During this session, panelists discussed what strategic and late-stage investors are looking for in today’s market, offered practical tips on how to make organizations attractive to investors, and described innovative funding arrangements for use during tough times.
Session panelists:
- Julie Ebert, Managing Director, Silicon Valley Bank
- Adam Kaye, Managing Director, Sixth Street
- Noah Lewis, Managing Partner, Ardan Equity
- Irem Rami, Principal, Norwest Venture Partners
- Moderator: Thaddeus E. Chase, Jr., Partner, McDermott Will & Emery
Top takeaways included:
- The days of funding growth at all costs are over, particularly for late-stage businesses. Investors are looking for strong unit economics at the gross-margin level, proven return on investment, customer retention and product-market fit.
- Consolidation and other M&A activities may be the best plays for late-stage companies in this market. Investors are skeptical of soaring valuations and customers have been overwhelmed with point solutions over the last few years. Strategic and other late-stage investors are focused on consolidation opportunities.
- Companies should build for profitability, not for exit opportunities. For example, instead of launching with a national sales strategy, companies should focus on proving return on investment (ROI) in one or two markets before expanding, noting, “Slow is smooth, and smooth is fast.”
- Although investment activity has been slower over the past year, investments are expected to pick up again during the next 12 to 24 months. The panelists were most bullish on life sciences, followed by payor solutions, then provider solutions.
