Should I Be Worried as a Founder Right Now? – Filip Dames, Cherry Ventures

About this episode

The startup world is in flux. While some speak of a full-blown crisis, others see merely a market correction. Filip Dames from Cherry Ventures, one of Berlin's most renowned VCs and part of Zalando's original founding team, brings a unique perspective to this discussion.

Crisis or Correction?

The central question occupying many founders: Are we actually experiencing a crisis right now? Filip Dames contextualizes the current situation and draws comparisons to the 2008 financial crisis. His experience from both eras – as a founder at Zalando and as an investor at Cherry Ventures – enables him to take a nuanced view of the current market conditions.

Particularly interesting is his perspective on the challenges founders faced then versus now. While 2008 saw liquidity completely frozen, today's situation presents itself as more complex and nuanced.

Funding Rounds in Transition

One of founders' biggest concerns relates to capital availability. Dames provides insider insights into current developments in funding rounds and explains how conditions have changed. Particularly relevant for founders are his explanations of liquidation preferences and their evaluation in the current market phase.

The days when startups could almost automatically achieve higher valuations are over. Instead, founders must understand which KPIs truly matter and how to minimize the risk of down rounds with unattractive valuations.

Learnings from the Zalando Era

Particularly valuable are Dames' insights into Zalando's 2008 launch. The timing was anything but optimal – starting an e-commerce company in the midst of the financial crisis initially seemed like an impossible undertaking. Yet this very experience shows that crises can also harbor opportunities.

The comparison between then and now reveals interesting parallels and differences. While the under-price-attention strategy worked back then, market mechanisms have fundamentally changed today.

Portfolio Observations at Cherry Ventures

As an investor, Dames closely observes developments in Cherry Ventures' own portfolio. These observations provide valuable insights into the real impact of the current market situation on startups at various development stages.

Founders in the seed phase particularly ask themselves: Should I be worried now? The answer is nuanced and heavily depends on the individual startup's situation.

Budget and Profitability in Focus

A central theme involves the budget cuts and structural changes many startups are experiencing. The question of profitability in the early phase is gaining importance again – a development that had long been pushed into the background.

Dames explains how the relationship between growth and price has changed and what role M&A activities play in the current market phase. These insights are particularly relevant for founders who need to adapt their strategy to new circumstances.

Practical Action Recommendations

What can founders concretely do to emerge as winners from the current situation? Dames shares practical learnings from his portfolio and provides insights into which companies are particularly affected and why.

The trend toward more bridge financing is another development founders should understand. These interim solutions can serve an important bridging function during uncertain times.

Key Market Observations

Dames shares additional relevant market observations that founders should be aware of. The development of funding rounds and the potential increase in bridge financings are trends that could significantly impact startup strategies in the coming months.

From his portfolio experience, he also discusses cases of companies that didn't survive and the learnings that can help other founders avoid similar pitfalls.

Conclusion: Preparation is Everything

The current market situation requires heightened attention and strategic adjustments from founders. Those who keep the right KPIs in focus, thoughtfully plan their financing, and learn from the experiences of successful investors like Filip Dames can thrive even in challenging times.

The message is clear: panic is not warranted, but preparation and realistic assessment of the situation are essential for success in the current market phase. Understanding the difference between 2008 and today, knowing which funding conditions to expect, and adapting business models accordingly will separate the winners from the losers in this market cycle.