If I could go back in time, here are a few pieces of advice I would give to myself many, many years ago when I started my career in venture capital. ‍

Relationships are everything

It鈥檚 easy to get caught up in chasing fast-moving deals in the hottest trend or startup. Many investors do, and there鈥檚 no shame in it 鈥� except the performance metrics those deals tend to yield.

Venture capital is a long game, with cycles that span many years, even decades. Over even a long career, you may only see two or three of those cycles and the investments you make have maturation dates that usually span a decade.

The people matter more than the deals. This industry runs on trust, not transactions. My LPs trust me to deliver and that trust is transferred to the founders I invest in. The trust I establish with my LPs is the foundation for future investments and the way founders maintain my trust often provides them with funding for multiple ventures.

The best investors invest in founders 鈥斕齨ot startups 鈥� and that dynamic transfers to LPs. People remember how you treat them when there鈥檚 nothing to gain and winners often come from unexpected places.

Earn your filter and maintain the hustler mindset

Take as many meetings as possible. Meet as many people as possible. Listen to ideas you think are crazy, pitched by people you think are nuts. Go deep 鈥� call customers, talk to parents, professors and anyone else that can provide even the smallest signal on the founder.

It鈥檚 OK to ask dumb questions. The best investors don鈥檛 win with spray and pray. Selectivity scales and drives long-term success. The faster you can develop a filter, the faster you鈥檒l earn the ability to select winners.

That skill only comes from reps, so don鈥檛 waste time curating meetings based on perception, ego or prestige. If you do this well, your job will get glamorized and it will become increasingly difficult to maintain a beginners mindset, which is essential.

Early-stage investors win by caring more about their founders and the details of their business. Never hesitate to roll up your sleeves and dive deep into customers, unit economics, churn curves, competitors, fundraising decks and any other granular component necessary to make your founders succeed.

Build a brand before you need one

By the time you actually need to build a brand around yourself and your fund, you鈥檙e going to be leaving opportunities on the table.

Founders and LPs alike need to know who you are and what you stand for, and the earlier you can establish those channels and develop a narrative history the better 鈥� even if no one sees it for years.

You don鈥檛 have to be right, and you can change course at any time.听 Getting something out there is more important than being perfect. Teach the market, share what you鈥檙e learning and seeing, and transfer value without expectation of return. You鈥檙e playing the long game, remember?

One of those posts from four years ago might just be the reason the deal of a lifetime finds you. A brand is not a logo, it鈥檚 a reputation. Establish it early with no expectations and it鈥檒l pay dividends when it鈥檚 needed most.

Final thoughts

Venture investing is not easy. There are volatile cycles, big decisions and an enormous amount of dedication required to successfully establish a 20- to 30-year career. The North Star to rely on is relationships built on trust. Relentless effort is a prerequisite, but ultimately the best investors have developed and nurtured relationships. Do that and the returns will come.

As the co-founder and managing partner of , is committed to establishing MGV as the premier venture firm for world-class tech entrepreneurs to accelerate their visions. Under Schr枚der鈥檚 stewardship, MGV has swiftly ascended to a top-quartile firm, surpassing the performance of 95% of venture funds. The performance of MGV is driven by Schr枚der鈥檚 unique approach to venture investing 鈥� that providing intensive sales training, devising robust fundraising strategies and securing follow-on investments is the best way to support founders and drive the deepest return for investors. has recognized him as one of the Top 100 global seed investors, and his perspectives are published regularly in SA国际传媒 News and other leading publications.

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Equities, despite the volatility and uncertainty, have held up. Bitcoin recently posted a new all-time high and the development of the crypto space is booming. The battle-tested startup market is generating more revenue earlier than ever before while the AI boom continues to attract capital.

It is looking more and more likely that we are at the beginning of a bull cycle that investors and founders have been praying for. Markets are cyclical, and while challenging times test resilience, booming markets present a unique set of opportunities and risks for both venture capitalists and founders. Success in an upswing requires preparation, strategy and focus.

Here鈥檚 how to get ready for the next big wave.

For VCs: stay disciplined

In previous cycles, the beginning of the end has traditionally been marked by such extreme froth in the market that VCs chase deals outside of their focus, cut due diligence corners, and disregard fundamentals.

