Investors have become more demanding and focused

The exceptionally opportune times of the past decade in the economy, finance and venture capital world have been replaced by uncertainty, expensive money and investor caution.

It is expected to be a short-term setback, but it forces investors to choose long-term sustainable strategies and resilient business cases, as was noted during the StartupDay 2023 panel discussion – on the photo from left to right – by Sille Pettai (SmartCap), Eve Peeterson (Startup Estonia), Troy A. Weeks (McWin Capital Partners), Gerri Kodres (Specialist VC) and Charles Lorenceau (ACE & Company).

Some takeaways from the discussion:

  • Current market turbulence is expected to calm down in the next few years, but apparently, the familiar period from the past 15 years with excessive capital supply is not expected to return in the foreseeable future.
  • It must be taken into account that venture capital is still a long-term investment, it is not a decision made based on emotion or the fashion, but trends instead. 
  • Start-ups must be able to achieve more and succeed faster in a situation where inflation is racing, costs have increased, and the prospect of fundraising is getting bleaker. 
  • Regardless of the sector, it is still important for investors – especially with early-stage investments – to focus on strong and competent teams, to invest in the quality of people.
  • Startups that want to raise capital should realistically evaluate the factors of the surrounding environment, establish long-term strategies and demonstrate ability to become profitable, focus on new technologies and data-driven approaches. 
  • It is time for start-ups to turn their attention also to grants, the EU and state subsidies in addition to private capital, especially when it comes to knowledge-based solutions. 
  • The Estonian start-up community has remained strong, and the ecosystem that has been built here provides support and growth even in changing times. 
  • The Estonian start-up ecosystem also needs a paradigm shift, and with this regard, cooperation between the government and the private sector is essential. Also, the accelerators or incubators that existed 10 years ago are no longer sufficient – we need to bring research teams closer to investors and business people, without which growth and internationalization are not realistic. 
  • Central and Eastern European start-ups have a huge competitive advantage since they have shown that it is possible to be proactive and do more with less. 
  • The more research-intensive the solution or technology is, the more connections within our ecosystem are required, as well as with countries and ecosystems outside. Nordic Tech Valley is a completely realistic ambition. 

Photo credit: Edmond Mäll/StartupDay