Turning Adversity Into Opportunity, Clarified For Start-Up Founders: A Briefer Care of Handelsblatt’
Overwhelmed with the increasingly-complex market conditions that are holding your start-up back from finding the funding that will take it further? One of Europe’s most immersed journalists on VC and tech, Nadine Schimroszik, is here to point you in the right direction.
In the face of economic turbulence, a scarce pool of investors, and the fading beacon of funding access, today's start-up founders—across all sectors—grapple with some of the most formidable challenges the industry has seen thus far. The outlook, seemingly shrouded in a cloak of uncertainty, does little to uplift the entrepreneurial spirit.
More and more trailblazers find themselves navigating complex challenges—underlining the necessity of founders to reconfigure their strategies and approaches to funding and growth.
So what’s the next step a start-up figurehead like yourself needs to take?
Nadine Schimroszik, a distinguished tech journalist and Handelsblatt correspondent, advises taking a pause—a moment to observe and take in all the emerging changes and roadblocks in your sector, as well as both the VC and funding markets. Her recent forays into the start-up arena have led her to an epiphany, a vital nugget of wisdom she urges every founder to engrave in their entrepreneurial mindset:
A seismic shift is on the horizon for start-ups—a transformation in the requirements for start-ups to secure all-important funding and overcome the tumultuous investing landscape.
Nadine recently joined us on the Street Tweets Podcast to share her insights on the emerging developments in the start-up and funding landscapes in the hopes of helping listening founders get ahead. During our discussion, she emphasized that there is still much to be optimistic about in today’s challenging start-up climate—saying:
“I'm very hopeful that we are going to see new startups coming up and others that just keep on growing, which would be just great because it's something well, we have to solve the climate crisis. And it's just great that there are startups out there being innovative and finding new ways to hopefully solve this crisis. On the other end.”
If you’re a start-up founder looking to overcome some of the field’s most challenging hurdles, then this episode is definitely something well worth tuning into. Our episode with Nadine covers a wide range of topics—such as the dwindling investment pulse in Europe's startup ecosystem and a key realization founders need to have about seeking funding in a sea of growingly-conservative investors.
Here are some of our favorite takeaways from this insight-packed installment of Street Tweets with Nadine Schimroszik:
Key Takeaway #1: Succeeding in a tumultuous European investment climate is all about—as simple as this sounds—finding a way to succeed by learning from what’s happening constantly, putting yourself out there, and managing the effects of the crisis.
For Nadine, this comes as a crucial learning point because of the inevitability of current investor conservatism and the ever-present necessity for founders to adapt at all costs:
“I just have a feeling that already putting yourself out there and managing this whole crisis, everyone like startups and investors are gaining so much more knowledge, it's just a more competitive environment than maybe during the corona crisis. But still, I have a feeling the ones that are getting out of the crisis, they will be more healthy and maybe even better suited to become unicorns or to just stay ahead of their competitors.”
By shifting your focus to getting out of the crisis and managing the potential roadblocks along the way instead of solely focusing on funding, you’ll be able to attract more investors and create room for growth!
Key Takeaway #2: As the global investment climate continues to remain unstable for the time being, it’s crucial to adapt by changing your business modeling with lower costs to cull investor apprehension.
While this approach may not sound too optimal at first, it creates more room for funding to attract potential investors while ensuring that your start-up gets the necessary funding it needs to operate and evolve.
Here’s what Nadine had to tell us about this approach:
“We have the rate hikes, the interest rate hikes that are weighing on the industry, we have inflationary pressure and the overall economy is well, not growing or not growing as much as it used to be. These are points that go into the equation and just investors are more subdued, not will you invest in startups where they are going to make profit soon. So startups change their business modeling to lower their cost and that's what we all see”
Once you lower the barriers to entry with a lower-cost business model, you can bypass investor conservatism and expand your reach to a larger pool of funding streams!
Key Takeaway #3: With economic downturns in play, start-ups looking to generate funding need to shift their attention from seeking investments from seed rounds to finding alternative options such as financing, acquisitions, or partnerships.
However, this key lesson doesn’t mean that you have to disregard the opportunity to run series A, B, and C funding—it just means that you should put it lower in the priority list for your fundraising efforts.
Nadine mentions that undergoing a refocus on your funding efforts can help mitigate the obstacles posed by economic downturns:
“So it's really interesting being in the market and there are startups that are doing quite well. I mean, we have seen refocus, they raised new money despite all of the difficulties. It was, I guess, less than they originally planned to raise, but still, it's a new round and they gained new investors, so there are many positive things going on. So just let's say there's that and I just recently wrote an article about climate tech and so there were many climate tech startups that raised money over the last years and over last year still stuff going on, so that's good.”
With the help of a restructured funding priority chain, you’ll be able to achieve more in terms of getting valuable backing by refocusing your fundraising efforts on the alternatives with the highest rates of success!
Key Takeaway #4: Trending industries with higher utility and a greater potential for innovative disruption—such as AI—have a much higher chance of generating funding because of the ability of trends to draw investor attention.
If you’re in an emerging sector that’s championing disruptive innovation or brimming with emerging, future-focused applications, measures, and technology, then you’ll have a larger pool of investors to tap into—as Nadine says:
“AI, I mean that's just not only a buzzword, it's happening. I've just seen that there are also huge AI-related startups in the US that are planning to go public via spec, which just means, yeah, let me look up ones I haven't heard before, heard of before, but they are named like Elearning Engines, Airship, AI, that's the developer of an AI-driven video management platform. Just one platform I guess. So that means that money is flowing back into the system, into the system that new startups are popping up and that's just well we are at the very basic beginning of this whole new AI-related startup field. So yeah, something to be optimistic about and there will be money for that because it's just the way it is when there's a trend, there will be investors.”
TL;DR: If your start-up is in an industry that’s pioneering in a specific trend or commonly finds itself as a fixture in the general picture of disruptive innovation, then expect to have an easier time finding funding amidst a challenging landscape.
Key Takeaway #5: Having an interesting story behind your start-up is one of the most effective ways to generate funding in difficult times because it elicits two outcomes: publicity and investor interest.
Together, these two key resources can help you circumvent the biggest funding setbacks that are restricting your company because they bridge the gap to finding potential backers that are most applicable to your current status and long-term goals.
If you’re deliberating on leveraging media and PR work to your start-up’s funding advantage, here’s a piece of advice from Nadine:
“We are not interested in pre-seed rounds because there are so many startups out there, so I just can't manage to write about them. But if you have a story to tell and if it's something maybe other readers haven't heard about yet, and if it's interesting, we definitely try to cover it. And maybe not next week, but overall we have these trend stories and if it's just interesting, then call us. Or better not send us mail.”
Remember: stories are a powerful tool that can tap into two of the most often-overlooked aspects of investor decision-marking—sentiment and emotions!
While the current economic landscape, shifting investor sentiment, and diminishing backing opportunities may paint a pessimistic picture for start-up founders, there is much that can be done to overcome rising challenges in funding. With the help of Nadine Schimroszik’s insights, you’ll be able to better navigate the path toward finding valuable solutions in a tough investor market!