Even before the Covid-19 pandemic, the US economy was showing signs of weakness, as predicted. Venture builders - startups that create and invest in other startups - had already begun to struggle, as many early-stage companies were unable to raise follow-on funding from VCs. In a recession, venture builders will be under even more pressure to generate returns from their portfolio companies. Many will be forced to scale back or shutter altogether. Some may choose to pivot to other businesses, such as corporate venture capital or growth equity. But it is likely that the number of venture builders will decline in the coming years.
As a reminder: A venture builder is a company that creates, launches, and scales new ventures. The key to success for a venture builder is to have a strong pipeline of new ideas. A robust pipeline will ensure that the venture builder always has a steady stream of new opportunities to pursue. To build a strong pipeline, a venture builder must have a wide network of connections and be constantly on the lookout for new ideas. They must also be able to quickly assess whether an idea has potential and whether it is worth pursuing. Venture builders that can successfully build a strong pipeline will be well-positioned to launch successful new ventures.