VCs will fly to quality in 2023

Andrew Lau, CEO, and co-founder of Jellyfish discusses his predictions for VCs in 2023, including why the days of easy money and endless budgets will come to an end, how the doors are opening for startups to recruit talent that has long been out of reach, and that firms will be deploying heavily once more by the second half of 2023.

VCs will fly to quality.

"VC firms have record amounts of dry powder. Their limited partners are not happy when funds are sitting there, so the money simply has to be put to work in search of returns. The deployments can lag for a few quarters, as we've seen, but I expect firms to be deploying heavily once more by the second half of 2023. We’ll see a flight to quality, investments in strong companies with quality products in the right industries, rather than the risky bets that became commonplace in the era of loose capital."

Team members will need to read the wave.

"Surfers must read the horizon to catch the perfect wave. In this market, employees need to learn the levers driving the business and how they connect together to play their hand deftly. Folks shouldn’t sit in the corner, ignoring the macroeconomic trends, and asking for more resources. Instead, engineers should work towards impacting bottom-line and top-line growth, customer retention and acquisition, and expanding the total addressable market. Understand how their output fits together with the business necessities and act accordingly."

FAANG layoffs will lead to startup opportunities.

"Over the past decade, FAANG companies scooped up an outsized amount of top-tier talent. Now, layoffs and hiring freezes at those corporate giants are opening the door for startups to recruit talent that has long been out of reach. Many of these employees are tired of reacting to decisions made in far-off Zoom meetings. They're excited to again dig in and build a great product on teams where they can make serious impacts. For startups, this is the chance to build the team that’s eluded them for the past five years."

Business accountability is in vogue.

"The days of easy money and endless budgets are over, for now. Businesses are once again focused on efficiency and scrutinizing every purchase, hire, and budget item. As leaders shift to cost controls, they need data to understand, in granular terms, the actions they can take and the opportunities they have to improve their team performance and bottom line and, importantly, why that's the case."

Andrew Lau

Andrew Lau is the CEO and co-founder of Jellyfish, the leading Engineering Management Platform. A veteran of the Boston startup community, Andrew served for nine years as VP of engineering at Endeca, where he met his future Jellyfish co-founders Philip Braden and David Gourley. Endeca was acquired by Oracle Corporation in October 2011 for over $1 billion. After Endeca, Andrew gained valuable executive experience at two other Boston startups, LoopIt and Nanigans, before co-founding Jellyfish in 2017. Jellyfish was created with the vision of making it easier for engineering teams to work with and support their colleagues in product and business organizations. Over the company’s first five years, Andrew has led Jellyfish to dramatic revenue growth and the recent announcement of a $71 million Series C funding round led by Accel, Insight Partners, and Tiger Global. In October, Jellyfish was named to the Intelligent Apps 40 list, presented by Madrona, Goldman Sachs, PitchBook, Microsoft, and Amazon.