In recent interviews with Bloomberg and The Times of Israel, Asaf Horesh, General Partner at Vintage, shared what he expects to see in Israeli tech/investments in 2023, which looks to be a “reset” year for many startups and funds, and why he believes now is the best time to invest.
“Now is the time to invest for two reasons. First, because valuations are going to be much more sensible than they were in the past few years, and second because we have seen in the past that great companies are being built in downturns as the strong get stronger and the weak get weaker.”
Additional key takeaways from the interviews:
-Many companies raised funds in 2021 without demonstrating viable business models. Some will not make it through this downturn and will need to close up shop.
-We are currently seeing an adjustment in the valuation of late-stage or mature companies, where the strong companies are traded at a multiple of 10-15x. As valuations are corrected, there will be a drop in funding and the number of unicorns.
-Downsizing won’t be enough; companies will need to raise fresh funds and face adverse market conditions as they need capital insertion to continue to operate.