Sequoia coaches start-ups to cut costs or face a 'death spiral' amid stock market slump, bleak economic backdrop

Sequoia coaches start-ups to cut costs or face a 'death spiral' amid stock market slump, bleak economic backdrop

May 26, 2022 by CNBC

Key Facts

  • In the most recent one, Sequoia points to sustained inflation and geopolitical conflicts that it says will limit the ability for a “quick-fix” policy solutions like slashing interest rates or quantitative easing.
  • “The era of being rewarded for hypergrowth at any costs is quickly coming to an end,” the Sequoia memo says, pointing to revenue multiples across software being cut in half over the last six months and trading below the 10-year average.
  • The winners, they said, are those willing to confront challenges that “may have been masked during the exuberance and distortions of free capital over the past two years.”
  • “The message we wanted to get to founders was that for the best companies, this should be your time to shine, because when it’s easy for everyone to fund-raise and get demand you don’t see as much of the strength of some of the distinctive businesses and teams,” Bailhe told CNBC’s Crypto World Wednesday.

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