QUANTITATIVE
STUDY OF STARTUP VALUATION AND STRATEGY
POST-2022
WINTER
Muhamad Fajrin Rasyid1,
Erman Sumirat2, Raden Aswin Rahadi3
Sekolah
Bisnis dan Manajemen, Institut Teknologi Bandung, Indonesia
[email protected]1, [email protected]2, [email protected]3
ABSTRACT
In 2022, the market
capitalization of some publicly traded technology companies is declining. This
period is commonly referred to as "winter" because it is more challenging
for startups to get funding from investors. The study seeks to understand the
impact of winter 2022 on the valuation and strategy of privately funded
startups, focusing on five variables: sector, funding stage, relative market
position, profitability, and founder's contribution/strength. Quantitative
analysis relies on survey responses from 180 startup founders in Indonesia who
specialize in six industries: retail/e-commerce, fintech,
agriculture/fisheries, healthcare, logistics, and education. Path Analysis is
then applied to the data to determine the relationships between variables. This
research shows that profitability and founders' contributions/strengths impact
startup valuation. Furthermore,
relative market position and profitability have an impact on startup strategy.
Finally, a decrease in valuation multiples for startups affects their strategy.
This research can guide startup founders as they grow their businesses,
especially in relation to the five variables listed above. Future research may
be conducted on other variables, sectors, countries, or similar topics
later/period.
Keywords: founder contribution, funding stages, market
position, sector, startup, profitability.
Corresponding Author: Muhamad
Fajrin Rasyid
E-mail: [email protected]
INTRODUCTION
In the preceding decade, the growth rate of the
startup industry has been unprecedented. Covid-19 has supported digitization
and accelerated the growth of startups despite its impact on multiple
industries (Marlinah, 2020). In 2020, it was anticipated that e-commerce would be
worth $26.7 trillion (PBB, 2021). During this phase, many startups experienced rapid
expansion. At the start of 2022, there were over 1,000 unicorns (startups
valued at $1 billion or more) with a total value of over $3.3 trillion (Insights, 2022). Many of these companies went public, including Uber,
Meta, Alibaba, and Twitter.
The startup industry is also experiencing
unprecedented growth in Indonesia. President Joko Widodo of Indonesia
anticipated that there would be 2,345 startups in Indonesia in September 2022.
Over the past two years, Indonesia's digital economy has grown from $40 billion
in 2019 to $70 billion in 2021 (Bain et al., 2021). Moreover, according to research by Temasek, Bain,
and Google, its value will reach $330 billion by 2030. Retail/e-commerce,
fintech (financial services and insurance), agriculture and fisheries, media
and entertainment, healthcare, transport, logistics, education, digital
advertising, and hospitality are among the most critical industries in
Indonesia's startup scene (Sharma & Tandon,
2020). Retail/e-commerce is the largest industry, with a
market size of $75 billion over the next five years, while fintech is the
sector with the highest growth rate (32% CAGR).
In 2022, however, a significant shift occurred in the
global startup landscape (Feld, 2020). Nasdaq Composite Index, which consists primarily of
companies in the information technology industry, decreased by 34% between
November 19, 2021, and October 7, 2022, falling from 16,057 to 10,652. Similar
declines were experienced by Meta (-65%), Amazon Inc. (-38%), Netflix Inc.
(-67%), Alphabet Inc. (-38%), Uber (-54%), Snap Inc. (-87%), Alibaba (-54%),
and Sea Ltd. (-84%). Figure 1 depicts that global private market venture
capital also decreased during the first nine
months of 2022 (Teare, 2022). Y Combinator, a prominent Silicon Valley incubator
that has invested in over 3,500 companies, urged startup owners within its
portfolios to prepare for the worst-case scenario by reducing spending and
extending their runways (Singh, 2022). Many, including Masayoshi Son, founder and chief
executive officer of Softbank Group, a prominent global venture capital firm,
consider this condition "winter" (Hope & Scheck,
2020). In this situation, it is difficult for a company to
raise capital from investors.
