Report: VC Investors Urge Tech Firms to Continue ‘Innovation’

Venture partners are trying to encourage tech startups to accommodate the current economic downturn by continuing to innovate, The Wall Street Journal (WSJ) wrote Tuesday (Sept. 20).

They say they’ve seen startups that have been innovating even amid the worse economy, as there’s been demands fearing that underinvestment in tech could hit their market shares.

Shane Wall, venture partner and president of the CXO Network at Fusion Fund, said markets are won or lost “based on what you do in a downturn,” and that tech chiefs can make sure businesses prioritize advancement so they don’t fall behind.

Wall said the economy was likely to “soften” in the next year and there’d likely be “winners and losers” in that. But he said there would likely be massive growth opportunities.

And Alex Kayyal, senior vice president and managing partner with Salesforce Venture, said there’s still a big opportunity for cloud spending, along with cybersecurity and automation.

Kayyal added that the entrepreneurs have become “even hungrier” with the current economic conditions, with a want to solve companies’ problems. An example given in the WSJ report is Snyk, which raised money from Salesforce Ventures and others last year, and looks to bring the security mindset to the developer stage, with code written with cybersecurity in mind.

PYMNTS wrote recently that startup venture debt was going up as investors were getting antsy about the current environment.

Read more: Startup Venture Debt Rising as Investors Grow Cautious

This comes after a long decade of booming cash for the startups, which is now turning more into loans.

As the good times were going on, startups didn’t need debt — but investors now are demanding higher returns on capital to make up for the risk amid the volatile market, interest and inflation. Global venture funding in February was $10 billion lower than in January as the economy changed, with the war in Ukraine and various economic factors beginning to contribute.