On the surface, VC activity seems to have survived the massive outflows that have affected equity markets. But drill down both reports for the US and ASEAN, and a similar theme emerges: mega deals (over $100 million) absolutely dominated total deal values, accounting for two-thirds of total VC investments. In tandem, deals have been concentrated on later-stage startups and funded by big VC firms. In short, the big have simply gotten bigger, while smaller firms and startups have seen activity dry up.
OUT WITH THE OLD DOGMA
Unless you are a massive investor or already a unicorn, this situation calls for a drastic change in the typical tenets of VC investing. For too long, VCs have thrown money at as many startups as possible ('spray and pray') in the hopes that one eventually sticks, chasing regional or local copycats of existing unicorns in the same few sectors catering to mass-market consumers. Even prior to the pandemic, experts had sounded the alarm that skyrocketing valuations, which pushed smaller VCs to jump in earlier due to the fear of missing out, only led to a class of unicorns that have billions of dollars in revenues but zero profits.
In a rush to find the next WeWork, Amazon, or Uber, investors raised larger rounds toward blitzscaling untested startups. Blitzscaling aims to rapidly build up enterprises, prioritizing speed over efficiency to pursue massive scale. Startups burn through funding, plunging money into aggressive marketing, overpaying for talent, and offering heavily-discounted pricing in the hopes of boasting large user bases. Whether the business model leads to sustainable growth or profitability, whether the users are high-value or high-repeat, is secondary.
CHANGING FOUNDER MINDSETS
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Esta historia es de la edición February 2021 de Forbes Indonesia.
Comience su prueba gratuita de Magzter GOLD de 7 días para acceder a miles de historias premium seleccionadas y a más de 9,000 revistas y periódicos.
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BACK ON TRACK
Collective wealth gets a 21% boost to a record $162 billion amid an economic uptick.
Championing Locals
The wave of social commerce is enabling inclusive digital economies beyond urban areas.
Boys in the Bubble
Startups are supposed to specialize, but OPENSEA’s founders thrived by building a wide-open market for creating and trading all manner of NFTs, whether art, music or gaming. Now that they’re centimillionaires and poised to become billionaires, they have other worries: competitors, fraudsters and the next crypto crash.
Enduring Relations
The implementation of IA-CEPA amid the pandemic signifies the Indonesia-Australia’s commitment to recover and counter future challenges together.
Sweet Success
Steven Erwin envisions Unifam to become a major global player in the confectionery and F&B industry.
Marathon Man
Across America, scores of municipal pension funds remain scandalously underfunded. But not the pension fund of Tampa’s police and firemen, thanks in large part to JAY BOWEN, whose no-frills approach to stock picking has protected and served them for more than 45 years.
Gold Rallies on Inflation Fears
During September the price of gold rallied to $1,868 per ounce following the release of figures on US inflation by the Bureau of Labor Statistics which indicated that, as of September, CPI inflation had rocketed to 6.2%, above the 5.8% which economists had been predicting.
Set Off to A New Start
Bank Aladin has two main ingredients for success: establish trust and offer better customer experiences.
The Daily Intake
YOUVIT plans to invest further into marketing and grow into one of the leading vitamin brands in Indonesia.
THE CROESUS OF CRYPTO
FTX COFOUNDER SAM BANKMAN-FRIED BUILT A $22.5 BILLION FORTUNE BEFORE HIS 30TH BIRTHDAY BY PROFITING OFF THE CRYPTOCURRENCY FRENZY—BUT HE’S NOT A TRUE BELIEVER. HE JUST WANTS HIS WEALTH TO SURVIVE LONG ENOUGH TO GIVE IT ALL AWAY.