Don鈥檛 repeat those mistakes. Double down on sectors and models you deeply understand and believe in and ignore the pressure to chase trends. The FOMO will be real and the desire to get in on deals quickly to outcompete other investors will be strong.

Resist. Don鈥檛 compromise due diligence standards and don鈥檛 lower the bar for fundamentals. Capital efficiency, durable competitive advantages, clear paths to revenue and scalability still matter in a booming market and you鈥檒l regret compromising your standards when this cycle ends. At peak-hype cycle, it鈥檚 easy to chase the hottest deals 鈥� oftentimes to the neglect of your existing portfolio and founders.

Stay focused on relationships, both with your existing founders and LPs. It鈥檚 easier to raise that next fund during a booming market, so instead of chasing overvalued deals the best VCs use these cycles to play the long game by doubling down on their winners and securing fresh investor commitments.

For founders: build the foundation for growth

For startup founders, boom cycles are often characterized by an endless, perpetual state of raising money. As capital becomes more accessible, the competition also increases so founders find themselves dedicating an enormous amount of their time to fundraising.

Knowing this is coming, founders should prepare by clarifying their vision, sharpening their pitch, fortifying their balance sheet, investing in talent and warming up existing strategic partnerships.

The more you can do to create efficiencies for yourself in the coming funding cycle by polishing pitch assets and preparing for due diligence cycles, the less time you鈥檒l have to spend during crunch time and the faster you鈥檒l be able to move in the highly competitive race for capital.

Internally, you can create some efficiencies for yourself by beginning long lead recruitment cycles, knowing that the capital to chase that growth is just a few months away. Those partnerships you鈥檝e established? They are going to be tough to leverage during the chaos of the cycle, so make sure you establish plans and channels to capital on those relationships when it matters most.

Prepare, don鈥檛 chase

Both VCs and founders must remember that booming markets are as much about timing and preparation as they are about opportunity. For VCs, the goal is to deploy capital thoughtfully and avoid the pitfalls of hype-driven investing. For founders, the focus should be on scaling sustainably while seizing the advantages of favorable market conditions.

Booming markets don鈥檛 last forever, but companies and funds built on strong foundations can thrive long after the cycle turns. The best time to prepare is now 鈥� before the wave begins.

As the co-founder and managing partner of , is committed to establishing MGV as the premier venture firm for world-class tech entrepreneurs to accelerate their visions. Under Schr枚der’s stewardship, MGV has swiftly ascended to a top-quartile firm, surpassing the performance of 95% of venture funds. The performance of MGV is driven by Schr枚der鈥檚 unique approach to venture investing 鈥� that providing intensive sales training, devising robust fundraising strategies and securing follow-on investments is the best way to support founders and drive the deepest return for investors. has recognized him as one of the Top 100 global seed investors, and his perspectives are published regularly in SA国际传媒 News and other leading publications.

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While it’s somewhat standard practice to get an idea off the ground with friends and family, then angel investors, things get more complex as startups approach their early stages and begin raising successive rounds. Having investors that provide tangible support beyond money 鈥� at just the right points along a startup’s trajectory 鈥� can be vital to scaling up past even its expectations. Here’s why.

The stages of building a startup

Building a startup is a multistage challenge. On Day One, it’s about hacking value and moving from zero to one. Founders must identify product/market fit and prove that the idea can be built.

This step is entirely on the founders’ shoulders, and they can typically fund this themselves via friends and family or angel investors. Once that’s done, they have to build what might be called an MVP 鈥� a minimum viable product 鈥� which takes more capital and operational complexity.

During this phase of hacking growth, there are other nuances: Product and sales operations need to be established, key employees need to be hired 鈥� and all needs to happen in tandem and at a high degree of quality if you want to become a business with scale. Once all of that has happened and is working correctly, founders are officially in the business of company-building, and are moving out of early-stage and into growth-stage venture capital funding.

The real value of early-stage VC perks

Early-stage VCs often pride themselves on being hands-on with their portfolio companies: Marketing, legal, accounting, hiring, operations, sales, mentorship and other services are offered by them in-house or through various networks.

During these first few stages, where budgets are tightest and growth needs to be most rapid, these offerings can make an enormous impact. Founders who know how best to leverage these resources will give themselves an advantage over their competitors 鈥� those who secure early-stage checks from investors that disappear after signing miss out on what engaged ones provide.

