Investor advice during a recession: Don’t panic TechCrunch

How to compete without losing your mind – and your runway

Increasing competition Crowded spaces can cause nervous tension. Increasing competition Crowded space in the midst of a challenging fundraising environment is even more nervous tension.

We all know that cash is not nearly as readily available in 2022 as it is in 2021. This puts startups in a position to compete without losing their minds – aka the runway.

At TechCrunch Disrupt 2022, I interviewed Ramp CEO Eric Glyman, Airbase CEO Thejo Kote, and Anthemis partner Ruth Foxe Blader about the topic. Glyman and Kote shared how they work to preserve capital, while Blader offered some of the advice she gives her investment firms. And she didn’t hold back.

For the uninitiated, Glyman and Kote both run startups in the field of spending management. As friendly competitors, they acknowledge that while this category is not a win-win, it is still important to differentiate and continuously innovate.

“One of the things we did in our business was looking at acquisition costs — to fully recoup deployed costs — and we lowered that threshold,” says Glyman. . “And so our view is that we want to grow as quickly as possible, but with a much faster tolerance – in the same way that you can get higher returns elsewhere, Use that rigorous framework for where you choose to deploy capital. We think this is the right approach for this environment.”

For Kote, it’s mostly about focus. The aviation base, he noted, was once targeted at the mid-range market and the early corporate space. He refers to the “crazy 2021 period where there’s all the madness around investing in this space,” with investors “willing to pay multiples of 100x, 200x.” Instead of frantically trying to change Airbase’s model to meet expectations, Kote said the startup continues to operate the way it always has.

“So one silver lining from a focal point of view that came to us this year was, ‘You know what? Kote said. “We’ve been very focused on subscription revenue and high margin subscription revenue and net ARR – not gross ARR. So we really stuck with what we’ve always done, which is to focus on the mid-range market. And that means we’ve freed up resources in many ways, giving us more runways. “

Meanwhile, Blader – which invests in all stages of the lifecycle – shares her belief that “this is an industry based on emotions and when the music plays, everyone dances. “.

“People who jumped jobs in 2021 and raised a lot of capital — enough capital to break even and maybe cut a bit, are probably feeling pretty good,” she said. “And the people who are really either unfunded or not able to raise or raise capital at a valuation where they really won’t be able to bridge the gap between the multiples and now, a bit panicky.”

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