Venture Building To Drive Start-up Growth As Capital Contracts

This is bad news for start-up organisations as economic volatility and market corrections continue to shrink the risk appetite of investors, and longer funding cycles and reduced availability of capital make riding out the current storm all the more challenging.

The days of funding future value without clear fundamentals are coming to an end. Venture capitalists are waking up to the reality that taking wild bets on unproven ideas is simply too risky and the era of throwing capital at anything remotely tech related is giving way to a more disciplined approach. Many start-ups who raised these unimaginable sums are beginning to buckle under the weight of over-optimistic projections and unvalidated business models.

While the market was already tightening, the new tariffs and potential trade wars are adding complexity for start-ups.

Increases in raw materials, components and services will put additional strain on already tight margins as startups are forced to either absorb the new costs or pass them on to the consumer, and thereby reduce competitiveness.

Global supply chain challenges are also likely to raise their heads again and cash flow disruptions in an uncertain market will make it harder for businesses to sustain operations or expand as planned. What's more, market access may also become an issue for those aiming to expand their geographic footprint.