Hi there,

Founders face a challenging next few months: they are pressured by investors, employees, and by a lack of cash. 

We have hand-picked and -written some articles to help navigate these next few months, whether it is determining how fast to grow, or which hires to make at what stage.

These trends are driving the "R.I.P. Good Times":

1. Funding is slow / valuations decline further (down to 5X compared to 10X last spring);

2. Tech layoffs indicate an imminent rebalancing of the talent market;

3. Inflation has reversed and will decline to 4,1% in 2023, driven by a 60% decline in the gas futures market;

4. Many employees still demand compensation with steep salary demands.

With increasing interest rates, VCs know they can raise much less capital for their funds. This makes them extremely cautious about where to invest. As one VC said: "I currently invest only in perfect deals, and I know many funds don't invest at all".

This impacts entry valuations as well as the absolute amounts of capital raised. Most importantly: 'reasonably good' companies aren't being funded currently at all. All that leads to an immediate evaluation of one's cash runway. Something which I urge you to do.

"Big burners" have already intervened, stopped hiring and invoked strategic layoffs; also in the Netherlands, even though the media have missed most of them. In May, I spoke to a founder who stopped hiring, but he was also already firing. And with reason: with only a few million in yearly revenue... he was burning €1M each and every month...

The silver lining? This is a welcomed rebalance of the overly stretched talent market and will shift the power slightly back to the employers (i.e. startups). 

You still upset? OK get this: earlier this week Dutch 2023 inflation was at 4,1% (consensus estimate). US inflation has already declined from 9% to 7%. 

A normalized inflation will 1) stabilize the markets, 2) calm down employees and 3) enable interest rates to go down again. And in the long term, this will (Yaay!) revive the Good Times again! (But don't hold your breath.)

Employees definitely haven't received any of these memos: the Dutch FNV unions are asking for a 14,3% salary increase across the board (not our problem), while 80% of employees plan to ask for a raise. Anecdotally, I've heard about employees asking for 15%, 20% or even 25% salary increases...

Be sure to forward them this email.

¯\_(ツ)_/¯ 

I wish you and your employees an exceptionally safe voyage.

Aik

P.S.: If the articles below do not suffice, we are currently seeing a lot of interest in our:

1. Org chart & hiring plan workshops.
2. Recruiting Operations conversation data review
3. Executive Search

Which hires to make in different stages of growth

What do flowers and tech startups have in common? They can only reach the successive growth stage if their needs in the previous one are fully met. But the needs can vary a lot depending on which growth stage they are in. For tech companies that means that hiring specific roles at a specific stage can be the deciding factor when it comes to meeting each stage’s targets.

The recent layoffs bring a new balance to the tech market 

120.000 people have been fired in the past six months. That’s 169% more than during the initial months of COVID (71.000 employees between Q2-Q4 in 2020). While for some that could be frightening, it could also become an opportunity. With the talent market being skewed for the past years, the current context creates a new balance in the tech market.

Determine which hires to make, and which to postpone (toolkit)

If the market slows down, should you stop hiring? Simply put, no. As a startup or scale-up, you might not have the time to wait until the economy picks up. Here’s a toolkit that will help you adjust your plans and the velocity of your hiring.

Know your cash runway to determine your optimal growth speed

As a startup or scale-up, your resources are limited. Your cash runway is the main oxygen source of your company. Knowing how much “air” you have left allows you to take proactive measures and find your optimal growth speed.

Startups & scale-ups in the Dutch ecosystem are still hiring

2022 has become the second-highest year for VC investments, determining a 7.6% annual growth in jobs created in the Dutch startup ecosystem. Business development roles are the most sought-after, followed by tech roles, with the latter being the hardest-to-fill.

Do you enjoy our monthly updates? Feel free to forward this newsletter

and subscribe right here.