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Reporter’s notebook: Tech’s signature optimism is alive and well

The startup world has experienced a sudden dip from funding euphoria. But the shoot-for-the-moon attitude has barely waned.

Wonder Group founder Marc Lore (Courtesy of TechCrunch)

I expected a more somber mood walking into this year’s TechCrunch Disrupt tech conference in San Francisco. After all, the startup world has experienced a sudden dip from funding euphoria.

Instead, the industry’s rose-colored outlook was everywhere.

There were of course nods to “the current environment” and what that means for founders. Mayfield Fund‘s Arvind Gupta cautioned entrepreneurs to focus on cash flow margins at a time when interest rates are higher and, most likely, will keep rising.

Jomayra Herrera, a partner at Reach Capital, advised founders to seek less ambitious round sizes and “let the market push you up.” And Arman Hezarkhani, founder and CEO of financial-education platform Parthean, acknowledged the founder-funder knowledge gap: "[Investors] know how to play the game. They built the game.”

Mobile oven moonshot

But overall, the shoot-for-the-moon attitude has barely waned.

Serial entrepreneur Marc Lore kicked off the event to talk about Wonder Group, his new food delivery startup. The way Lore explains it, Wonder parks a van outside your house and right there heats up your dinner in a convection oven.

The whole time I was thinking: Does he know people already own ovens?

Lore, whose was acquired by Wal-Mart in 2016 for $3.3 billion, certainly sees something that other folks might not. It’s a refreshing reminder that highly successful people will put their time and wealth into ideas that can be totally baffling to the rest of us.

No regrets

Was there any regret among investors for overzealous deals? Not that I could see. Asked about an investment in virtual events company Hopin—which according to PitchBook data was valued at more than £5.5 billion (about $7.7 billion at the time) last year only to reportedly lay off 29% of its workforce in July—General Catalyst managing director Niko Bonatsos made the case that such deals were logical at the time.

"[Hopin] had the perfect product at the perfect time for the entire world,” Bonatsos said. “When you have a very competitive market situation … some offers need to be sweetened a little bit to make them more convincing.”

New ambitions

Even with fewer deals on their plates, VCs are staying active in other ways. As the pace of dealmaking slows, Andreessen Horowitz general partner Chris Dixon said his crypto-focused team is busy on a lobbying blitz and relaunching a crypto school.

Later in the week, the firm announced it had hired Collin McCune, a former congressional aide, as its first head of government affairs.

Direct messaging, hat in hand

Addressing the anxiety of founders in search of new money, VCs repeatedly made fundraising sound as easy as sending a Twitter DM. There was even an entire session on “turning social capital into financial capital.”

Sheel Mohnot, a general partner at Better Tomorrow Ventures, owned up to investing in two companies that DM’d him. “I think you can raise a pre-seed pretty much anywhere, especially if you’re active online,” said Mike Asem, founding partner of Chicago-based VC firm M25.

It takes an ace

Perhaps it was Serena Williams, whose firm Serena Ventures raised $111 million this year, who best summed up the reason why VCs don’t seem perturbed by the market conditions.

In short, it’s because they’re used to bets not working out—something Williams has struggled with: As the tennis legend put it, “I’m still trying to find that balance of understanding that you can’t pick 100% winners.”

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