Tim Connors

Tim Connors


Co-Founder & Founding Investor


November 1, 2022


The public equity markets are choppy right now and it is creating a whipsaw in venture capital.   Lots of wealthy growth VCs are seeing their personal equity account balances decline and are translating that anxiety back onto early stage founders.  Don't fall for it.

Back in the last downturn, Sequoia wrote a famous deck that said "RIP Good Times" encouraging founders to baton down the hatches and go into cash conservation mode.  Turns out the companies who didn't follow the advice did best.

Down markets are always the best time to build startups.  There is less competition for talent, less competition for mindshare with prospective b2b customers, less folks bidding on facebook ads so CACs decline, etc.   The valuations in the public markets right now don't matter to early stage startups.  What matters is what they will be in 5-7 years.

Now sure, if you are spending like a drunken sailor with unhappy customers, bad retention, and terrible unit economics, you should rethink what you are doing on both your cac spend and your investments in talent opex.  But if you've been laser focused on your winning metrics properly, you won't be spending crazy anyway.

My advice is the same now as always: stay focused: Stay small and frugal and keep iterating until you have happy customers seeing great value with great retention and with great unit economics. Then get aggressive scaling up CAC spend keeping a close eye on your CACD.    There will always be excited investors to fund companies with great winning metrics who are hitting the key revenue milestones.  And if your CACD is good enough, you just might be able to skip some of those equity rounds.

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