In the near future, Next Indonesia Unicorn (NextICorn) Foundation chairman Daniel Tumiwa projected that start-ups’ cash-burning stage would be shorter.
enture capitalists are getting more cautious about investing in start-up firms as they now require start-ups to present a clear path to profitability following Softbank’s loss from its investment in WeWork.
Next Indonesia Unicorn (NextICorn) Foundation chairman Daniel Tumiwa told the press on Nov. 13 that many venture capitalists were now holding off on investing in start-ups as they wanted to ensure that their investment would earn profits following the Japanese conglomerate holding company’s loss in the third quarter of this year.
Softbank suffered a US$8.9 billion loss from July to September, its first quarterly loss in 14 years. This was due to what chief executive officer Masayoshi Son referred to as “poor investment judgment” as it turned a blind eye to problems, such as corporate governance, at American workspaces-sharing firm WeWork, Reuters reported on Nov. 5.
SoftBank was forced to spend more than $10 billion to bail out the start-up after its initial public offering (IPO) attempt flopped.
Daniel said venture capitalists were used to basing their growth projections on factors such as number of users for start-ups, even for firms in advanced stages of funding.
“Nowadays, they are starting to include revenue as a factor in calculating growth,” he said in Jimbaran, Bali.
In the near future, he projected that start-ups’ cash-burning stage would be shorter and that there would be more accountability.
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