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As public markets sink and people head for the hills ahead of rising interest rates and inflation, the ripples are being felt throughout the financial world - including Silicon Valley.
In 2021, venture funding reached an all-time high of $669 billion. That's almost twice as high as the 2020 figure. Much of this momentum was on account of the overwhelming optimism generated by the tech sector.
Yet for some of these startups, this optimism belied reality.
Money flowed freely into their coffers not because of concrete bottom lines, but rather forward-looking projections. And, with ultra-low interest rates and cheap debt, this seemed to work, for some startups - and publicly traded tech stocks, too.
After all, that has largely been the name of the game in startup investing (and public trading in all too many tech stocks).
However, as the tech-centric NASDAQ finds itself in a free fall, the optimism surrounding private tech startups felt throughout the pandemic has begun to erode. Venture funding is drying up as a result.
So, where there was once startup-funding free-for-all, spurred by fear of missing the "next big thing," startup investors are overall way more cautious.
But that's not necessarily a bad thing. Caution is usually essential for success.
For savvy investors - who know the difference between quality and quantity - there's an incredible opportunity to pick up the money that others are leaving on the table.
Fortunately, we know exactly what to look for...
Separating Bad Bets from Generational Wealth Opportunities
More often than not, there's danger in growing too big too fast.
Just ask Cameo, OnDeck, and Gopuff, all of which achieved valuations of at least $1 billion in the past few years... but which have recently announced layoffs amid the economic slowdown.
It's one thing when growing profits spur a company's growth. It's another thing entirely when the company can't sustain that growth without outside investment.
So, where some startups previously opened "another round of funding" to continue on a particular trajectory, they now find they must shed weight to maintain altitude.
As a result, there will be increased focus - and, likely, investment dollars - paid to those startups able to demonstrate tangible growth as opposed to those touting ethereal gains.
For angel investors like us, this means good, actionable startup intelligence is critical. Now more than ever, there's an urgent need to be able to quickly tell the difference between real value and inflated, "expected" value.
To be blunt, not every angel investor will realize this, but the folks who do will find the market is still packed with generational wealth-building candidates.
Here's the Key to Unlocking Those Opportunities
The secret is due diligence and a "deep bench" of pros, founders, venture capitalists, and researchers who understand exactly what it is that makes a startup great. You want researchers who read balance sheets like they're bedtime reading.
In fact, finding startups with legitimate claims to success is our bread and butter. We follow a rigorous set of vetting standards, focusing on companies with sustainable growth that are providing innovative, practical solutions to real market needs.
Our job is to lead investors to the next Airbnb or Uber, companies that blasted out of their startup phase to valuation growth in the millions of percentage points. (You read that right: 4,182,817% for Airbnb; 1,900,936% for Uber - imagine being among the first people who took a bet on them.)
So you can rest assured that the deals we deliver to your inbox on a monthly basis aren't built on a foundation of toothpicks and bubble gum and have incredible potential to lead you to life-changing wealth.