The Dark Side of the Funding Boom: Skimpy Due Diligence, Burnout
Eye-popping valuations. Mega rounds. Lawyers so busy they’re turning away clients. It may seem like the greatest moment in history to be a venture capitalist, founder or one of the many service providers that caters to startups.
But a grim reality underlies the pace of such a frenetic market: burnout. Many venture capitalists, entrepreneurs, lawyers, recruiters and others in the startup industry say they are experiencing unprecedented workloads, with fewer respites between deals to catch their breath. Investors are scrimping on due diligence. And extreme fatigue is making it harder for startups to retain employees, while the scramble to hire replacements is helping to push up salaries.
“There’s a lot of exhaustion, for sure,” said Eric Bahn, co-founder of seed investment firm Hustle Fund. “It just feels unsustainable.”
Who's impacted the most? Female and minority founders of course are most negatively impacted by the current innovation and incubation of ideas process. As funds can't perform due diligence fast enough they often resort to their "old" networks of founders they have previously invested in just because they know them.
The old opaque manual due diligence process has far exceeded its limits during this record high of startups, funding and quantity of deals skyrocketed post COVID. There's no sign of this trend slowing any time soon either. The world post COVID is innovating and building new infrastructure and adapt to a more remote way of life. It's a very exciting moment in time as leaders embark into the Fourth Revolution.
We reverse engineered the investing process to become a founders first experience. We start with Due Diligence first instead of waiting until the end, which acts as a teaching and feedback loop for the innovators to level up and become more investable. Ensuring when they do connect with investors it's at the ideal moment in time, providing them the best possible "first impression" and maximizing their opportunities to succeed together.
Democratizing access and deployment of capital is seriously at risk if these record amounts of capital are poured down old faulty investment processes. Like a leaky faucet, you simply don't keep pouring good money down a leaking faulty faucet.
While many firms have thesis that preach inclusion, diversity, democratizing x etc. all most all are currently employing old investment processes and due diligence. The infrastructure for a more decentralized way to innovate and invest is long over due.
WeTransacts.live is the systemic infrastructure solution to foster a cooperative and inclusive access to the deployment of capital for ALL. We've reimagined the entire way human capital and resources align at the precise moment in time for ALL. We're manufacturing serendipity and access to resources for ALL with a more sustainable and cooperative AI platform.
Does your innovation process align with your mission and values? or Does it repeat and propagate the systemic problems that got us here to the largest funding gap for female and minority founders?
To request a demo to upgrade your innovation process and explore our SaaS solutions for founders, investors, funds, universities, pitch events/hack-a-thons, and entertainment industries.