“Companies don’t fire their best employees first. These people will have a hard time getting a job because of this and that they will be ‘on the market’ the longest until things return to growth,” said Avi Eyal, Founder and Managing Partner of Entrée Capital. “The culture of working from home will change back to being more in the office and the amazing perks will be restored. The productivity of each employee will likely return to a more normal level.”
These are some of the predictions he shared with CTech when asked how the layoffs seen recently in the sector will affect the market. Entrée Capital provides venture capital to Seed to Series B companies worldwide and has $1 billion under management.
Name of fund/funds: Entry Capital
Fund total: $1B under management
Partners: Avi Eyal, Ran Achituv, Eran Bielski, Adi Gozes
Notable portfolio companies: monday.com, Riskified, Breezometer, Open Web, Fundbox, Rapyd, HiBob, Snapchat, Glovo, Coupang, PillPack, SeatGeek, Stash, Gusto.
Eyal joined CTech for its “2022 VC Survey” to share some of his insights and recommendations for companies as they approach 2023.
If 2020 is the year of the pandemic, and 2021 the year of records, how would you define 2022 in the VC sector?
2022 is the year the truth finally arrives. We are in a recession and it is not weak. Things will get worse, not better. The war in Ukraine, inflation, and government changes in China, the USA, the EU, and the UK will have long-term and far-reaching effects on everyone. Tech is not an island, it is part of every business and will win and lose as any other business will.
Who are the big winners of 2022 and why?
Businesses with positive free cash flow.
Who are the big losers of 2022 and why?
Tech companies from Seed to late stage that have raised funds at high cost with cost bases and will not survive 2023.
What do you expect from the VC sector in 2023?
There is less dry powder than most people think. Most of the dry powder is really management fees and reserves, and funds will find that unless they’re in the top 10 percent by returns over multiple vintages, they won’t be able to raise new funds because the LPs will have fewer allocations and fewer. dollars to invest in this asset class.
What global processes will affect (positively and negatively) the Israeli market?
All global processes affect Israeli tech – quite simply, Israeli tech is completely dependent on foreign sales. When foreign buyers postpone decisions, cut spending and lay off staff, it affects Israeli tech directly and in the most important way: revenue and cash flow.
How should different companies prepare for the coming year?
It’s probably too late to prepare. If you haven’t made the hard choices yet, you’re probably on a bad trajectory.
What high-tech sectors should we look out for in the coming year – and why?
Everyone will experience a slowdown. Especially HR Tech and Cyber.
HR: Are the layoffs, past and coming, helping in any way to fix the distress that companies have been going through for the past 2-3 years?
Companies don’t fire their best employees first. These people will find it difficult to get a job again because of this and they will be ‘on the market’ the longest until things return to growth. The work-from-home culture will revert to being more office-based and the amazing perks will return. The productivity of each employee will likely return to a more normal level.