The Bright Future of Startups - Particularly Bright For Go Fish

The recent doom and gloom painting of Silicon Valley's future by Rob Price, Ben Bergman, and Melia Russell is a perspective rooted in pessimism and a singular interpretation of the current economic landscape. Contrary to the belief of an impending 'extinction event' for startups, there's a brighter and more optimistic outlook that recognizes the inherent potential and resilience of the startup ecosystem.

One, the authors maintain the idea that as the external environment worsens, so too will the performance of startups. However, the entrepreneurial spirit thrives on challenges, and for companies like Go Fish Originators, the worse it gets out there, the better of a position they are put in, as their business model is to help lenders provide capital to people & SMEs in need of capital. As per a previous post in March 2023, startups' survival and success aren't dictated solely by a thriving economy, but more significantly by their innovativeness and ability to transform challenges into opportunities. This is their time to shine.

Two, the article insists that the investment into startups is spiraling down, but this assertion does not hold water when we view the data from a broader perspective. Kevin Dick from Rightside Capital, an investor in more than 1,000 startups, details in his recent blog post entitled "No The Sky Is Not Falling" that the investment scenario is not as bleak as it's being portrayed. In his recent survey of 76 VCs, he shows that 4 are actually increasing their investment activity, while 57 are making no changes, and 15 (or 20%) are reducing their pace. He later shows in the article that about 1/3 of VC are now seeking lower valuations. So, while he acknowledges a slight drop, the data shows that investors are simply now taking a more frugal approach.

Three, the “doom and gloom” writers confess that the slowdown could also be attributed to the unprecedented amounts of capital raised in the past years, with many investors nearing or reaching full investment. This notion contradicts their own assertion of a drying up of capital and underlines the reality that the current slowdown is a natural correction following an unprecedented surge in 2021 and 2022, not a sign of impending doom, and certainly not a complete drought.

Four, the Rob Price piece underlines a withering of venture capital, venture debt, and IPOs, implying a vulnerable position for Series A, B, and C startups that rely heavily on investment capital. However, it's important to remember that not all startups fall into this category. Seed-stage companies like Go Fish Originators, particularly those with high margins and secondary income streams supporting the founders, are not impacted by this burn rate and are in fact, weathering this storm comfortably. The founders' personal rent and other expenses are supported by the income stream from their past successes.

Five, to overcome any economic downturn, it takes more than money—it takes GRIT. The founder of Go Fish Originators started their career working hard labor at their family's concrete plant for 8 years (until they ruptured 3 discs in their back from the heavy lifting), from age 15 to 23, and they also interned part-time along the way for 2 years at Morgan Stanley Dean Witter at just age 18 - learning about macroeconomics in the trenches while their friends were at parties having fun with drinking and girls. Their personal experience of navigating through four economic downturns in their 43-year lifetime helps them as a CEO, including starting their first company in their last semester of college at the height of the Great Recession in 2008 and taking it straight through to the success of closing multiple $600,000+ individual computer kiosk systems deals with fortune 100 companies like Ricoh USA. That repeated hard difficulty uniquely trained them to do a lot with a little, as reflected in their current fundraising goal of $300k versus an excessive and unnecessary $2M+. This lean approach to capital raising fosters discipline, frugality, and a relentless focus on delivering value in a very difficult time—a recipe for enduring success irrespective of the economic landscape.

If you want anybody at the helm in a time like this, you want Joseph M. Baliva, a name that was forged into iron by 3 decades of hardship turned into successes. Series A, B and C startups That are capital intensive That do not enjoy a large profit margin That do not see the demand for their services increase in economic downturns That do not need to raise equity in lieu of debt ...all 5 things that do not apply to us at Go Fish.

For us, these tough times translate into “more” significant opportunities for us. Reiterated, as the economic landscape becomes increasingly bleak, demand for our services increases and our opportunity to make a difference becomes brighter and brighter. For us, this is not about survival—it's our time to thrive! Lastly, it is concurred that the accessibility of Venture Capital might be constricting in the coming 2-3 years. Yet, it is essential to recognize that this environment doesn't pertain to Go Fish Originators— after this seed round, their circumstances will positively pivot considerably. They will have transitioned beyond the need to procure funding via equity. The notion that the tightening of VC Capital will impede them is a fallacy.

In fact, capital for debt is profusely flowing into credit investments currently, driven by high interest rates. This upswing is a result of the natural ebbs and flows of financial markets. When interest rates rise, fixed income securities & credit (lending) investments tend to move in the opposite direction compared to stocks. Since we are part of these credit investments, we're ideally positioned to seize the opportunities that come with this regular cyclical trend.

In conclusion, while there is undeniable change afoot in Silicon Valley, let us not mistake it for an 'extinction event.' Instead, recognize it as a period of consolidation and adaptation for