Summary of Craft Ventures: Operating during a downturn

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00:00:00 - 00:55:00

This video discusses how the recent stock market downturn has impacted venture capital, and how companies can operate during this period of increased volatility. The presenter offers advice on how to extend a company's runway and how to pursue customers during this time.

  • 00:00:00 The author discusses the recent stock market downturn and how it has impacted venture capital. They explain that the downturn is because of higher inflation rates and the Fed's slow reaction to it. They also point out that the stock market is generally negatively correlated to interest rates, and the 10-year Treasury yield has surged to unprecedented levels.
  • 00:05:00 The video discusses how, due to the increasing interest rates and stock market volatility, growth stocks have been devalued in the public markets. This has led to a significant correction in the valuation multiples applied to these companies.
  • 00:10:00 The video discusses the reset in the public markets for growth companies, including for software companies such as SAS. The reset has led to a fraction of the new unicorns seen in 2021, and many startups are now only worth 2 billion or less. This has led to a risk off environment for venture capitalists.
  • 00:15:00 The video discusses the current downturn in venture capital, which is being caused by increased inflation and interest rates. The downturn began in 2018, and is expected to last for about two years.
  • 00:20:00 The author discusses the factors that are in a company's control and how those factors can impact its future growth. He also provides advice on how to make sure that a company has enough runway to avoid having to raise capital prematurely.
  • 00:25:00 The presenter offers tips on how to extend a startup's runway, including considering a hiring freeze and trimming non-measurable marketing and sales expenses. The presenter also notes that it is a good time to build a company, as access to capital is easier than in past years.
  • 00:30:00 The video discusses the possible consequences of a recession and how it could impact a startup's ability to fundraise. The advice is applicable to both marketplaces and startups.
  • 00:35:00 The presenter discusses how net dollar retention and cat payback are important metrics for marketplaces, and how burn multiple plays an important role in determining whether a company is able to grow into its evaluation. If a company's burn multiple is higher than two, it may be necessary to cut spending in order to preserve capital.
  • 00:40:00 The author of the video provides advice on how to operate during a downturn, particularly for early stage companies. He notes that while the financing environment is affected by the downturn, it is not limited to growth stage companies. He also provides advice on how to pursue customers and how to move up market over time.
  • 00:45:00 The author points out that the funding and acquisition environments have changed in the last two years, and that this is likely to continue in the future. He advises founders not to wait until conditions become worse before raising money, as this will only exacerbate the situation.
  • 00:50:00 This video discusses the outlook for venture capital, noting that the pace of deployments will slow down in 2020 and 2021 as a result.VCs will be more selective about where they invest in the next two to three years, as there will be less money available. This downturn may last for two years or more.
  • 00:55:00 Craft Ventures, a company that makes and sells craft products, notes that the broader economy is not doing well and that layoffs will likely happen. The company encourages its customers and employees to be helpful during this time.

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