One of my favorite examples of the impact of early-stage support centers on creating scalable foundations early 鈥� sales, operations or staffing. The goal of an early-stage company is to achieve as much hyperbolic growth as possible with the proper infrastructure to support it at scale.

Many startups are fortunate enough to experience rapid growth, but get caught in a perpetual game of catch-up as they develop the systems to handle that growth on the fly. I’ve seen companies with fantastic products not grow because their infrastructure couldn’t meet demand. Having an early-stage venture partner with the right offerings could have prevented that struggle and made the most of that early momentum.

Blending early- and growth-stage investors

As startups progress from seed to Series A, it can make sense to bring on growth-stage investors alongside hands-on early-stage backers 鈥� especially if those early-stage investors have done what they need to do during the pre-seed/seed stages. At this point, bringing more of the “spray and pray” funds can be helpful, but founders should be wary of bringing them on too soon. Having a solid group of hands-on investors early on sets the stage for success when growth-stage conversations start happening.

Conclusion: Vet your investors

Founders should meticulously vet their investors at every stage. Getting VCs who can deliver value across the business from Day One is a must 鈥� it’s about much more than just money. Getting the right people in the right positions at the right times is how you ace each phase and reach your goals.

To sum up, the benefits presented by initial-stage venture capitalists and how those offerings fit into the startup鈥檚 strategy is massively important for early-stage founders. In addition to being necessary in maneuvering through startup growth challenges, support and resources given by hands-on, deeply involved investors is a massive shortcut to rapid, sustainable growth.

is the managing partner and co-founder of , and is focused on working with world-class tech entrepreneurs and establishing the MGV legacy. Before co-founding MGV, Schr枚der served as the head of global sales at the and was an investor at . Originally from the Netherlands, he grew up in South Africa and graduated with a law degree from Bertolt-Brecht University.

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Those days ended with a series of significant blows to the ecosystem including the Silicon Valley Bank collapse, global wars and rising interest rates.

Now the industry has settled into a new, healthy normal where valuations have returned to reasonable levels, only the highest-quality startups are able to attract significant capital, due diligence has come back into vogue as investors slowed down, and capital efficiency is again the name of the game for startups.

Glimmers of hope have emerged: Global markets have held, IPOs are thawing, crypto has rebounded and AI is booming 鈥� all signals of renewed investor interest.

As the doom and gloom continues to subside we are all wondering: What is the Goldilocks scenario that investors and founders are hoping for?

Investor sentiment

I spent the past few weeks learning what other venture investors think this outcome would require. I discussed this with and , managing partners at and , respectively, to understand if other fund managers share my optimism.

鈥淭he ecosystem needs liquidity. IPOs need to begin happening again, interest rates must come down, or public markets need to grow. Any one, or ideally, all of these things, need to start happening for the venture ecosystem to rebound,鈥� McCrea told me. 鈥淰enture capital is all about the long game, so some patience will be required.鈥�

The general consensus is that first and foremost, IPOs need to start happening again, and recent signals from and indicate they might.

The liquidity events brought by IPOs are the lifeblood of venture, and once venture investors across all stages start getting capital returned, they can return capital to LPs, create new funds and make new investments across the startup ecosystem.

As that foundational cycle continues to show more strength, the momentum of the ecosystem increases and another cycle begins.

鈥淔und managers are seeing some long awaited signs of life from the market, despite the myriad of headwinds. Startups are getting more efficient and profitable while a great deal of froth has been removed from the market. There鈥檚 a palpable sense of optimism emerging that the Goldilocks scenario might just occur,鈥� Cohen told me. 鈥淲hether it materializes has yet to be seen, but 滨鈥檝别 seen more optimism emerge in the last month than I did in the last year.鈥�

Reaching Goldilocks

Inevitably, the most crucial piece of this puzzle is the interest rate and macroeconomic climate. If global markets are able to avoid a recession and interest rates are able to be managed in a way that fosters continued growth under tighter monetary controls, then institutional capital will once again flow toward growth.

In a world where IPOs are consistently rolling and fund managers are showing strong performance, the venture and startup ecosystems will be in the Goldilocks scenario.

It鈥檚 a uniquely interesting time to invest; the scales seem evenly matched and maybe even slightly optimistic.

This is a prime time to invest, because we may be witnessing the beginning of a renewed bull market. The risks, however, remain persistent with global turmoil continuing to spread.

