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The 2022 Business Survival Guide

The 2022 Business Survival Guide
May 24, 2022

The Daily Stack is a daily private market insights newsletter by PrivCo, a private company intelligence platform. Read our previous insights.
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In August of 2021, we wrote about the looming feeling of being in another tech bubble. Investors had major FOMO, deep-pocketed hedge funds and other nontraditional investors boosted competition for deals, and due diligence on novice companies was being swept aside to grab the next day’s headlines. Investors were admittedly suspicious of the guns-blazing vibe of investing but still didn’t want to miss out on the future winners in IPO exits. 

How to Survive a Bear Market
Then came the new year and the market correction (which just officially became a bear market) began changing investor behavior. Now we’re seeing how those public stock prices are affecting startup founders trying to raise money to build the Next Great Thing. Y Combinator, the startup incubator and early investor that launched Stripe, Airbnb, and others, wrote a letter last week to its founders, urging them to hunker down.

The ten-part letter included this nugget about the public market’s effect on private investors:

Understand that the poor public market performance of tech companies significantly impacts VC investing...During economic downturns, even the top-tier VC funds with a lot of money slow down their deployment of capital (lesser funds often stop investing or die). This causes less competition between funds for deals which results in lower valuations, lower round sizes, and many fewer deals completed.”

The takeaway? Conserve cash, plan to survive without raising more capital in the next two years, and if someone offers you money now, take it.

Corporate "Survive and Thrive" Plan
Meanwhile, public markets are in turmoil in part because of high inflation. But not all companies are raising prices because they need to do so. Some are raising prices because they can. A recent investigative report showed that many public companies raised prices only to increase profits (not offset costs). Amazon, Hershey, and Chevron were all named perpetrators of price-gouging, with Chevron experiencing its best two quarters yet.

Arizona Tea: The Last Can Standing
When even the dollar store can’t stick to $1 prices, it’s great to see one holdout. Arizona Iced Tea, the tall can sold in bodegas and grocery stores across the country, has maintained its $0.99 price since 1992. Don Vultaggio co-owns the company with his sons and says that rather than raise prices, he’s offsetting costs, like changing the thickness of his iconic can’s aluminum in response to rising prices of the material.

Since last week, PrivCo has added:
1,332 Companies | 423 Funding Activities | 138 M&A Deals

Funding & Deal Highlights:

Recurrent raises $300MM from Blackstone

Digital Media • Equity • Miami, FL

SpotOn raises $300MM from Dragoneer

Fintech • Round F • San Francisco, CA 

Xendit raises $300MM from Coatue Management

Payment Processing • Round D • Jakarta, Indonesia

Velocity raises $400MM from Elridge

Recruitment • Round B • Denver, CO

Inspiration raises $215MM from Macquarie

Fleet Management • Equity • Washington, DC 

ChargeLab raises $15MM from King River 

Software • Round A • Mountain View, CA

Everstream raises $24MM from Morgan Stanley

Platform • Round A • San Marcos, CA

Inceptor Bio raises $37MM from Kineticos

Drug Research • Round A • Morrisville, NC

Locus raises $35MM from Artis Ventures

Biotechnology • Round B • Morrisville, NC

Oviva raises $11.5MM from Cambrian

Women's Health • Seed • New York, NY

Knight Material acquires Electro Chemical

Industrial • Acquisition • Emmaus, PA

Sedgwick acquires Orchid Medical

 Medical • Acquisition • Orlando, FL 

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