Hello friends! Axel from Gilion here.
First off, we have a new CEO!
I am thrilled to announce that Oscar Werner, former chief executive at the global behemoth Sinch, will step into the role of CEO of Gilion. Oscar’s extensive experience, honed at companies like Sinch, Tobii Tech, and mBlox, uniquely positions him to lead Gilion into the next phase of scaling our growth & lending platform to the world’s entrepreneurs.
See the full announcement HERE.
Now, let’s head into some of the latest market trends:
Musings from the market
1. Exit values down, downrounds up, but there’s a silver lining
According to new data from Pitchbook, the average exit valuation of startups were down 29% in 2023 over 2022. Simultaneously, the amounts of down rounds went from 14% to 21%. This is of course bad news for the wider tech ecosystem, but it also brings some opportunities, and in my opinion reduces risk to some extent.
Of course the fact that founders and teams are earning less when exiting years of hard work is sad to see. On the other hand, it makes companies pursue other options than IPOs or being swallowed up in vertical integration.
2. Now for some M&A
We are starting to see this trend play out at Gilion, with more companies enquiring around M&A financing to merge with or acquire adjacent companies. The lack of M&A activity in tech has been one of the most surprising aspects of the industry to me historically, and I think there’s a lot to gain from a pickup here. It can’t possibly be true that greenfield market entry, or building up complete product suites from scratch is the best option in all cases.
3. Down rounds suck, but at least there’s a market price
Let’s be clear. Downrounds can wreak havoc on a startup, with unfavourable terms, excessive dilution, and employee moral fading as option payouts look all but impossible. At the same time, we all know that startup valuations have taken a pounding, and a year ago we spoke to a lot of founders who were frustrated that despite undoubted value in the company, investors were afraid to invest at lower valuations, and hence being the ones to establish a new valuation. The fact that more downrounds are happening might be a sign that market pricing and conviction is stabilising.
What about debt? I haven’t seen any updated statistics on this, but I wouldn’t be surprised if the valuation declines pose some serious troubles for Venture Debt. For us as a lender relying solely on cash flow predictions, it does not mean a problem, and I believe considering debt as an option, both for M&A and as an alternative to growth equity makes more sense than ever.
What do you reckon should be the biggest focus for tech startups in 2024? We’d love to hear your thoughts on the topic.