Figure 1. Global Venture Dollar Volume, Q1 2020 � Q3
2022
Source: (Teare, 2022)
The primary cause of the startup winter in 2022 was
the deteriorating global economy. Numerous nations experienced high inflation
rates, which were detrimental to their economies (Putra, 2022). In June 2022, for instance, the United States
reached a new 40-year high of 9.1% inflation. To combat inflation, several
central banks raised their interest rates. In 2022, the Federal Reserve raised
interest rates seven times (until December). Before 2022, the rate was 0 to
0.25 per cent, while in December 2022 was 4.25 to 4.5%. The high-interest rate
shifted investor behaviour away from high-risk investments, such as the
technology industry, and toward low-risk instruments, such as bank deposits. As
a result, startup industry financing declines.
The startup industry in Indonesia is beginning to
exhibit signs of winter (Suwarno &
Silvianita, 2017). Bukalapak (BUKA.JK) and GoTo (GOTO.JK), two of the
largest technology companies in Indonesia, saw their share prices decrease
after going public. The share price of Bukalapak was IDR 268 on December 16,
2022, a decrease of 68% compared to its IPO price of IDR 850 in August 2021. In
the interim, GoTo's share price fell by 72%, from IDR 338 to IDR 96, a
significant decline compared to April 2022, when the company went public. Even
though the financing amount increases from the previous year, $2.7 billion in
the first half of 2022 compared to $1.3 billion in the first half of 2021, many
believe it will be challenging to secure funding (Bestari, 2023). Numerous investors harbour scepticism regarding the
viability and profitability of startups. Some are concerned about the expansion's
high fuel expenses.
Experts reiterate the difficulty of obtaining funding
from investors. The chief executive officer of a well-known Indonesian security
company stated that investors would likely reduce a startup's valuation if it
lacked a clear strategy for achieving profitability (Sudarmanto et al.,
2021). Bima Laga, chairman of the Indonesia E-Commerce
Association (idEA), stated that while profitable e-commerce is thriving,
unprofitable e-commerce must reduce expenses to attract investor support (Hoetoro & Satria,
2020). Therefore, this paper aims to determine how winter
2022 affects privately funded startups in Indonesia and what strategies
startups should implement in this situation by focusing on five variables:
sector, funding stage, relative market position, profitability, and
contribution/strength. Because of the whole, startups need to consider these
factors when developing strategies and dealing with changing business
conditions. In the face of changing seasons or other business conditions,
successful startups often have strategies that are adaptive, flexible, and
continuously follow market trends.
METHOD
In this paper, the
author primarily employs quantitative methodology. The author conducts surveys
with 180 retail/e-commerce, fintech (financial services and insurance),
agriculture, healthcare, logistics, and education startup owners/founders/cofounders
from Indonesia. The
questionnaire contains three primary components: (1) Startup categorization. In
this section, the questionnaire inquiries about hypotheses-related variables
(funding stage, sector, relative market position, profitability, and founder
contribution/power). (2) Startup funding. In this section, the questionnaire
inquiries about funding-related variables, such as the ease of raising capital,
the multiples to employ, and the valuation multiples situation. (3) Startup
strategy. In this section, the questionnaire inquiries about variables
associated with the startup's strategy, including overall aggressiveness,
personnel, and marketing. The author will then apply Path Analysis to the
questionnaire data to determine the relationship between variables.
RESULTS AND DISCUSSION
Quantitative
Research Analysis
Table
1 provides information on multiples of valuation. Most startups (56.7%) have
reported a decrease in valuation multiples (either drastically, moderately, or
a little). The sector whose valuation is affected the least from a sector
perspective is "Others," which is outside the scope of this study
because it includes numerous other sectors such as HR, cloud, games,
enterprise, chatbot, and construction. In addition, logistics, healthcare, and
agriculture/fisheries are impacted less. In the funding stages column, the
valuation multiple is impacted more severely in series B, series C, and later
funding rounds than in earlier rounds. Regarding the profitability variable,
the valuation of a startup tends to decrease the longer it remains profitable.
