It Is a Buyer's Market
I have been speaking with both Limited Partners (LPs) and entrepreneurs about the current state of venture capital funding. I use a term that makes an LP smile and an entrepreneur feel queasy. The term: Buyers’ Market. As in; with the recent evaporation of ever-increasing valuation venture funding for companies without a path to profitability, it is now a Buyers’ Market. As we continue to talk, it becomes apparent that the current market is a win/win in Buckeye Nation.
The LPs are delighted that they can buy into startups in a low-valuation market. The entrepreneurs feel deflated that they are not going to get a stratospheric valuation without the need for customers, product-market fit, revenue, or any fundamental concept of how to get to cash flow positive. Maybe blitz scaling is not a thing in a rational market.
Here is why the latest venture funding market is a positive for our Buckeyes investing in Buckeyes. Ohio (and the rest of the Midwest) has always been about creating real businesses, with real business models that will generate real cash. The valuations for that type of startup, have not cratered. Those are the businesses that will survive and thrive. They are doing it right while the piles of cash are not there to cover the shortcomings of their competition. The Buckeye businesses will still be standing.
So maybe instead of Buyers’ Market, we should term it a Buckeye Market…