Raise Millions by Hustle Fund VC Page 38 1. VCs are having a harder time raising funds Just like many startups, VCs have to raise money from their LPs (remember, an LP is someone who invests in a venture capital firm). Interest rates are high, and many LPs are opting to put their money into other assets like a savings account that earns interest there rather than invest in a VC fund. This gives VCs less capital to work with, so they become more conservative with their cash. VCs will be extra selective about investing in new companies, or they’ll focus more on reinvesting in and bolstering their existing portfolio companies. 2. Companies are valued less If there are fewer investors (supply), there’s more competition amongst startups to raise money (demand). This means investors can usually negotiate terms that are more beneficial for themselves rather than for founders. But it’s not all sunshine and rainbows for investors, either. Founders that do raise successfully tend to have lower valuations than in the last few years – when the market favored founders over investors. So a company that raised a pre-seed round at a relatively high valuation (say, $8M), is raising their seed-round at a relatively lower valuation (say, $10M). Some companies are having such a hard hustlefund.vc / @hustlefundvc