#7 February 2023: 2023 Predictions
Your monthly filter for economic data & insights that matter.
A Note From the Scale Team
The first month of 2023 has far exceeded the pessimistic outlooks predicted for this year, but that doesn't mean we're in the clear yet. Our international economy is feeling continued pressure from the pandemic-induced supply chain hangover and manufactured inflation from the war in Ukraine. At the same time, consumers aren't slowing down their consumption, and businesses still want to expand. While some investors are holding onto their dry powder until the markets settle, Scale is deploying. We believe it’s never been a better time to invest in early-stage founders, so apply for our next round of investments. Why we are bullish on the future in our 2022 review here. 😎
Scale invests monetary and social capital in early-stage tech founders strengthened by struggle. We’re excited to bring you monthly updates about Scale, tech, and micro and macroeconomics. - We've filtered through thousands of sources, so you don't have to. Enjoy🥂
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📈 Macro Trend Report
INFLATION | While the official message is that inflation is (finally) cooling, most consumers aren't yet seeing benefits. While most items remain significantly more costly than they were a year or two ago, if you're into TVs, shrimp, or screwdrivers you may be in luck!
TECH EMPLOYMENT | While many remain pessimistic about hiring this year, we believe tech workers will still win in 2023. Preparing for continued remote work, working for companies without a "big name," and emphasizing soft and hard skills seem to be the way forward for employees. It's a great time to be an early-stage founder because there is so much talent in the market. The high-tech layoffs in 2022 have carried into 2023, with the biggest month of tech layoffs in the last three years 😱
HOUSING | After the craziness of 2022, home prices seem to be cooling and mortgage rates are coming down. Because of a smaller housing deficit as compared to elsewhere in the US, we expect Midwestern markets are primed
VENTURE CAPITAL | A new rule from the US Securities and Exchange Commission is sending VCs into turmoil. Designed to address a lack of transparency in the field, it would simplify the process of suing investors and potentially make it more difficult for VCs to raise funds. Despite impending risk, funding through the end of 2022 reached an annual high. Even though this was accompanied by the lowest exit activity in more than a decade in Q4 2022 M&As will likely pick up in 2023.
And one final, fun look at a VC year in review for 2022
Some quick stats from Pitchbook's Q4 2022 NVCA Venture Monitor
Record Seed deal value, despite declining deal count; i.e., early-stage valuations are still rising
Unicorn valuations didn't decline even after a 30-80% dip in public tech stocks
Angel deal count was the lowest in the last decade
💰 Midwest Economics
A year-end look at flyover country VC deals - despite a national slowdown, there were still big deals in 2022 between the coasts.
Michigan-based RoboTire bringing theirautomated tire changing to real customers
An Iowa meat packing plantraised a whopping $150 million
The Midwest hit it's highest % of total VC funding (7.66%) since 2011
A little shakeup in the public equities as the broader market outlasts the Missouri public companies. When you took a beating for 12 months, you're bound to bounce back at some point 🤷🏽♀️
💰 Midwest Deals
Des Moines-based Bristola, a clean energy technology company, announced a $1.1M follow-on equity investment.
Check out all 21 deals we tracked here!
🐄 Midwest vs. National Macro Trends
🧠 This Month's Recommendations
📚 What We’re Reading
AI designed better antimicrobial proteins in minutes than our bodies produce in a lifetime.
🎧 What We’re Listening To
Figma is arguably the best design product on the market; listen in to how their CPO builds product [68 mins]
An excellent 20VC episode discussing the funding environment today [49 mins]
Eric Baker's unique and disruptive talent [25 mins]
📅 What We’re Doing
We have started early preparations for the next Missouri Startup Weekend, taking place March 10th-12th, 2023. Check out how our 2022 winner went from idea to raising money from venture capital investors in 7 months.
The famous InvestMidwest is returning on April 12th, and we are supporting the efforts at Scale as a 2023 channel partner!!
🎮 Midwest Tech of the Month
EquipmentShare recently launched its T3 Technologies, the first operating stack to connect people, assets, and materials for construction operators to have full visibility of work throughout the project. This includes telematics and hardware tech to monitor equipment health, software to optimize rental utilization, and mobile applications for team members to clock in and off on the spot.
🚀 Scale Portfolio Company Highlight of the Month
Kaveat is building tools for content creators to make the complicated legalese of contracts easy. We've been proud to watch their journey as part of our Cohort III, and they even won the "Consumer" category at the TLTF Summit Startup Showcase last month!
Watch the latest Flyover Tech Speaker Series session with Willy Schlacks, Co-Founder of EquipmentShare and Scale, here ✈️
Resource page for founders we made here
Build a financial plan for your next 24 months in under 30 minutes here 🤑
A spreadsheet to value employee compensation here 💸
Downloadable database of 5k+ investors by stage, thesis, and geo here
It's extremely important to have well-thought-out messaging when reaching out cold to investors, so we put together some resources here🥶
Dozens of startup resources here
Why should you angel invest? Because Venture Capital is the sexiest asset class that improves society while producing outsized returns, duh. Also, venture returns have proven to outperform public equities during a recession. -> If you are interested in angel investing, then sign up here 😇
Keep up with our Medium content here 🔖
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