No doubt there are lots of doubts about the short-term outlook for the world economy.
Whilst we are happy to see so many clients doing well there are definitely pockets of weakness. One weakness that has been severely hurt is the tech industry who were flying high when money was cheap. Now that money isn’t so cheap, people are not so keen on loss making companies like they once were. Hindsight is a lovely thing but looking back you can see that getting 50 times revenue as a valuation despite making losses was not the real world.
Now that it has come back down to earth, it has had the flow on effect of hitting valuations and therefore fund raising that start-ups are going through. You only need to read about the massive write down of funds have made on once tech darlings like Canva to see how much values have fallen. The result of this, and the uncertainty is that the much smaller pool of funds who want to invest have very different expectations around valuation. As a result, the focus for start-ups has been to shift from revenue metrics to profitability and cash flow break even metrics. Justifying valuations also a big part of any pushes recently.
Whilst it certainly isn’t as easy, we are still seeing a healthy level of investment across the board. Australians are sitting on record piles of cash, and we have enormous amounts of talent and innovation here – might just need to tweak the pitch.