startup financing: the venture capital fund Beenext explains to startup founders how to adapt to the winter of financing

Bengaluru: Beenext, a Singapore-based start-up investor that has backed companies like BharatPe, Open, Jupiter, among others, has joined the growing list of venture capital funds to issue warnings to their companies about wallet asking them to reset and adapt to the current market downturn. . Beenext, which focuses on fintech investments, asked all founders to work with their existing shareholders, review marketing and staffing budgets, while verifying the availability of additional capital.

In a two-pronged plan, Beenext in its note split companies with less than 18 months and more than 18 months of track.

For companies, with less than 18 months of track, Beenext asked portfolio founders to stop experimenting on new ideas and new lines of business until their next funding round, focus on monetization commodities, show a clear path to profitability and secure longer revenue contracts and freeze new hires. He added that the current funding winter, due to unfavorable global macros, is likely to continue for the next 24 months.

To its entrepreneurs, the fund said that in the current environment, a flat turn (at the same valuation as the previous one) is not bad at all. “Try to top up the extra capital to extend your track. (e.g., reload to the previous lap). Round flat isn’t bad at all.

“The market has completely changed, so we have to be very realistic. Survival is the first priority rather than pricing. So be

on cost reduction, for example, try to get free AWS/Google Cloud credits to remove cloud burn; try cutting salaries and offsetting heavily in ESOPs (employee stock options). Stop experimenting on new ideas and lines of business until you raise the next trick. Try to leverage partnerships with other companies to sell rather than do it all alone, the early-career VC said in a note to all founders on May 26.

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For companies with more than 18 months of track, Beenext advised its portfolio to significantly reduce burn, prepare for worst-case workforce scenarios, and take action. He also asked companies to consider an acquisition or a pivot, in case they lack a product-market fit.

“Accelerate the process of finding product-market fit (PMF) by identifying the right customers and stop spending on untargeted marketing and business development. If you have less than 6 months of lead and no market fit products, you may need to consider an acquisition or a hard reset with only a very central team and a pivot,” Beenenxt added.

Interestingly, Beenext’s Indian portfolio also includes Mfine which laid off over 500 employees, a significant portion of its workforce, as the company struggled financially.

In recent weeks, several venture capital firms, including Sequoia Capital and Y Combinator, have sent such advisory notes to their portfolio companies, warning them of the funding winter and asking them to focus on profitability.

Earlier this week, Sequoia called the market downturn a “crucible moment,” warning portfolio companies. In the 51-page memo, the blue-chip venture capital firm told the founders not to expect a quick recovery.

“When capital was free, the most successful companies were capital intensive. As capital has become expensive, these have become the worst performing companies,” Sequoia said in its advisory, adding that the era of rewarding hypergrowth at all costs is coming to an end.

Last week, Silicon Valley-based startup accelerator Y Combinator warned founders of all companies in its portfolio, telling them to prepare for the worst.

“If the current situation is as bad as the last two economic downturns, the best way to prepare is to cut costs and extend your track in the next 30 days. Your goal should be to reach Default Alive,” Y Combinator said in a note.

Even Unacademy co-founder and chief executive Gaurav Munjal, whose company went through layoffs and a cost-cutting exercise, told employees in an internal memo that “winter is here” and the funding will remain scarce for at least the next 12-18 months.

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