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Startups seeking funding can cash in right now from a market flush with capital and seeking promising ventures, a panel of UConn experts said Wednesday.
“If you hit it right, it’s a great time to raise money because there’s quite a bit out there,” said Konstantine Drakanokis, a venture capital investor and member of UConn’s Entrepreneur-in-Residence program. He spoke as part of a discussion on financing mechanics for emerging businesses.
“This is going to be a very strong year from every indication that I see,” agreed Eric Knight, a serial entrepreneur and angel investor.
Many venture capital firms have spent the pandemic amassing huge pools of money that will fund up to a decade’s worth of investments, said Mostafa Analoui, executive director of venture development for UConn’s Technology Commercialization Services.
Valuations of startups have also risen because of the cheap money and “irrational exuberance,” Analoui said. “The question is is this sustainable or not,” he said, adding that the U.S. is benefiting at present from the pandemic’s asymmetrical impact on global markets.
But emerging companies can benefit from the exuberance, Analoui said. “At the ground level, for those raising money, there is plenty of cash and interest from investors to go after.”
The ongoing COVID-19 pandemic also presents an opportunity for fledgling companies to show investors that they are resilient and resourceful, Knight said. “It really stress-tested companies under real harsh, unexpected circumstances. I look favorably on those companies that had the resilience, in some cases the business creativity and pivots, to emerge and still be in growth mode with their businesses.”
In addition, the pandemic has jump-started technologies like video-conferencing that have allowed companies to be more efficient and nimble, Knight said. “The teams that made it through the pandemic came out a lot stronger and more creative,” he said.
Entrepreneurs need to be aware of a constantly changing marketplace and be sure to do in-depth study of their customers, the panel advised. Hot sectors right now include cleantech — or products and services with reduced environmental impact — and anything to do with infectious disease.
Two years ago investors had little interest in the infectious disease space, Analoui said. “Today, no matter what you do in the infectious disease area, you are going to be on top of the list for attention,” he added.
The speed and magnitude of these investor shifts offer a lesson for entrepreneurs, Analoui said. “It’s a very dynamic environment and you have to be very agile in responding to those market changes.”
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