- For startup founders and venture capitalists, celebrating the office holiday is a tradition in December.
- But poor financial forecasts for the new year have VCs telling founders to cut costs fast.
- Many are cutting back on their parties, but some are finding creative ways to celebrate.
For many venture capitalists and the startup founders they invest in, December is synonymous with two things: year-end paperwork and office holiday parties. Last-minute business is usually balanced with communal fun at a rented event venue or restaurant with an open bar and plenty of rubble.
But this year, holiday parties in startup land are looking a little different.
“Usually around this time, my social media is blowing up with photos from holiday parties, but this year it’s been radio silent,” said Oriana Papin Zoghbi, founder of Y Combinator-backed ovarian cancer research startup AOA Dx.
After years of seemingly unstoppable growth, “Patagonia Vest Recession” From social media to e-commerce to enterprise software, once passionate companies across the digital economy have been hit by a wave of layoffs and forced to cut costs on passion projects.
Meanwhile, venture capitalists have warned of impending “death spirals” and instructed their portfolio companies to cut spending wherever possible, which now includes office holiday celebrations. Today, with deal volume down and many founders hesitant to raise new capital for fear of a dreaded “down round,” holiday savings can be especially important.
Insider spoke with seven startup founders and investors to learn what techniques they’re using this holiday season to save as much capital as possible to enter a volatile market.
“We’re in a new world where you can’t burn what you used to,” said Brian Hirsch, founder and managing partner of Tribeca Venture Partners. He adds that reducing the “burn rate,” or the rate at which startups spend their cash reserves, which often fund year-end celebrations, has been a topic of conversation at every one of his board meetings over the past few months. .
“Every investor, unless they live on another planet, would advise their portfolio to reduce their expenses,” Hirsch said.
Some startups choose parties with little or no budget
Brooke Keeley, a partner at VMG, told Insider that questions about holiday parties often come up in her conversations with founders, and she advises startups to have fun even if they’re on a tight budget.
“My biggest piece of advice is that you can still do something special, meaningful and impactful at a reasonable cost,” he said, adding that teams need to think about what’s important to their organization’s culture. Whether it’s building a relationship or blowing off steam.
“Coordinate these goals with your holiday celebration, and you can do something powerful and affordable,” she said.
For 24-year-old Nadia Okamoto, co-founder of consumer products company August, renting a space as a small, early-stage startup was impossible. Still, he and his team were able to throw a zero-budget holiday party this December at their New York office in collaboration with another startup, Wonder & Ivy, an organic wine producer, that supplied the drinks.
He and his colleagues set up and broke down the decorations themselves and stayed in the office until 10pm before the party.
“We were sweeping the floors, lighting boxwood lights and ordering paper snowflakes,” she said. “Our whole community knows we’re weak, but it doesn’t look like we’re reckless – they know how much we care about the company and the community.”
K50 Ventures platform president Jessica Spivak Lowenstein said the more intimate “little parties” have been a way for her fund to bring together founders and portfolio investors this year without breaking the bank.
“People are getting creative to find ways to bring people together in fun ways that are less expensive,” he said. “If companies and companies are doing it, it’s smaller, so people are doing it for the team and not the whole network – it’s easier to connect with people because it’s a small group.”
Spivack Lowenstein shared that K50 Ventures decided to hold smaller, regional founder meetings in São Paulo and Bogotá, where many of its portfolio companies are based, rather than a large office party near its headquarters, because the company had organized a big event for New. York Tech Week just a few months ago.
This party style has been preferred by Artem Semjanou, founder and CEO of healthtech-AI startup Neatsy.ai. He told Insider he prefers to host a company-wide trip to a bathroom during the holidays, a tradition the early-stage startup can continue this year because it only employs 12 people.
“There’s a great place in the mountains where you go down a water slide into a mountain ice river with steam from the bathhouse,” he said. After that, you sit in a big towel with the decoction and look at the stars. Many good ideas were born during this time.
Even virtual parties may not be enough to cut costs
Other founders, including AOA Dx’s Papin-Zoghbi, have brought back pandemic-era “Zoom happy hours” to accommodate remote teams and save big at the end of the year.
“During better market times, we personally did our own team pullbacks,” he said. But he still plans to make the party a fun one for his team by sending a care package before the food and games. ring.
Erin Fabio, founder of creative agency Grit Studio, took a similar approach and decided to host a virtual wine tasting with a sommelier on Zoom for her team, she told Insider.
Sean Harper, CEO of investment-backed insurance startup Kin, said he has been looking to cut back wherever he can because he is reluctant to raise more money in the current climate, where investments are often difficult and Lower valuation comes with it.
“We have to be able to, you know, sustain our growth with our own resources, because I don’t know if I can raise more stock,” Harper said.
But while the holiday season may be an easy place to cut costs, Harper said it may not be enough for companies that are really struggling.
“Maybe you have to cut back on the trip, maybe you don’t have a big holiday party, but that’s all small compared to the number of passengers,” he says. “People are the most expensive.”