Take Advantage of a Bear Market With Startup Investing
This piece is brought to you by On Deck Angels — the investment community that helps you level up your investing through an incredible network of peers, world-class curriculum and exclusive deal flow that starts with an 8-week immersive onboarding experience.
The market downturn has impacted everyone — from seed-stage startups to the largest publicly-traded companies. Startups are seeing their valuations collapse, and companies are laying off employees left and right.
But like the public markets, investing in startups during a downturn also presents opportunities. Today, we explore those opportunities.
Startup valuations silently crash
Unlike public companies, private companies don’t have their market value visible on the stock market every day. So how do investors know if their investment is doing well?
- Say you invest in a startup at a $50M valuation. If they raise another round of funding at a $100M valuation, the value of your investment would have nearly doubled on paper (without considering dilution).
- But the reverse could also be true. The startup could also raise money at a lower valuation (say $25M), which means your investment would be worth nearly half its value.
The second situation is where startups are finding themselves today. To attract investors, companies are raising money at lower and lower valuations.
Even some of the most well-known startups are raising capital at significantly cheaper prices…
Here’s the opportunity for investors
1/ Startups are much cheaper than they were last year. Market timing is also important in startup investing. Invest at the peak of the market cycle and get burned. But enter at the right time and benefit from an eventual bull market.
2/ Institutional investors have billions on the sidelines. Despite the market downturn, major investment funds continue to raise billions. Hundreds of billions are waiting on the sidelines — ready to be deployed in the coming years.
And when they do, expect some serious firepower that’ll help raise startup valuations.
The key to startup investing
With startup investing, having a strong network is important. The best deals often come from referrals by other investors or entrepreneurs.
This is why On Deck Angels helps you refine your investing skills alongside a community of the world’s most helpful angel investors.
Through their 8-week onboarding that kickstarts your membership in the ODA community, investors will learn the three fundamental P’s of angel investing:
- Process — sourcing and evaluating investments.
- Portfolio Construction — allocation and diversification strategy.
- Platform — building your brand and value-add.
The program has three onboarding periods per year (Spring, Summer and Fall), with the Fall cohort kickstarting soon. Commitment ranges between 2-4 hours per week, and the program structure is broken down into:
- Investor Education — fireside chats, deep dives with industry leaders, workshops and more.
- Community & Peer Networking — building relationships through meetups, Slack groups, 1-on-1’s and mastermind groups.
- Deal Flow & Co-Investment — accessing deals from various programs.
- The On Deck Angel Handbook — a library of resources in the investment process.
See the whole curriculum here.
Who’s the program for? ODA will help you meet your investing goals whether you’re just starting, looking to break into the industry or honing your expertise as an angel investor.
Dip your toes into startup investing by applying to the latest On Deck Angels cohort before the Oct. 9 application deadline.