The conflict in Ukraine remains protracted and new conflict has arisen in Israel. Interest rates are flattening, but remain elevated relative to the previous cycle.

But global markets have remained resilient and a definitive turnaround there 鈥斕齝ombined with a few more successful IPOs 鈥斕齝ould provide directional confidence for investors over the coming months.

is the managing partner and co-founder of , and is focused on working with world-class tech entrepreneurs and establishing the MGV legacy. Before co-founding MGV, Schr枚der served as the head of global sales at the and was an investor at . Originally from the Netherlands, he grew up in South Africa and graduated with a law degree from Bertolt-Brecht University.

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Despite small glimmers of hope, the market turnaround has not yet materialized, putting startup founders in a challenging position as they decide how to optimize resources.

The vast majority of the founders I talk to are focusing on slashing costs to extend their runways 鈥� they鈥檙e in survival mode. While this is certainly the default option, there are drawbacks to it, and I鈥檓 not seeing enough founders pushing to consider the viable alternatives.

Survival mode

In times of uncertainty, it鈥檚 a natural response to want to play things conservatively. Slowing expenditures and even cutting staff to add six, 12 or 18 months of runway may seem like the way to accomplish that aim.

Trouble is, at that point you鈥檙e trying to time the market so it turns out that what you鈥檙e actually doing is something of a gamble. Maybe you鈥檒l be able to wait things out and still have enough left in the bank to come roaring back to life when markets turn around, making a fresh fundraise more feasible.

But maybe you鈥檒l just wind up fizzling out.

Here鈥檚 the thing: Not only does your bet on the timing of the market rebound need to pan out, you鈥檒l also need to have enough resources left to ramp back up into growth mode, develop some traction, and then hopefully be able to impress enough VCs to raise that next round. So long as you鈥檙e taking risks like this, you should also consider a bolder play: growth.

Growth mode

Sometimes it pays to be contrarian. While nine out of 10 startups go into hibernation, there can be big opportunities to conquer your market vertical. Look at your competitors. Are they actively marketing? Are they winning new customers? If not, this could be your chance.

Rev up your sales and marketing engines, ship new products, bring in some new customers and boost your ARR. Yes, there are costs involved, but pull this off, and your company will be far more attractive to VCs.

Right now there are far too few startups still growing, and if there鈥檚 anything that VCs like it鈥檚 growth 鈥� even better if it鈥檚 2x to 3x ARR growth, and you鈥檙e taking strides to corner the market you鈥檙e in.

Bootstrapping mode

The final route that鈥檚 an option for some startups is to dial back on the costs of hyper-growth and focus on developing an efficient, profitable business.

I鈥檓 always looking for startups with business models that actually work. At the early stage so many companies are trying out ideas that may never have a path to profitability.

Granted, if you鈥檙e still small and profitability doesn鈥檛 mean eye-popping growth, you should temper your expectations of raising a fresh round of funding.

On the other hand, if you鈥檙e trying to play things conservatively, bootstrapping can be an even less risky path than going all the way into survival mode. When you鈥檙e profitable, you don鈥檛 need to live off of your runway.

The question really is: Will you be able to remain competitive when the rebound spins out freshly funded, hyper-growth-chasing competitors?

Each of these paths has its share of risks and upsides. Which one is right for your startup is contingent on a number of factors: How much cash you have in reserves, what your competitors are doing, what your path to profitability looks like, and much more.

The bottom line is that founders do have options beyond cutting costs and extending their runways, and they鈥檇 be wise to consider them.

is the managing partner and co-founder of , and is focused on working with world-class tech entrepreneurs and establishing the MGV legacy. Before co-founding MGV, Schr枚der served as the head of global sales at the and was an investor at . Originally from the Netherlands, he grew up in South Africa and graduated with a law degree from Bertolt-Brecht University.

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滨鈥檝别 said it before and I鈥檒l say it again: Over the course of their careers, LPs have maybe two to three windows to buy at the bottom. Our current market is one of them.

We鈥檝e all seen stories about how LPs are shying away from venture in the wake of macroeconomic trends, war, interest rates 鈥� the list goes on. The saying, 鈥淭hose who fail to learn from history are doomed to repeat it鈥� rings especially true in our current climate, and the window for LPs to nail one of those two or three career bottoms is beginning to close.

