For venture investors, noise is ironically important. Wading through constant streams of capital-seeking founders and startup pitches may be the hardest part of the job, but it’s also imperative to the success of the same job.
So, what happens if energy around entrepreneurship slows? As the downturn looms, are fewer founders going to take risks? According to Redpoint managing director Annie Kadavy, there will be fewer total companies started in the next year than there were in the last two. And, somewhat counterintuitively, the investor thinks that the looming slowdown is “a great thing.”
“In an environment where it’s really easy to raise a seed round, it’s really easy to get your first product up as long as you can throw more money at the problem you’re trying to solve…that is a different profile of risk,” she said, “versus it’s really hard to raise money, and I have to build those products because I care so deeply about the problem.”
She added: “I think that the total number of founders we’re going to see will be fewer, but the quality bar is going up.”
Led by Kadavy and managing partner Erica Brescia, Redpoint Ventures’ early-stage team announced today that it has closed a $650 million fund to back startups. The investment vehicle is the firm’s ninth early-stage focused fund closed to date, which it will invest in companies from seed through Series B stages. The check size will range between $2 million to $15 million, depending on the company.