In The Wake Of Overvaluation Hype, Startups Now Pessimistic About Raising Money


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In The Wake Of Overvaluation Hype, Startups Now Pessimistic About Raising Money


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A surprising new survey of startup companies found that the vast majority of owners believe that it is going to be harder to conduct fundraising in the next few months. The news comes as many startup companies have been determined to be overvalued because of their associated hype and potential rather than their actual performance.

According to the survey, 95% of the owners of startups at the seed stage believe that it will either become harder or remain just as difficult for their companies to raise more money in the near future.

One of the conductors of the survey Josh Kopelman said, “Some of these findings showed more of a lack of optimism, or more pessimism is a better way of saying it, than we'd been expecting.”

Additionally, more than seven out of ten respondents said that the “startup bubble” burst, making things incredibly challenging for the young companies. Meanwhile, a mere 1% of late-stage startup founders believe that raising money will soon get easier.

Kopelman added, “When you only see one percent of late stage founders thinking it’s going to be easier, that’s a pretty extreme measure on the pessimism scale and that’s surprising. More than seven out of 10 thought we were in a bubble."

However, the findings do not indicate that startups are actually having a difficult time raising capital. A total of 68% of startup founders stated that they completed their last round of fundraising in less than three months.

Furthermore, the number one worry of startups right now is hiring the right people. Other highly prominent concerns included ensuring proper revenue and achieving company growth. The concern of raising money only ranked as the fifth most pressing concern.

The lack of optimism towards raising money is likely because of the widespread belief that startups will soon be more heavily scrutinized. After the overvaluations of many startups such as Square and Uber, people are somewhat more reluctant to put money into the young companies.

In the near future, a fundraising project that would currently take three months to complete might take four months instead. Of course, this is all speculation at this point, and it might never come to fruition.

Still, it’s just another sign that startup companies could come crashing down in a big way.

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