This opportunity does not come without risk, which is why those who capitalize on these moments are celebrated in history and why most miss it. It takes enormous courage and conviction to deploy capital in the face of headwinds like we鈥檝e seen over the past year. But for those who invest on 10- and even 20-year time horizons, the question really boils down to: 鈥淒o you think technology will continue to be the most profitable and disruptive sector over our lifetimes?鈥� If your answer to this is yes, now is a uniquely rare time to invest in the fund managers you think are capable of identifying the companies driving this trend.

As history has shown, it鈥檚 easy to invest when the market is booming and IPOs are flowing out like champagne in a nightclub. Ironically, many investors get crushed investing at the top when things seem most easy and obvious. Investing is all about timing, and those who have seen this cycle repeat tend to also be the most keen to lean into the risk presented by our current economic climate. Don鈥檛 get me wrong, it still remains to be seen when the official turnaround will come 鈥� but by the time that clarity is recognized, the opportunity will have passed.

LPs and investors of every variety are in a game of chicken with that slowly closing window. If history is any indicator, that turnaround will eventually arrive and the primary function driving capital deployment decisions is all about how close you want to cut it. History has also shown us that the window closes quickly and leaves many trapped 鈥� forced to decide between waiting for the next cycle or being forced to buy late and at prices they well know to be elevated. This is no easy task, especially when you鈥檙e beholden to boards and decision-makers that expect perfection.

My message to LPs is this: How close are you willing to cut it? If you鈥檙e really investing on decade time horizons, then it seems like you鈥檇 rather get through the window now and potentially weather a year or two (or less) of patience. The alternative is being late to the party and chalking up below-average returns as an investment in the wisdom to not make the same mistake a decade from now when history inevitably repeats.

Related reading:

• VCs Who Wait Too Long For A Market Rebound Risk Losing Out On The Best Deals

is the managing partner and co-founder of , and is focused on working with world-class tech entrepreneurs and establishing the MGV legacy. Before co-founding MGV, Schr枚der served as the head of global sales at the Maschmeyer Group and was an investor at . Originally from the Netherlands, he grew up in South Africa and graduated with a law degree from Bertolt-Brecht University.

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The ongoing downward trend in venture funding has many founders desperately trying to secure their next round.

Runways are running out, and many great startups with strong businesses and future prospects are willing to take a hit on valuations, and even take a downround, in order to continue operating.

Venture funds, however, are waiting for the directional resolution needed to not only feel confident in the market rebound but also to provide their limited partners with a sense that deploying fresh capital into venture is the right move.

Currently, everyone seems to be in a holding pattern waiting for this resolution.

Don鈥檛 wait too long

If history has taught us anything, it鈥檚 that oftentimes this resolution emerges after many of the best opportunities have been taken.

I believe that over the next six to 24 months, many of the venture deals that will go down in history as legendary will be made. As investors, it pays to be early 鈥� and that means deploying capital right before the market has directional consensus.

The difficulty for investors will be managing the risk of making investment decisions just as 鈥斕齩r ideally just before 鈥� positive directional consensus is reached. Once that moment happens, investors will begin piling back into the market, driving prices, valuations and competition for deal flow back up.

The sweet spot to make once (maybe twice) in a lifetime investments is coming up on the horizon, but with runways for many startups reaching their ends, the decision-making process for investors will become increasingly scary.

Many factors could contribute to this rebound 鈥斕齩r derail its possibility completely. The Ukraine war ending peacefully or the monetary policy soft-landing being confirmed could turn the tide of the markets overnight.

However, the opposite could very well happen and we could be in for a deeper, more protracted downturn than anyone anticipated.

Investors are obviously tracking these dynamics closely and monitoring the herd for directional agreement, but for the time being, many investors are stuck on the fence.

Until venture funds and their LPs start deploying capital again, the clock will continue to count down and many otherwise good startups will reach the end of their runways and close up shop.

A great many startups will reach that point over the next six months, so investors are running out of time to reach that directional consensus. If the macroeconomic landscape doesn鈥檛 provide some sense of clarity within that timespan, then VCs and their LPs will be between a rock and a hard place 鈥� either deploy capital to keep some portion of their portfolio alive, or accept a significant (potentially fund-crippling) number of failures.

is the managing partner and co-founder of , and is focused on working with world-class tech entrepreneurs and establishing the MGV legacy. Before co-founding MGV, Schr枚der served as the head of global sales at the and was an investor at . Originally from the Netherlands, he grew up in South Africa and graduated with a law degree from Bertolt-Brecht University.

