ZIRP is the zero interest rate policy that has been the primary philosophy of US Central Bank since 2008.
ZIRP has disappeared now and the more expensive capital markets have had drag on orthopedic startups.
The 8 Trends.
Trend 1/ Startups have changed their focus to building a great business FIRST.
- The only thing that matters (and the only thing that you can control) is to build a great business that makes great products for customers. That’s it.
- Ortho startups are shifting towards a primary focus on creating value for customers and building sustainable businesses rather than solely prioritizing shareholder liquidity or exits.
Trend 2/ Startups are starting to emphasize profitability.
There’s definitely a bias towards profitability in the capital allocation markets. The capital markets have done a 180 degree flip since the end of the low interest rate era. From “risk on” to “risk off.”
The financial landscape is witnessing a shift towards profitability, with companies making decisions that generate real revenue and ensure near-term profitability, reflecting a more sustainable approach to growth.
Trend 3/ Caution in raising venture capital.
If you don’t have to raise venture capital in this environment, you’re better off in many ways.
Startups are becoming more selective about raising venture capital, recognizing the advantages of maintaining control and avoiding external pressures associated with fundraising.
Trend 4/ Long-term vision over short-term exits.
You hear more startup founders say, “I just want to build this thing to be as big as possible, and I don’t want one single shred of external pressure to force short-term goals. I just want to build a great business.”
CEOs are expressing a commitment to long-term success and growth, placing less emphasis on immediate exits and more on creating substantial, lasting enterprises.
Trend 5/ Strategic decision-making for profit and growth.
CEOs are strategizing, “How can we get to cashflow positive or breakeven quicker?”
Strategic planning involves balancing growth and profitability, with a focus on achieving positive cash flow and sustainable business operations.
Trend 6/ Preference for organic growth.
Most startup veterans will tell you that if you don’t have to raise venture capital, you’re better off.
New founders are starting to express a preference for organic growth, avoiding the need for external funding and maintaining control over their companies.
Trend 7/ Reaching profitability is pro-employee.
Once a startup reaches profitability, the people that benefit are the employees because they can get paid, and the team can hire people without being subjected to external pressure from external owners.
Prioritizing profitability and control benefits employees, ensuring stability and favorable conditions for the team.
Trend 8/ Impact of AI on capital efficiency.
AI may be the biggest disrupter to VC funding startups.
The integration of AI is expected to significantly impact capital efficiency, allowing startups to achieve more with less funding and fundamentally changing the venture capital landscape forever.