what/ Investors prepare for a founder downturn. Or influx. Wait, what? – TechCrunch