I’ve been seeing more and more headlines about how the venture spigot is shutting off. I’m sure you are as well. Making sure we have the resources we need to execute on our operating plans, make good decisions, and pursue our missions is critically important.

Yes, most venture fundraising metrics are down, but down compared to what? If you plot every fundraising metric you can think of across any time domain that is 3 years or longer, you’ll see a beautiful up-and-to-the-right curve. Q3’22 numbers follow that positive trajectory.

The problem is that most headlines compare Q3’22 to 2021. Friends, 2021 was an anomaly, and comparisons to an anomaly are not helpful. For instance, global fundraising for ’22 is projected to be $439B, which is ugly when compared to ’21 ($630B), but up and to the right when compared to ’20 ($298B), ’19 ($258B), and ’18 ($292B). 

In health tech, the average deal size is down compared to ’21 ($24M v $16M) but equal to or greater than deal sizes from ’18-’20.  For Hashed Health (very early stage), the numbers actually still look very good. Deal counts are holding and there’s not much valuation compression. 

Finally, ’21 was not just an anomaly in fundraising, it was an anomaly in fund formation. As a result, there is tremendous dry powder in institutional ventures. All that to say, I don’t believe we are destined to fall off the cliff. As always, quality businesses, with great teams solving real, and important problems will get funded. The question is, how long will it take, and on what terms? 

Tactically, I encourage each of you to “product manage your fundraise.” Great product managers are always working directly with users to test and retest underlying assumptions before their product is launched or even built.  

Product managing your fundraise means engaging with capital sources well in advance of the time you would be asking for a check. Are investors writing checks? What are their requirements and necessary proof points? What terms are they looking for? There is only one way to know the answers to these questions – to ask the source and then build your investment product to suit. Above all, my advice is and has always been to focus on business fundamentals. Growth matters but unit economics matter more. Proof of product market fit matters. A realistic path to profitability matters. Having a great culture matters. Nail all this and the market for your investment product will be there.  It was in 2000-3, it was in 2008-9 and it will be in 2022-23.

Finally, we are a community. As we all engage in our individual fundraising product management exercises, I hope that we will all find the time to share what we are learning. At Hashed Health, we will continue to look for ways to encourage and facilitate that sharing and support.  

PS – Last month, Liquid Death raised $70M on a $700M valuation. Friends, that’s water in a can. Fundraising is still a thing.

This perspective was authored by Les Wilkinson, CEO of Hashed Health, if you would like to submit your own perspective click here.