Lastly, the valuation of a startup is impacted more severely when the founder's
contribution and influence are diminished.
Table 1. Breakdown of
Startup Valuation Multiples Data
|
Variables���������������� Multiples |
Decreased
drastically |
Decreased
moderately |
Decreased
a little |
Similar
(neither decreased nor increased) |
Increased |
|
|
Overall,
View |
15.6% |
23.9% |
17.2% |
25.0% |
18.3% |
|
|
Sector |
Agriculture/fisheries |
16.7% |
16.7% |
25.0% |
29.2% |
12.5% |
|
Education |
21.1% |
26.3% |
15.8% |
15.8% |
21.1% |
|
|
Fintech |
13.9% |
30.6% |
22.2% |
25.0% |
8.3% |
|
|
Healthcare |
26.3% |
15.8% |
15.8% |
21.1% |
21.1% |
|
|
Logistics |
5.3% |
15.8% |
15.8% |
42.1% |
21.1% |
|
|
Others |
0.0% |
28.0% |
16.0% |
16.0% |
40.0% |
|
|
Retail/e-commerce |
23.7% |
26.3% |
10.5% |
26.3% |
13.2% |
|
|
Funding
stages |
Idea/angel |
17.6% |
29.4% |
11.8% |
23.5% |
17.6% |
|
Pre-seed/seed |
11.6% |
19.8% |
16.3% |
27.9% |
24.4% |
|
|
Series A |
20.0% |
20.0% |
20.0% |
22.5% |
17.5% |
|
|
Series B |
15.0% |
35.0% |
25.0% |
20.0% |
5.0% |
|
|
Series C or above |
23.5% |
35.3% |
11.8% |
23.5% |
5.9% |
|
|
Relative
market position � Gaining market shares |
1
(Strongly disagree) |
0.0% |
0.0% |
25.0% |
25.0% |
50.0% |
|
2 |
20.0% |
8.0% |
16.0% |
44.0% |
12.0% |
|
|
3 |
17.8% |
26.7% |
20.0% |
17.8% |
17.8% |
|
|
4 |
16.4% |
30.1% |
13.7% |
19.2% |
20.5% |
|
|
5
(Strongly agree) |
9.1% |
21.2% |
21.2% |
33.3% |
15.2% |
|
|
Profitability |
Already Profitable |
8.1% |
24.3% |
21.6% |
21.6% |
24.3% |
|
Profitable in 2023 |
19.6% |
21.7% |
15.2% |
21.7% |
21.7% |
|
|
Profitable in 2024 |
11.1% |
19.4% |
13.9% |
44.4% |
11.1% |
|
|
Profitable in 2025 |
20.0% |
53.3% |
13.3% |
6.7% |
6.7% |
|
|
Other Answers |
66.7% |
0.0% |
11.1% |
22.2% |
0.0% |
|
|
Founder
contribution/power |
Less than 20% |
40.0% |
30.0% |
10.0% |
10.0% |
10.0% |
|
20 to less than 40% |
22.2% |
30.6% |
25.0% |
16.7% |
5.6% |
|
|
40 to less than 60% |
7.9% |
31.6% |
13.2% |
26.3% |
21.1% |
|
|
60 to less than 80% |
11.6% |
23.3% |
18.6% |
27.9% |
18.6% |
|
|
80% or more |
15.1% |
13.2% |
15.1% |
30.2% |
26.4% |
|
Source:
Author�s Analysis
Table
2 details Startup Strategy information. In the column, a 5-point Likert scale
is used, with 1 representing much less aggressive (defensive) responses and 5
representing much more aggressive (offensive) responses (offensive). More than
half of respondents (51.7%) reported being more aggressive in 2022 compared to
the previous year. The "Others" sector is the most aggressive from a
sector standpoint, followed by healthcare, education, logistics,
agriculture/fisheries, and retail/e-commerce. In contrast, fintech is the least
aggressive industry. Next, the strategy for startups in series B, C, and above
is less aggressive than in earlier stages.
