Powerlinx Blog

How decreased venture capital raising may impact your business

Start-ups and fledgling small businesses are facing a cash crisis in capital raising efforts amid falling public comps valuations. According to PitchBook, the average public listing valuation fell to $993.1 million in Q1 2022. While the figure is still elevated on a historical scale, it represents roughly one-third of 2021’s $2.8 billion.

Hardest hit in the recent drop in venture capital raising have been the mega deals. A mid-March PitchBook analysis found that, from their post-money valuations at exit to their current market cap, the top 10 VC-backed IPOs were all down 18% to 68%. Public market headwinds have already had — and will continue to have — trickle-down effects into VC. Only 28 VC-backed companies were listed publicly in Q1 2022, the lowest quarterly count since Q1 2020.

This funding chill comes in the wake of significant markdowns in valuation of multi-billion dollar companies, reflecting growing unease within the VC community about the ability of such big bets to deliver on their original promise. It also reflects a consolidation of VC dollars, as investors chase lucrative stakes in companies that have already gained a lot of traction while passing over more nascent market entrants.

For newly minted companies seeking a life-giving injection of cash from venture investors, this comes as potentially very bad news. While “dry powder” (namely, the amount of dollars VCs have readily available to invest into startups) is at an all time high with more than $230Bn, startups are now facing bigger funding hurdles.

The hurdles in the capital raising market

There’s a huge oversupply in the market. The collapse in the cost of launching a tech startup has caused an explosion in the number of startups looking to raise capital, while, on the other side of the aisle, given the new macro environment, investors risk appetite has turned sour.

The most precipitous drop in the data comes from the QoQ decline in capital exited, where Q1 posted only $33.6 billion after three consecutive quarters over $192.0 billion. The tech sector is facing a harsh reality check that has already seen companies like Coinbase and Tesla being forced to shed staff, and some dominant incumbents like Uber exiting viable markets due to a drop in profitability. While many of these larger companies may survive this capital crunch, smaller businesses and startups that are looking for the support they need to get their ideas off the ground face a tough fight.

The benefits of joint ventures

For businesses meeting only dead ends and closed doors in the venture investing scene, alternative sources of funding offer a potential lifeline. Government grants and contracts, such as those offered through the SBIR program, offer up one possibility. Another possible route is online crowdfunding through websites like Kickstarter and WeFunder; that’s how Oculus Rift and the Pebble Time Smartwatch got started.

The third alternative — ideal for startups that can’t afford to invest a lot of sweat equity or don’t want to spend countless hours pitching to skeptical investors — is to find the right strategic business partnerships.

Regardless of your funding status, it’s always worth starting the partnership conversation as early as possible as a way to accelerate your company’s growth. For an example, one need look no further than Uber; their partnership with Google Ventures, which leveraged the search giant’s maps and GPS technology, ultimately resulted in Google investing $258 million in the popular ride-sharing company.

As this shows, the most successful partnerships tend to be those that have a mutual benefit. Uber’s integration with Maps gave its customers real-time updates on ride availability, while keeping users off competitors’ map apps.

Innovating the search for partners

However, finding the right strategic partner can be a lot of work in its own right, especially when differentiation is so hard to achieve and the right professional networks can take months or years to build.

Platforms like Powerlinx are designed to address these concerns by presenting opportunities to new businesses that are aimed at bringing their products to commercial viability more quickly. Powerlinx’s partner-matching technology acts as a bridge connecting companies through actionable opportunities in areas such as capital acquisition and financing, geographic expansion, customer acquisition and exit planning.

For businesses that hope to expand into new markets, or simply need enough money to get away from the starting block, the decline in venture investment shouldn’t be viewed as a disaster. In contrast, it’s an opportunity to pursue more agile and innovative paths to success.

Collaborating to Improve the Customer Experience
A Curated Guide to Customer Experience Optimization |

When Barry Kayton joined Powerlinx, he connected with another Powerlinx member, Dave Carter of Integrity Solutions, around opportunities for making his customers’ experience even better. Integrity Solutions provides interaction-based consultancy services that emphasize organizational accountability, attitude, motives and values as key factors in improving both internal and external relationships.

Partners in Diversification: A must-have
Powerlinx valuable role in the changing Logistics industry

Looking beyond what you know and diversifying into a new product area or region can be daunting. Finding business partners to aid you on this journey could mean the difference between success and failure. 

Five business collaboration case studies of success [INFOGRAPHIC]

Business Collaboration Infographic

The power of a perfect partnership can transform companies, disrupt industries and reinvigorate brands. These five case studies of true business collaboration success demonstrate the importance of strategic partnerships, and the widespread benefits they could bring.

View the infographic to see how alliances have recently been a benefit to both prominent industrial leaders such as Nissan and Apple, as well as emerging niche companies with an intent on expansion.


What is a joint venture?

finding business partners
If you’re considering a joint venture, take a look at how your company can begin the process of forming a long-term, sustainable relationship.

Entering into a joint venture is a smart way to grow your company’s influence, diversify its products and reach new markets. But without a structured plan, starting your joint venture could be quite difficult and your joint venture aspirations could fall flat. Here’s how to identify the best partner for your business, create clear goals and stay on track with ongoing communication.

Do’s and Don’ts of your next business partnership [INFOGRAPHIC]

finding business partners

Strategic partnerships are critical for businesses that want to compete on a global scale. But many enterprises lack the appropriate strategy, structure or resources to create and maintain a productive business partnership. So where does it all go wrong, and what can your organization do to ensure a successful alliance?

Our most recent infographic shares common mistakes businesses make when forming a business partnership and tips that your company can use to aid in a successful alliance.


[Ebook] Lessons from the top: Why business collaboration is vital to your business

Lessons from the top: Why business collaboration is vital to your business

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True business collaboration can be a dramatic force for change in your organization.

When companies share a common vision, and are willing to share their capabilities, markets, talents and assets to achieve a win-win outcome, it can result in a powerful and enduring partnership.


Making Business Partnerships Work Using “The Remix Strategy”

Making Business Partnerships Work Using
When you look to external partners for acquiring resources and capabilities, your organization needs a practical roadmap to answer some critical questions: What kind of business partnerships and combinations do we need? How will we manage them over time? What profits will we earn, and will they justify our investment?

Ben Gomes-Casseres, international business scholar and Powerlinx adviser, addresses these questions and more in The Remix Strategy: The Three Laws of Business Combination. This excerpt, originally posted by the Harvard Business Review offers a simple, but powerful, framework to help you make those decisions.