Lavinia of Gumrod Sahil Rolling Fund, an AngelList product that allows investors to raise capital on a subscriber-by-subscriber basis, has broken into the venture world as one of the early testers. That was in 2020. Fast forward to 2022 and a lot has changed.
One of these changes? Number of pitches from founders looking to raise. “It’s down about 90% since March,” Lavinia told TechCrunch. “I was probably seeing more than most – 20 to 40 well-verified decks a week – and that number is now down to about two to four a week.” There has been an increase in the quality of talent for people who want to work for Gumroad – thanks in part to steady discounting – and a decline in founders who have started companies.
The decline in the number of founders raising capital suggests that early-stage startups are not as immune to macroeconomic changes as some investors claim. Conversely, the proliferation of new startups supports the idea that recessions—and the accompanying layoffs—are when startups are born.
I think the overall number of founders we’ll see will be lower, but the quality bar is rising. Redpoint Managing Director Annie Kadavy
Lavinia breaks down founder status into three buckets: “tourist founders, immigrant founders, and ‘born and bred’ founders.” He said tourist founders tend to start companies only in bull markets, a group he says has shrunk by 100 percent.
“In bear markets, funding is rare,” Lavinia said. They have to hire others to do things. Immigrant founders, on the other hand, do not care about the reputation and status of starting a company, but they weigh the risks. This founding group was cut in half, by Lavinia. Finally, “born and bred” founders are founders regardless of the market: “They’ve all raised money in 2020-2021 because they’ve been around, so they’re not raising the same amount of money by launching companies.”
