“Companies don’t fire their best employees first. These people will find it harder to get their jobs back because of this and will be ‘in the market’ longer until things pick up again,” said Avi Eyal, founder and managing partner of Entrée Capital. “The culture of working from home will go back to being much more in the office and the fantastic benefits will be reduced. Productivity per employee will likely return to more normal levels.”
These were some of the predictions he shared with CTech when asked about how recent layoffs seen in the industry will affect the market. Entrée Capital provides venture capital to Seed to Series B companies around the world and has $1 billion under management.
Name of the fund/funds: Main Entry
Total Fund Sum: $1 billion under management
Partners: Avi Eyal, Ran Achituv, Eran Bielski, Adi Gozes
Featured/Selected Portfolio Companies: monday.com, Riskified, Breezometer, Open Web, Fundbox, Rapyd, HiBob, Snapchat, Glovo, Coupang, PillPack, SeatGeek, Stash, Gusto.
Eyal joined CTech for their “2022 VC Survey” to share some of his insights and recommendations for companies as they head into 2023.
If 2020 were the year of the pandemic and 2021 the year of records, how would you define 2022 in the VC sector?
2022 is the year that reality finally sets in. We are in a recession and it is not mild. Things will get worse, not better. The war in the Ukraine, inflation and changes of government in China, the US, the EU and the UK will have long-term and far-reaching effects on everyone. Technology is not an island, it is part of every business and it will win and lose just like every other business.
Who are the big winners of 2022 and why?
Companies with positive free cash flow.
Who are the big losers of 2022 and why?
Tech companies from Seed to late stage that raised funds at a high valuation that have expense bases and will not survive 2023.
What do you expect in the VC sector in 2023?
There is much less dry powder than most people think. Most of the dry powder is actually management fees and bookings, and funds will find that unless they are in the top 10 percentile based on yields for many crops, they simply won’t be able to raise new funds as LPs will have less allocation. and fewer dollars to invest in this asset class.
What global processes will affect (positively and negatively) the Israeli market?
All global processes affect Israeli technology; Israeli technology is simply completely dependent on sales abroad. When foreign buyers suspend decisions, cut expenses and lay off staff, Israeli technology is affected directly and in the most important way: revenue and cash flow.
How should different companies prepare for the coming year?
It’s probably too late to prepare. If you haven’t made the hard decisions yet, you’re probably on a bad trajectory.
Which high-tech sectors should we look out for next year and why?
Everyone will suffer a slowdown. HR Tech and Cyber in particular.
HR: The layoffs, those that have already taken place and those that are coming, do they help to fix in any way the disaster experienced by the companies in the last 2-3 years?
Companies don’t fire their best employees first. These people will find it harder to get their jobs back given this and will be ‘on the market’ longer until things pick up again. The work-from-home culture will be much more in the office again and the fantastic benefits will be reduced. Productivity per employee will likely return to more normal levels.
