Funding Is Decreasing… And That’s a Good Thing.
Startup funding rounds are declining - and this is a positive signal for the ecosystem.
Good morning everyone,
The other day, I was reading an article from one of our major media outlets here in Germany. The article was called “More Startups, Less Money: The New Paradox in the Ecosystem.”
The core narrative of the article is that we are seeing more and more startups being founded here in Germany. At the same time, we are seeing a declining number of funding rounds, which the article criticizes.
In my opinion, this is actually a very positive sign. And it’s the same trend I see in my daily work with hundreds of startups: more and more companies are being bootstrapped and moving away from the VC capital trap.
Back in the day, there was a need to raise millions of dollars to develop a SaaS product and hire expensive developers just to reach a point where the product could be tested on the market. At the same time, investors were brought on board who often pushed the company in a completely different direction… away from the founders’ passion and toward simply making money.
And nowadays? We have AI.
Many founders are taking the risk, building the product they envision, and launching it on the market themselves. This shifts the role of venture capital into a completely different position.
Nobody raises money anymore to build a product (unless they are operating in a deep-tech-heavy domain). They raise money to scale their company… if at all. I’ve spoken to many founders recently who do not want to raise money or bring investors on board. Pretty understandable. With investors often come unnecessary obligations, which I have frequently seen push founders away from profitability and toward scaling at all costs.
For investors, this means they have to become more strategic, offer real value, and provide more support instead of just money. Only then can they make a compelling case for why founders should bring them on board.
Interesting times ahead.
AJ
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By Andreas Just