June 30, 2022

Read Balderton’s email to portfolio CEOs about the tech slowdown

“The world is now upside down”, managing partner Bernard Liautaud tells portfolio CEOs

Eleanor Warnock

3 min read

Balderton Capital team

Given the slowdown in tech and the threat of an economic downturn, investors from Sequoia to Y Combinator have been quick to share advice with their portfolio companies. 

Sifted has obtained a copy of an email sent by Bernard Liautaud, managing partner at Balderton Capital, one of Europe’s largest venture capital firms, outlining the firm’s view on the economy and market correction and giving his guidance to startup leaders. The email — under the subject line “Managing Through Turbulent Times” — was shared with CEOs in the company’s portfolio last week. 

In it, Liautaud warns founders that new investments are likely to "remain quiet" for the rest of the year, and that there's "a lot lower to go... before we even get back to 2020 levels" in terms of capital being deployed. He advises that businesses avoid "getting dragged into a preemptive round" and to focus on reinforcing the strength of their startup's fundamentals.


The email is provided in full below, but here are a few other takeaways:

  • “We do see the ingredients for a deep and prolonged slowdown in the economy”
  • “Q2 has mostly been a period of retrenching, and the rest of 2022 may remain quiet for new fundraises. However, as we move towards 2023 this dry powder will need to start being invested again. It will be deployed at roughly half the pace, however.”
  • “We expect activity levels and $ invested to continue to trend substantially downward. We have a lot lower to go in terms of $ invested before we even get back to 2019 or 2020 levels.”
  • “We continue to actively invest in new deals as do our main peers. The seed stage venture market continues to be very active, frothy even, as many later-stage investors view smaller checks as lower risk and so are moving earlier. Be careful of this dynamic.”
  • “Investors still have a strong appetite for cyber security, software infrastructure, energy and climate tech more broadly. Fintech and general SaaS are OK. Consumer is most impacted, in particular any company which benefited from Covid tailwinds. Too early to say on Web3 given the events of the last week.”
  • “Right now our advice is to be very careful about engaging with this inbound and getting dragged into a preemptive round.  The last thing you need is to get pulled into one conversation, that turns into a few conversations, that turns into a preemptive round, which takes your focus away from your business with a low likelihood of conversion.”
  • “Make sure you take the time to resource yourself. You need to be in good shape physically and mentally. You have to work hard but you also need to sleep enough, eat well and exercise. You will have to display a lot of positive energy.”

More from Sifted on the tech slowdown

Eleanor Warnock

Eleanor Warnock is Sifted’s deputy editor and cohost of Startup Europe — The Sifted Podcast. Find her on X and LinkedIn