All Together’s View
The effect of the Great Tech Revaluation will be felt far and wide. 2023 could very well be a bloodbath, but this isn’t just about tech companies.
We have seen a steady increase in valuations of non-tech startups in the UK over the past five to ten years, fuelled by a genuine increase in the supply of good startups and experienced founders, and inflated further by the generous support of SEIS and EIS. Consumer product businesses achieved tech style valuations. Revenue multiples ruled over EBITDA as the preferred measure of valuation. These times are gone. For profitable businesses, and businesses with high (not hyper) growth, traditional EBITDA multiples are back. For those in hyper growth, revenue multiples are coming down to their lower, historic levels.
While there is still cash available for investment right now, we are no longer in a founders market. Investors will have their power back, and prices– valuations – will adjust accordingly. Fundraising from the back end of Q3 2022 will become super hard. Beyond that, down-rounds will be back, and business failures are inevitable.
Our advice? Follow Steve’s plan. Be the most entrepreneurial you have ever been in securing new ways of adding cash. We are in crisis management again. Close funding rounds now – and don’t argue the details. Change operating plans. Revisit strategy. Focus on fewer investments. Moderate growth ambitions. Trim people and admin costs. And undertake the analysis and preparation for large scale cost cutting just in case. Develop a plan that sees you survive 2023 and 2023, with lower ambitions if need be.
The good times always come back, but only the most entrepreneurial will both survive and thrive the coming winter storm.
The best of you will thrive during this time period too. And when markets are back, and in an upswing again, you will be positioned to win and win big.
All Together’s Volunteer Advisors offer their time pro bono to small business leaders for exactly these moments. When times get tough, an independent sounding board can be invaluable. Apply here and we can connect you with one of our advisors: www.alltogether.company/apply
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