What 2022 taught us about 2023
Goodbye hype investing, hello fundamentals
As a VC who focuses on fintech and Web3, I can say without question that 2022 has been a wild ride. The good news is we learned valuable lessons from the bull run, the resulting market volatility, and the crypto crash. Today I look back on that turbulent year to see how we can best prepare for 2023.
Don’t fall for the hype
The crypto meltdown of 2022 was largely the result of a lack of regulation and hype investing, and the broader valuation collapse in tech was largely the result of hype and too much “free” money.
Luckily at Mercury, we remained somewhat immune to the hype through strong discipline and our culture of applying intellectual rigor to every decision. The companies we invested in have sustainable business models from the start. In 2023, that should be the focus: cutting through the noise to build companies that can be efficiently scaled, are sustainable, and are providing actual customer value.
Time to bulk up those balance sheets
For the last two quarters, I’ve been working with all our portfolio companies to bulk up their balance sheets. Surging inflation, the lingering economic effects of COVID, and Russia’s war in Ukraine suggest we’re in for more volatility in 2023.
The best way to survive is to have cash in hand. Startups need enough runway to get through 2024, or beyond. It’s all about controlling your destiny. That means cutting costs and saving cash to get through the bumpy times ahead.
Still bullish on blockchain
Though it was a, dare I say it…. disastrous year for crypto, I’m still bullish on blockchain technology and the broader web3 space. The potential for blockchain goes far beyond enabling Bitcoin and other cryptocurrencies. As I’ve written before, blockchain allows us to do everything from transferring data more securely to ensuring the products we buy are ethically sourced.
Last year’s debacle got rid of many of the bad actors who’ve plagued this space, and it’s really important that we start to build trust with financial institutions and corporations. Now’s the time to invest not in crypto but in the technology that powers it. (For a more detailed look at my thoughts about Web3 in 2023, check out this TechCrunch article.)
Think globally, and locally
This year I was fortunate to be named a Kauffman Fellow, allowing me to network, innovate, and build with other VCs around the globe. It’s allowed me to travel all over — from London to Tel Aviv — and to work with some of the brightest VCs the world has to offer.
It’s also made me appreciate nascent ecosystems even more. For context, I built my venture career in Texas long before Austin was a household name in the tech world. I’m now seeing investors from all over the country, and even the world, start to deploy capital outside their local regions. This will drive global innovation and be a spark to help cities build resiliency for future technological disruption.
In Summary
For many entrepreneurs, this is a stressful and rough time to be building, but this is the exact time to be building. Control your destiny, re-adjust expectations to bring cash in the door, and survive now so you can thrive later.
And finally, Slava Ukraini! (a personal note)
My 2022 was largely defined by trips to the Ukrainian border with my partner (life partner, not business), Dmitriy. Dmitriy’s dad and brother still live in Ukraine, so Dmitriy knew exactly what materials Ukrainian troops and territorial defenses needed throughout Russia’s ongoing invasion.
Over 2022, we’ve taken over $150k worth of medical and tactical supplies to Ukraine. We plan to continue these trips until Russia leaves Ukraine (I documented our first trip here.) If you’d like to get involved or have any suggestions for our next trip, you can find me on Twitter or Instagram, where I keep folks up to date on when and how to help.