Related Reading:

• Bootstrap, Sell Or Recapitalize? A Tech Entrepreneurs鈥� Guide To Surviving A Capital Crunch In A Downturn
• 鈥嬧�媁hat Does 鈥楧ry Powder鈥� Actually Mean For Startups?
• How Founders Should Manage Burn Rates During A Recession

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Managing burn rate is a critical aspect of running a startup, especially in a recession or protracted economic downturn. The market has shifted and so have investors’ expectations. It鈥檚 no longer a game of growth at all costs 鈥� sustainability, profitability and efficiency are the new key performance indicators catching the eyes of investors.

This change means that founders need to focus on burn rate now more than ever, so 滨鈥檝别 put together my thoughts on how to manage your startups in today鈥檚 economic climate.

What鈥檚 your break-even point?

First and foremost, founders need to have a clear and realistic financial plan. This includes having a detailed understanding of the startup’s current financial situation, and projecting future financial needs based on different scenarios. Startups should also have a clear understanding of their break-even point, which is the point at which the startup is able to cover its costs and generate a profit. By understanding the startup’s break-even point, the company can better manage its burn rate and ensure that it is able to generate enough revenue to cover its costs.

A key component of that plan is cash flow management. The ability to monitor and manage the startup鈥檚 cash balance ensures that bills are paid on time and provides an accurate perspective on when new funding will be required to continue operations. Given the constraints of this cash flow management plan, a refreshed and resilient take on the business model can be created. This includes finding ways to diversify revenue streams, building a strong and loyal customer base, and developing a business model that is scalable and sustainable.

Planning for future growth

Startups should also consider developing a strategic plan that outlines how they will navigate the recession and position themselves for future growth. If fresh venture funding will not be available for a year or two, founders need to actively seek out new sources of funding. Implementing a line of credit while the balance sheet and revenue are strong is a good first step, but other forms of short-term financing such as venture debt should also be considered.

Communicate clearly

Finally, it’s important for startups to have clear and open communication with their investors, employees and customers during times of uncertainty. This includes keeping investors informed of the startup’s financial situation, explaining any cost-cutting measures that have been implemented, and providing regular updates on the startup’s progress. Founders should also be transparent with their employees about the challenges they are facing and how the company is working to overcome them.

In conclusion, how founders manage their startups burn rate is essential during times of economic uncertainty. Startups should concentrate on executing cost-cutting measures, having a clear and realistic financial plan, focusing on cash flow management, building a strong and resilient business model, and having clear and open communication with their investors, employees and customers. By implementing these strategies, startups can increase their chances of success during a recession and position themselves for future growth.

听is the managing partner and co-founder of听, and is focused on working with world-class tech entrepreneurs and establishing the MGV legacy. Before co-founding MGV, Schr枚der served as the head of global sales at the听听and was an investor at听. Originally from the Netherlands, he grew up in South Africa and graduated with a law degree from Bertolt-Brecht University.

Illustration: Dom Guzman

The recent slowdown in venture funding has shifted the way founders are approaching VCs and vice versa. Deal flow has slowed dramatically and VCs are being especially mindful around what investments they choose to make and why.

Only a few months ago, founders were raising at a frantic pace (and spending that way too). Now, the focus has shifted from growth to preservation, and funding is being used to shore up balance sheets and extend runways for at least two years. For startups that happened to time this cycle poorly, their founders are faced with difficult propositions and challenges.

My advice to these founders is it鈥檚 better to take a down or flat round in order to withstand the recession that is likely coming. That comes with a lot of consequences, so in the very worst case I advise founders to 鈥渇ail gracefully鈥� so they鈥檙e able to preserve their investor relationships and start preparing for the next wave.

The news headlines seem to reflect some of the opposite dynamics 鈥� the deals are continuing at a rapid pace and startups are able to secure continued funding. This is only partially true. VCs are triaging their value drivers, so the deal flow we are seeing is from VCs looking to protect their portfolio darlings by allocating enough cash to extend their runways and ensure their longevity. In classic VC fashion, these rounds have created a gravity that funds 鈥渟tanding by the hoop鈥� wish to follow.