Regarding
relative market position, there is a correlation between market share expansion
and aggression. When it comes to profitability, a startup's aggressiveness
tends to decrease the longer it is profitable. Lastly, regarding valuation,
their strategies tend to be less aggressive the more extensive the impact of
the valuation multiple declines.
Table
2. Breakdown of Startup Strategy Data
|
Variables������������������� Strategy |
1 |
2 |
3 |
4 |
5 |
|
|
Overall,
View |
6.1% |
16.7% |
25.6% |
31.7% |
20.0% |
|
|
Sector |
Agriculture/fisheries |
8.3% |
20.8% |
25.0% |
33.3% |
12.5% |
|
Education |
10.5% |
21.1% |
5.3% |
36.8% |
26.3% |
|
|
Fintech |
2.8% |
22.2% |
38.9% |
25.0% |
11.1% |
|
|
Healthcare |
0.0% |
15.8% |
31.6% |
42.1% |
10.5% |
|
|
Logistics |
10.5% |
15.8% |
26.3% |
26.3% |
21.1% |
|
|
Others |
0.0% |
4.0% |
24.0% |
36.0% |
36.0% |
|
|
Retail/e-commerce |
10.5% |
15.8% |
21.1% |
28.9% |
23.7% |
|
|
Funding
stages |
Idea/angel |
0.0% |
11.8% |
29.4% |
29.4% |
29.4% |
|
Pre-seed/seed |
3.5% |
15.1% |
19.8% |
37.2% |
24.4% |
|
|
Series A |
12.5% |
12.5% |
25.0% |
35.0% |
15.0% |
|
|
Series B |
10.0% |
15.0% |
50.0% |
15.0% |
10.0% |
|
|
Series C or above |
5.9% |
41.2% |
23.5% |
17.6% |
11.8% |
|
|
Relative
market position � Gaining market shares |
1
(Strongly disagree) |
25.0% |
0.0% |
25.0% |
25.0% |
25.0% |
|
2 |
8.0% |
24.0% |
28.0% |
32.0% |
8.0% |
|
|
3 |
8.9% |
15.6% |
26.7% |
28.9% |
20.0% |
|
|
4 |
5.5% |
19.2% |
20.5% |
37.0% |
17.8% |
|
|
5
(Strongly agree) |
0.0% |
9.1% |
33.3% |
24.2% |
33.3% |
|
|
Profitability |
Already Profitable |
2.7% |
13.5% |
17.6% |
37.8% |
28.4% |
|
Profitable in 2023 |
8.7% |
15.2% |
26.1% |
30.4% |
19.6% |
|
|
Profitable in 2024 |
5.6% |
19.4% |
36.1% |
27.8% |
11.1% |
|
|
Profitable in 2025 |
0.0% |
26.7% |
40.0% |
20.0% |
13.3% |
|
|
Other Answers |
33.3% |
22.2% |
22.2% |
22.2% |
0.0% |
|
|
Founder
contribution/power |
Less than 20% |
20.0% |
10.0% |
10.0% |
50.0% |
10.0% |
|
20 to less than 40% |
5.6% |
25.0% |
25.0% |
30.6% |
13.9% |
|
|
40 to less than 60% |
7.9% |
18.4% |
39.5% |
23.7% |
10.5% |
|
|
60 to less than 80% |
7.0% |
9.3% |
16.3% |
32.6% |
34.9% |
|
|
80% or more |
1.9% |
17.0% |
26.4% |
34.0% |
20.8% |
|
|
Valuation
Multiples |
Decreased drastically |
17.9% |
35.7% |
17.9% |
14.3% |
14.3% |
|
Decreased moderately |
9.3% |
16.3% |
34.9% |
27.9% |
11.6% |
|
|
Decreased a little |
3.2% |
12.9% |
25.8% |
38.7% |
19.4% |
|
|
Similar |
2.2% |
17.8% |
31.1% |
26.7% |
22.2% |
|
|
Increased |
0.0% |
3.0% |
12.1% |
51.5% |
33.3% |
|
Source: Author�s Analysis
Next, the author constructs a
path diagram for the questionnaire data, whose results can be seen in Figure 1.
