In recent years, the low cost of capital allowed record amounts of dry powder to be raised and dispersed into the venture capital and startup ecosystem. As the landscape began shifting last year, we started to see a course correction by investors who had been freely pouring money into VC-backed startups. The recent bank failures introduce another hurdle into a rapidly shifting environment and dramatically highlight the challenges of our high-interest-rate, inflationary climate.
For many VCs, these recent events solidify a transition from a growth focus toward a cash flow breakeven or profit perspective on their investments. For years, there was almost unlimited cash available for startups offering hyper-growth opportunities to those on a quest to swoop up market share. Growth was to be achieved at all costs, a trend common in the technology sector.