So in some sense, yes, deals are continuing but the broad allocations that were commonplace just a few months ago have come to a grinding halt. This has created a tale of two cities for startups; those which VCs wish to protect remain insulated with strong runways while all of the other startups on the roster are left with few options. Over the last few months we鈥檝e seen many of the portfolio winners secure that protection, so most VCs are now in 鈥渨ait-and-see鈥� mode before reshifting their focus to new deals.

What鈥檚 ahead

If positive signs in the economy take more than six months to a year to manifest, we are going to see significant desperation in the market as startups start running out of cash. There might be a sweet spot window in there for VCs if that desperation closely coincides with an economic turnaround, but whether or not that comes to fruition remains to be seen.

If we experience a protracted slowdown, I expect to see layoffs and an increasing number of startup failures as cash runs out and VCs remain unready to deploy fresh capital into new deals. With their winners insulated, they may be incentivized to let portfolio companies on the fringes fail in order to preserve their capital for the next sign of life from the economy.

Like every VC, I hope we don鈥檛 see that day come, but it鈥檚 possible. The most likely scenario is that we see a brief window where great startups are on sale and the smart VCs are able to step in and secure lucrative equity at a deep discount. Historically, this is where the best VCs have risen to the top.

is the managing partner and co-founder of , and is focused on working with world-class tech entrepreneurs and establishing the MGV legacy. Before co-founding MGV, Schr枚der served as the head of global sales at the and was an investor at . Originally from the Netherlands, he grew up in South Africa and graduated with a law degree from Bertolt-Brecht University.

Illustration: Dom Guzman

The best VCs identify and support the world鈥檚 best founders. This is at the core of what they do.

Creating and growing a startup to scale is an extremely difficult task that can be derailed by a myriad of circumstances outside of a founder鈥檚 control. So even when great founders fail, the best VCs are waiting in the wings to support their next idea.

The U.S. has an extremely positive mindset toward failures like these, but that same appetite for risk and the celebration of attempts at creating big ideas doesn鈥檛 exist in the same way in most of the world.

In Silicon Valley, startup founders who fail gracefully are celebrated as heroes 鈥� people who have bravely attempted the impossible. Their failures aren鈥檛 seen as personally attributed negative marks on their records, but rather learning experiences that will inform and enable them to be successful on their next attempt.

However, in Europe, Canada and other huge markets, these failures are viewed in a more embarrassing light that can stand as valid reasons to withhold capital from failed founders.

This perspective gives U.S. founders and investors a distinct edge and is responsible for some of the smashing successes the U.S. market has seen in every industry across the board.

From adversity to opportunity

With the sense of a significant downturn looming, there will undoubtedly be many startups that won鈥檛 achieve their vision in the coming years. It鈥檚 my belief that this represents a generational opportunity for founders and investors alike.

As the availability of capital diminishes, there will be many great startups that simply won鈥檛 be able to secure the funding needed to continue their operations. While this short-term pain will be felt by both founders and investors, it also represents a much-needed refresh of the cycle.

This refresh will unlock time for some of the most promising founders to go back to the drawing board with the wealth of earned experience needed to inform and create an even better company, product or service. For investors, this refresh will change the dynamics of valuations and opportunities in a way that presents uniquely valuable, once-in-a-lifetime opportunities to invest in great founders early and at extremely attractive valuations.

In the short-term it will be painful, make no mistake. But great VCs think on long time horizons and, for the last decade plus, great valuations in great startups led by great founders have been difficult (if not impossible) to come by.

And the winners are?

With the coming refresh, fund-changing valuations will present themselves again and the next generation of marque venture funds will be born out of this cycle. The major factor in deciding which funds will come out on top will be their willingness to lean into the risks and maintain focus on the long-term prospects of the coming cycle.

Having a strong portfolio of great founders is the key to unlocking this potential. So as failures begin to mount, VCs should be ready to back the founders they believe in most, even if those founders have earned a failure or two 鈥� or three.

is the managing partner and co-founder of , and is focused on working with world-class tech entrepreneurs and establishing the MGV legacy. Before co-founding MGV, Schr枚der served as the head of global sales at the and was an investor at . Originally from the Netherlands, he grew up in South Africa and graduated with a law degree from Bertolt-Brecht University.

Illustration: Dom Guzman