Figure 1. Path
Diagram Result
Source: Author�s Analysis
Meanwhile, the associated
result of T statistics and P values for each of the structural paths that
correlate with the author's hypothesis can be seen in Table 3 and the
subsequent explanation.
Table 3.
Hypothesis Testing Result
|
Hypothesis |
Path |
Coefficient (B) |
Sample mean (M) |
Standard deviation (STDEV) |
T statistics (|B/STDEV|) |
P values |
Note |
|
H1 |
Sector � Valuation |
-0.175 |
-0.173 |
0.195 |
0.900 |
0.368 |
Rejected |
|
H2 |
Stages � Valuation |
0.062 |
0.067 |
0.075 |
0.827 |
0.408 |
Rejected |
|
H3 |
Market � Valuation |
-0.036 |
-0.035 |
0.073 |
0.492 |
0.623 |
Rejected |
|
H4 |
Profitability � Valuation |
0.236 |
0.236 |
0.067 |
3.508 |
0.000 |
Accepted |
|
H5 |
Power � Valuation |
0.257 |
0.256 |
0.078 |
3.277 |
0.001 |
Accepted |
|
H6 |
Sector � Strategy |
-0.002 |
-0.001 |
0.196 |
0.009 |
0.993 |
Rejected |
|
H7 |
Stages � Strategy |
0.165 |
0.169 |
0.096 |
1.717 |
0.086 |
Rejected |
|
H8 |
Market � Strategy |
0.250 |
0.254 |
0.071 |
3.529 |
0.000 |
Accepted |
|
H9 |
Profitability � Strategy |
0.257 |
0.255 |
0.077 |
3.316 |
0.001 |
Accepted |
|
H10 |
Power � Strategy |
0.100 |
0.100 |
0.077 |
1.298 |
0.194 |
Rejected |
|
H11 |
Valuation � Strategy |
0.365 |
0.367 |
0.068 |
5.336 |
0.000 |
Accepted |
Source: Author�s Analysis
H1: Although generally, the privately funded startups' valuation multiples
decrease, specific sectors are less impacted
As seen in Table 3, the T statistics value of H1 is 0.9, lower than
the threshold value of 1.96. In addition, the P value of H1 is 0.368, higher
than the significance value of 0.05. Therefore, hypothesis H1 is rejected,
meaning that the sector does not influence their valuation multiples.
H2: Startups' funding stages have a negative influence on their valuation
multiples
As seen in Table 3, the T statistics value of H2 is 0.827, lower than
the threshold value of 1.96. In addition, the P value of H2 is 0.408, higher
than the significance value of 0.05. Therefore, hypothesis H2 is rejected,
meaning that the funding stage does not influence their valuation multiples.
H3: Startups� relative market position has a positive influence on their
valuation multiples
As seen in Table 3, the T statistics value of H3 is 0.492, lower than
the threshold value of 1.96. In addition, the P value of H3 is 0.623, higher
than the significance value of 0.05. Therefore, hypothesis H3 is rejected,
meaning that relative market position does not influence their valuation
multiples.
