Now is probably the best time for investing in an early-stage fund of startups. 10/2022

How could that be if we are entering a recession?

Now is probably the best time for investing in an early-stage fund of startups. How could that be if we are entering a recession? It seems counterintuitive but there is plenty of evidence from past economic downturns and here are the main reasons:

1. More mature startups are and will have a hard time accessing funding in better terms than in previous years. They are extending their budgets in time reducing costs and letting go of talented people. These people are now available for early-stage startups at a lower cost. Execution is all about people.

2. The lower entry point of investment.

3. Data shows that economic downturns produce some of the best venture capital performances. Great value is created when capital is deployed during a crisis.

4. The opposite happens for many funds deployed during the 2000 bubble

5. Guess which of these companies emerge during downturns: Uber, Lyft, Airbnb, Pinterest, Slack, Flipkart, and Cloudera. All of them and more. 

6. Early-stage startups will face less competition, a more frugal mindset, and disciplined financial culture. 

7. When Public markets experience volatility, experts say to invest in emerging managers. (Forbes)

Current situation:

Team News:

• I was debating about the reinvention of the automotive industry and the energy transition at Movilidad 2030 invited by Ualabee

• Glad to share my experience at the UTFSM innovation and entrepreneurship EIVA even in Valparaiso

Deals News:

• We are building our deal warehouse. We have 13 deals under review, mostly from Latam and 2 from Israel. We are meeting their funders and their customers. This is just starting, we expect to review a total of 300 startups. 

Some Industry News:

• Copec acquires Blue Express for $221MM

• SWVL acquiers Urban in Mexico

• HSBC, Goldman, Santander Ink $810 Million in Financing for Kavak

• Future is bright in Latin America startup ecosystem despite current volatility

• Walmart agrees to order 4,500 Canoo EVs for last-mile delivery

• Intel’s self-driving company Mobileye files for an IPO

See you next month and remember our closing Blue Mobility Fund I in December. Contact me for more details ds@bluemobilityventures.com