Y Combinator (YC), the world's most prestigious start-up incubator (with Airbnb, Coinbase and Reddit on its roster) is raising the alarm with its partners:

« Pour ceux qui ont créé leur entreprise au cours des cinq dernières années […], votre expérience de collecte de fonds n’a probablement pas été normale et les futures collectes de fonds seront beaucoup plus difficiles ».

Enough to make the start-up nation shiver.
We explain.

What's been going on for several years:

Les levées de fonds sont faciles. Trop faciles.

Chaque semblant de projet lève des millions de dollars à tour de bras. Puis dépense ces dollars sur sa «topline», c’est-à-dire sur tout ce qui peut aider à faire croître son chiffre d’affaires : pubs Instagram, flyers à la sortie du métro, campagne influenceurs Tiktok et tout le reste.

Inutile de préciser que la grande majorité de ces sociétés est lourdement déficitaire. Et peu d’entre elles ont un plan pour devenir un jour bénéficiaire.

In just two years, the amount of money spent on funding start-ups has grown from $60 billion to over $150 billion. Companies raise huge amounts of money, spend them immediately, and raise huge amounts of money again, and so on.

You can understand better how Lola, 19 years old, earns 20,000€ per month by filming herself on Tiktok with a Shein swimsuit.

What will happen:

The return of selectivity in finance. Finally.
Investors will ask start-ups to propose viable and profitable projects.

Enough to form a storm on the horizon, according to YC: "Many of your competitors will fail to anticipate, maintain a high spending rate and only realize they're screwed when they try to raise new funds."

The rest you have guessed: slowdown on fundraising and slowdown on marketing expenses.

Lola will have to find a real job.
Finally, inflation has its benefits.

Have a great week,

Pierre