H4: Profitability has a positive influence on their valuation multiples
As seen in Table 3, the T statistics value of H4 is 3.508, higher than
the threshold value of 1.96. In addition, the P value of H4 is 0.000, lower
than the significance value of 0.05. Therefore, hypothesis H4 is accepted,
meaning that profitability positively influences their valuation multiples. The
more profitable startups are, the less likely their valuation multiples will
decline. Because the less likely a
startup is to experience a decline in valuation as they grow and develop well
in the market. In this situation, investors tend to see startups as highly
potential and high-value companies. Thus, such startups are more likely to
maintain or even increase valuation (Poland, 2014).
H5: Founder contribution/power positively influences their valuation
multiples.
As seen in Table 3, the T statistics value of H5 is 3.277, higher than
the threshold value of 1.96. In addition, the P value of H5 is 0.001, lower
than the significance value of 0.05. Therefore, hypothesis H5 is accepted,
meaning that founder contribution/power positively influences their valuation
multiples. This means that the higher the founder's contribution/power, the
less likely their valuation multiples will decline.
H6: Although generally, the strategies of startups will be less aggressive
than before, specific sectors are less impacted
As seen in Table 3, the T statistics value of H6 is 0.009, lower than
the threshold value of 1.96. In addition, the P value of H6 is 0.993, higher
than the significance value of 0.05. Therefore, hypothesis H6 is rejected,
meaning that the sector does not influence its strategies.
H7: Startups' funding stages have a negative influence on their strategies
As seen in Table 3, the T statistics value of H7 is 1.717, lower than
the threshold value of 1.96. In addition, the P value of H7 is 0.086, higher
than the significance value of 0.05. Therefore, hypothesis H7 is rejected,
meaning that the funding stage does not influence their strategies.
H8: Startups� relative market position has a positive influence on their
strategies
As seen in Table 3, the T statistics value of H8 is 3.529, higher than
the threshold value of 1.96. In addition, the P value of H8 is 0.000, lower
than the significance value of 0.05. Therefore, hypothesis H8 is accepted,
meaning that relative market position positively influences their strategies.
This means that the better position the startups in the market (in other words,
gaining market shares), the more aggressive their strategies are.
H9: Profitability has a positive influence on their strategies
As seen in Table 3, the T statistics value of H9 is 3.316, higher than
the threshold value of 1.96. In addition, the P value of H9 is 0.001, lower
than the significance value of 0.05. Therefore, hypothesis H9 is accepted,
meaning that profitability positively influences their strategies. The more
profitable startups are, the more aggressive their strategies are.
H10: Founder contribution/power has a positive influence on their
strategies
As seen in Table 3, the T statistics value of H10 is 1.298, lower than
the threshold value of 1.96. In addition, the P value of H10 is 0.194, higher
than the significance value of 0.05. Therefore, hypothesis H10 is rejected,
meaning that the founder's contribution/power does not influence their
strategies.
H11: The impact of the 2022 winter on privately funded startup valuation
influences their strategies
As seen in Table 3, the T statistics value of H11 is 5.336, higher
than the threshold value of 1.96. In addition, the P value of H11 is 0.000,
lower than the significance value of 0.05. Therefore, hypothesis H11 is
accepted, meaning that the impact of the 2022 winter on privately funded
startup valuation influences their strategies. This means that the more
significant the impact of the valuation multiple declines, the less aggressive
their strategies will be.
Proposed Solutions
Here the author proposes business solutions for each
variable based on the analysis result.
