Motorsport legend
Ayton Senna once said, "You can't overtake 15 cars on a sunny day, but you
can overtake when it's raining." When the market begins to change, stocks,
especially tech stocks, are facing a period of turmoil, with some Big Tech
stocks losing more than $ 1 trillion in just three trading days in early
May. This may be due in no small part to the macroeconomic factors that
induce whiplash that businesses have struggled with over the last two
years.
Capital
injections boosted the economy during the pandemic, but the war in Ukraine now
exacerbates the effects of already constrained supply chains, curbing
production, causing rising prices, and associated inflation. As consumers
collapse as a result of this, central banks around the world are raising
interest rates to stop rising prices. Rising interest rates make capital more
expensive and raise serious concerns among business leaders and entrepreneurs.
As a result, the market is feeling oppressive, with tech stocks among the
biggest victims.
A tough time for
high-growth companies
Capital-stealing
companies thrived in the recent low-interest rate environment, where debt was
low and spending was boosted by Covid's stimulus. The same company now counts
all the dollars and sees job freezes and even layoffs.
In the past,
high-growth companies could escape growth at any cost if they knew they could
simply raise more money when they ran out of money. It was over at that time.
It is very difficult for companies that are currently raising venture funds
with high growth to raise capital in a market where growth is no longer
rewarded at any cost.
Even recently
raised, high-growth companies with annual recurring revenues over $ 100
million, like us, need to reassess how they can effectively allocate capital in
these new market conditions. We all have to respond to ever-changing market
conditions, and above all, think about the upcoming "winter."
Readjustments
and cost savings for new market realities
Lessons learned from
running a growing company in a volatile market, such as the 2008 crash and the
recent Covid-19 pandemic, can never be modified. Showed me a long finish.
Responding to the
inflation market requires a new decision tree that focuses on how to leverage
the situation and how businesses generate revenue. As a leader, you are
focusing your spending on the right areas of your business, and of your capital
to gain a strategic advantage over competitors you may not be as solvent. You
have to make sure that you are optimizing your use.
One such
consideration is to secure a runway for at least the next two years. However,
in volatile markets, forecasting and planning become more complex and difficult
to calculate.
One way to save
capital is to streamline the area ofspending. For example, you can select a
delay