In Startup Decoupling & Reckoning by Elad Gil, the author lays out the situation many mid-to-late stage startups will be in starting at the end of 2024. Companies raise capital for 2-4 years of runway. Valuations have risen sharply compared to public markets. Raising money will be more difficult as startups that don’t have product-market fit will not hit key milestones relative to their valuation.
This reset will result in many startups either running out of cash or seeking an acquisition. With a large number of startups looking to sell, acquirers will get flooded with deal flow from late 2023 to 2024.
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There is a long list of reasons that a startup to fail, but running out of money is high among them. A common piece of advice for early startups is to make rapid progress towards “default alive” as in, running the business on revenue rather than relying on outside investment.