After an uneventful year in 2021, the business market has declined this year, and will remain positive in 2023 due to rising prices, rising interest rates, and global uncertainty.
But news is not all news.
Despite the market turmoil, 2022 is the second most profitable business year on record. Total revenue will reach $200 billion for the second year in a row, making this year the fifth consecutive year of total revenue exceeding $100 billion, according to our analysis of Crunchbase data. In addition, venture capitalists have raised $151 billion to fund new ventures in just three quarters this year, which means there’s plenty of money sitting aside to help fund other projects. In fact, according to the current situation, 2022 will be the fifth year following the results of the fund.
Three obvious ways
In this environment – where economic problems and rising prices meet the increasing demand for investment – how do you know if your company has access to financing? In reviewing the latest business news, here are three key points that stand out:
Your company should be a priority, not a luxury
Consumers and companies are struggling to manage the financial crisis. Can your business help you? If your company offers a tool, platform, or service that helps customers improve operations or reduce costs, you’ll have a better chance of raising revenue.
If you offer this type of product, make sure the price “must be” makes sense to investors, including what supports the type of product that customers can expect to save – not just money, but time and labor. Make it quantifiable and provide compelling evidence to the customer.
These products encourage customers to cope with economic downturns, making companies that make these products more attractive to investors than companies that provide “nice-to-have” goods and services.
Your business needs to be affordable and able to thrive in good times and bad
During a difficult economic period, investors are looking for opportunities that do not rely on large amounts of money to support expensive customer acquisition strategies that take time and can disappear in a difficult environment.
If your brand needs a lot of money, can you follow a strategy that helps your company to be more efficient and show a faster way to profit?
Your business will benefit from a sustainable link or clean energy
The investment team is eager to support emerging companies that can provide sustainable solutions to the market. In the first nine months of this year, the energy sector raised what it did in 2021, according to our analysis of Crunchbase data. The recent and proposed law adds to the influence.
The recently enacted Depreciation Act—which includes $360 billion in funding for energy and climate change programs, along with tax incentives to promote renewable energy and electric vehicles (EVs)—will help keep investment in the sector strong in the future.
In addition, the SEC’s climate disclosure rule – released in March 2022 and designed to give investors a better understanding of the impact of climate change on the operations of publicly traded companies – will have companies clamoring for greener ways of doing business.
We have seen an increase in funding for companies that offer “outside the box” incentives, such as those that make fashion out of post-consumer waste, and there has been strong funding for various climate technology companies, such as sustainable nuclear power and EV companies.
Be prepared to show how your company is helping to solve a major environmental problem or is doing more for the world than it has done in the past. State the size of the market. If your marketing strategy is cashless, that’s a bonus.
Other ways to increase your income
Even if your business doesn’t operate in a favored sector or meets one of these three main criteria, you don’t have to wait forever to get funding. To be successful, you need to come to the table with more evidence than you need for a good time – for example, the number of customers, the amount of money, or the control of money.
Now is the time to focus on serving existing customers and increasing profits, not on risky investments in new areas or uncertain markets. Find ways to increase operating income and reduce costs. Employers will be impressed if you can show good results during difficult times.
You need a successful growth plan and a go-to-market strategy that shows you’re in tune with what’s happening in the market. Pie-in-the-sky predictions will be obvious to financial experts who are making decisions especially with new investments.
It is also important to be successful in raising your capital. Try to move potential investors to “yes” by helping them learn as much as possible about your company as soon as possible, supporting their efforts, introducing members of your leadership team, and setting up meetings with key customers.
Go from investors who are sitting on their hands and prioritize those who are showing an interest in learning more. If you’re not getting it right, there’s nothing wrong with taking a few months off your income to focus on your core business.
It is often difficult when true leaders step forward. If your company has the potential to succeed, investors will notice.
Jeffrey Grabow is the head of EY US venture capital. The views expressed in this article are the views of the author(s) and do not necessarily reflect the views of Ernst & Young LLP or other members of the EY global organization.
The opinions expressed in Fortune.com articles are the opinions of their authors and do not reflect the opinions and beliefs of Chance.
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