Startups should be treated like a clown

Startups should be treated like a clown ...

Venture capital firms likeSequoia Capital and Y Combinator have sounded the alarm for startup firms that capital harvests are relatively short.

The Information was able to offer a52-slide advice to 250 founders on May 16, alerting them to a crucible moment as higher rates of inflation, volatility in the stock market, and several geopolitical issues resulted in a less certainty in the venture capital market.

Sequoia advised startup founders that there might not be a V-shaped recovery like we anticipated during the outbreak, but instead advised that they evaluate their companies for costs that might be reduced.

Dont see (cuts) as a negative, but as a way to save money and run faster, according to Sequoia.

Sequoia, a pioneering venture capital firm founded in 1972, has successfully invested in technology giants such as Google ( (GOOGL) - Get Alphabet Inc. Class A Report, Apple ( (APPL) ) and Uber ( (UBER) - Get Airbnb, Inc. Class A Report, Stripe, Block (SQ) - Get Block Inc Class A Report(formerly Square), Instagram (FB) - Get Meta Platforms Inc. Class A Report) and WhatsApp.

Sequoia, a California-based venture capital firm that isn''t shy about alerting its portfolio companies that cutting back on expenses is now a priority, gave a similar warning in 2020 called Coronavirus: The Black Swan of 2020, as well as a slide presentation in 2008 relating to the Great Recession and financial crisis that started with the housing market''s meltdown entitled R.I.P. Good Times.

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Another Grim Warning

According to Crunchbase data, the VC firm has made 76 investment so far this year. Compared to a slower rate in the first half of last year when it sunk money into 85 startups.

The VC held $45 billion in public positions in November 2021, and over the past 15 years, it has distributed$29 billion to its limited partners while investing $12.5 billion.

Last week, Y Combinator, a startup accelerator, issued a rash warning to its companies.

No one can predict how bad the economy will wreak havoc on the planet, but things do not look good, according to the accelerator in a letter he received called Economic Downturn. The safe move is to plan for the worst.

After reporting a loss of $27.7 billion on investments in its Vision Fund, Softbank (SFTBF) said in May that it would modify its recommendations in selecting investments.

Large losses in the public market may result in less capital in the venture capital world as limited partnership investors pull back.

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