Founders - Lux Capital is not pulling the fire alarm, but they do see some smoke in the stairwell.
Josh Wolfe, one of the most respected VCs investing into deep tech, shared an excerpt from a letter they sent to all portfolio founders recently.
It details some macro conditions that feel fragile, including bonds vs equities, tariff restructuring, infrastructure interacting with politics, and markets loving the Block layoffs.
Whether you agree or not with the prognosis, the recommendations are sage advice:
Review your runway and test the bad cases. Like a 50% revenue miss for instance.
Review your venture debt obligations if you have any.
Scenario plan for a world where your customer cut massive headcount.
Review your costs.
Get compute capacity confirmed in writing (hmmm...a little worrying).
Extend runway if you can do so at low cost.
Candidly, I'm not sure whether the macro signs point to a bubble pop. Perhaps we will just muddle through or lurch into that boundlessly optimistic future that seems so popular with AI theorists. But hey, the vibes were also high in December of 2021.
As always, the goal is don't let your company die!
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