Many tech workers have never experienced a job market like this one.
Last year, 1,044 tech companies let go of 159,786 employees, according to Layoffs.fyi. As of this writing, 103,767 workers have been laid off from 345 startups so far in 2023. Many, many more are coming, obviously.
Losing a job unexpectedly is more than a financial shock. Many of us invest much of our identity in what we do for a living, which means layoffs can transform social and emotional lives overnight.
Slashing your personal spending and polishing your LinkedIn profile is the right move, but investors tell me that now is still a good time to launch a startup. The fact that you’ve just been laid off from a startup proves that you have a tolerance for risk. How much are you willing to bet on yourself?
Depending on where you worked and what you did, you may already have the experience investors are looking for when it comes to reaching product-market fit and solving engineering problems. Mentors are immensely helpful, but they’re not a requirement: We run articles regularly that explain how to create pitch decks and reach out to investors.
I surveyed six seed- and early-stage investors to get their tactical advice for laid-off tech workers who are thinking about starting up. Most of them are so open to pitches, they’ve provided their contact information below.
Each shared details about the sort of deals they’re looking for right now and indicated how they prefer to be approached with pitches.
“If you want to have a compelling story, go deep into an area you’re excited about and are uniquely suited to tackle,” says Rex Salisbury, partner at Cambrian Ventures. “The best way to get my attention is to show you’ve done research as to why we might be a good fit to work together.”
And if you’re concerned that your former employer will accuse you of stealing their billion-dollar idea, let that go.
“IP is important to us. However, some founders let their preconceptions of IP concerns hold them back from starting a company,” said Dr. Galym Imanbayev, partner, Lightspeed Venture Partners. “Fear shouldn’t drive that decision; seeking appropriate counsel and doing a robust IP review should.”
Reaching out to an investor isn’t just about getting their money; it’s also a way to make connections and demonstrate the value you bring to the table. You never know, the VC who passes on your pitch may recommend you to a founder that’s building a team.
“What also stands out to me are founders who are genuine in building and maintaining relationships whether or not a transaction materializes,” said Christine Tsai, CEO and co-founding member of 500 Global. “This is often a good indicator that a founder thinks long-term and values trust.”
I spoke with:
Rex Salisbury, partner, Cambrian Ventures
Christine Tsai, CEO and founding partner, 500 Global
Anna Barber, partner, M13
Dr. Galym Imanbayev, partner, Lightspeed Venture Partners
Deena Shakir, general partner, Lux Capital
Stephanie Palmeri, partner, NextView Ventures
Rex Salisbury, partner, Cambrian Ventures
Do you have any IP concerns about investing in someone who developed an idea while working for their previous company?
No. One of the amazing things about the Bay Area is the general acceptance that people start new companies when they leave old ones. Overzealous defense of IP is a net negative for everyone.
Many investors say now is a great time to start a company, but thousands of workers have been laid off in recent weeks, and more RIFs are expected. There are probably hundreds of newly unemployed people who want to start a company. How can someone without a network stand out from the crowd?
Most laid-off workers are understandably nervous and worried about their future, but they should be motivated by the fact that VCs are looking to make investments, regardless of the economic situation. If you want to have a compelling story, go deep into an area you’re excited about and are uniquely suited to tackle.
The best way to get my attention is to show you’ve done research as to why we might be a good fit to work together. There are a lot of inbound requests for funding, but the ones that stand out are thoughtful and tie in with my approach. There’s a lot of value in taking the time to do research and find the top three investors instead of sending out a mass email blast.
Before meeting with anyone, it is smart to research things they have previously written, Tweeted, and/or spoken about publicly. Deena Shakir, general partner, Lux Capital
What kind of opportunities are you looking for in Q1 2023?
Founders who teach me something new that relates to an exciting opportunity in the financial services ecosystem that they are uniquely qualified to tackle.
Tell us how you’d like to be approached by a founder with their initial pitch.
Cold emails with a deck, blurb and your LinkedIn profile are welcome. You can probably guess what my email is!
What are a few books, articles or podcasts a newbie should explore before they try to meet with you?
Here are some of my favorite things to read and listen to, but [they] are no means required before meeting with me:
Capital Isn’t: What’s working in capitalism and what isn’t by University of Chicago.
Fintech Law TLDR: It turns out that understanding the regulatory landscape in fintech matters.
Fintech Takes: Bi-weekly newsletter by Alex Johnson, a former credit expert who quit his job to document the future of fintech.
Money Stuff: Ex-Goldman derivatives structure with a cult following (iykyk).
Christine Tsai, CEO and founding partner, 500 Global
How can someone without a network stand out from the crowd?
We seek founders who are truly passionate and empathetic about the problem they’re solving and the customers they’re serving. Building a company is incredibly difficult and will push you to your limits mentally, emotionally and physically. Having the commitment to show up every single day and keep moving is critical.
What also stands out to me are founders who are genuine in building and maintaining relationships whether or not a transaction materializes. This is often a good indicator that a founder thinks long term and values trust.
What kind of opportunities are you looking for in Q1 2023?
Our portfolio is quite diversified and spans a number of sectors, stages and geographies. We’re actively looking at opportunities in fintech, B2B SaaS and infrastructure tools, health digitalization, commerce, AI and sustainable tech.
As for geographies, we’re continuing to invest in Silicon Valley/U.S. and around the world, particularly in regions like Southeast Asia, Latin America, Middle East and Africa where we’ve been investing in for many years.
Tell us how you’d like to be approached by a founder with their initial pitch.
6 VCs share advice for laid-off tech workers planning to launch startups by Walter Thompson originally published on TechCrunch