Table
4. Proposed Solutions
|
Variable |
Valuation |
Strategy |
|
Sector |
� Pivot/expand into sectors whose valuations are less impacted. � Be more vigilant about profitability and other variables analyzed if
the startups are in an industry with a moderate/severely impacted valuation. |
Have at least a similar level of aggressiveness with the sector's
average to maintain market share but maintain profitability. |
|
Funding stages |
� For the early stages, continue raising funds from potential investors
as usual. � For later stages, be aware of other variables analyzed before
discussing them with potential investors. |
� For the early stages, be more vigilant of their profitability lest
they run out of cash if they cannot raise funding. � If profitability can be kept in check for later stages, be more
aggressive to gain market share. |
|
Relative market position |
Gain market share. If the market share increases, startups have a better
chance to increase profitability. |
Be more aggressive if the profitability is similar. If not possible
(for example, need to increase profitability), then at least maintain the
same level of aggressiveness. |
|
Profitability |
Immediately create a business/revenue model (if you still need to) and
create a path to profitability (if not possible, to achieve profit
immediately). |
Maintain a
balance between profitability and aggressiveness (if startups put too much
emphasis on financial engineering, they may lose the big picture and make
them irrelevant in the long run, while on the other hand, if they are too
aggressive, their profitability may be impacted). |
|
Founder contribution/ power |
Manage shareholder dilution carefully and do not give equity too much
to investors or other parties. |
Have specific terms with investors to maintain founder contribution to
promote startup agility/flexibility. |
Source: Author�s Analysis
CONCLUSION
Based on this study, winter also occurs
in Indonesia, as more startups (56.7%) reported declining valuation multiples.
Two (profitability and founder contribution/power) of the five tested variables
(sector, funding stages, relative market position, profitability, and founder
contribution/power) are accepted as influencing valuation. It is accepted that
the decline of startups' valuation multiplies and influences their strategies.
The relative market position and profitability are believed to influence the strategies
of startups. Regarding rejected variables, the author believes there are still
some insights that may be useful, namely, about the sector variable,
"Others" sector valuation multiples decline the least compared to
other sectors. In contrast, fintech sector valuation multiples decline the
most. Regarding the funding stage variable, valuation multiples for earlier
stages decline less than those for later stages. The author advises startup
founders to consider each of the variables examined in this paper when
developing their businesses. Startup founders may wish to pivot or expand into
sectors where valuations are less affected, such as logistics, healthcare, and
agriculture/fishing. These sectors are less affected because there are still
numerous issues to be resolved in each sector, and the growth potential is
enormous. If, on the other hand, they choose to remain in industries whose
valuations are moderate/severely impacted, such as e-commerce and fintech, they
must be more vigilant regarding profitability, as these sectors are more
impacted. Founders of early-stage startups can continue to raise capital from
potential investors as usual, as this stage is less impacted. In contrast,
founders of later-stage startups must analyze the abovementioned variables
before raising capital from potential investors, as this stage is more
impacted. Regarding their relative market position, startups should strive to
increase their market share, as this will increase their likelihood of
increasing profitability. However, they must do so while maintaining
profitability. For instance, when conducting marketing campaigns, they can use
data science to determine which activity provides the highest ROI.
Regarding profitability, startup
founders must immediately create a business model. As long as it is remained
competitive, they may consider increasing the take rate or margin. Startups
must also generate a profit or establish a path to profitability. This requires
both an increase in revenue and a decrease in expenses. Startups must examine
their expense list and eliminate any non-essential expenses that have a
negligible impact on revenue. As employees are typically a startup's most
significant expense, if it is impossible to conduct layoffs, be more
disciplined in evaluating their performance and more selective when hiring
future workers. Lastly, founders must manage shareholder dilution carefully and
not give away too much equity to investors and other parties regarding their
contribution and power. More respondents can be added to future research to
extend the current study. This will allow for a more excellent categorization
of the variables. Since the "Others" sector's valuation multiples
decline the most diminutive relative to those of other sectors, the author
believes it will be interesting to conduct additional analysis on this data.
Additionally, future research can be conducted on additional variables and
countries. The author suggests including the company's financial size (revenue
or asset), the founder's background, the number of founders, the location of
the startup's headquarters, the number of employees, and the composition of
current investors as study variables. Future research can also be conducted
from the perspective of startup and former employees. Future work can also be
accomplished by conducting similar research in different time periods, such as
the following year. This will allow us to determine the duration of the winter
situation.
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