Venture Capital Investment and the Great Resignation
The Great Resignation isn’t just hyperbole: Record numbers of people are quitting their jobs. In November of 2021 alone, 4.5 million people walked away from employment in — an all-time high. It would be easy to think that this was just a blip, but similar numbers occurred in January and February of 2022, with March also hitting that same, sky-high figure for another matching record month of job leavers. As so many people realize that they can demand more from employers, match their skills to better roles, or even set out on their own to start a new company, how is the Great Resignation affecting venture capital investment — and should we expect things to continue in this way?
Skills Gaps and Remote Work Driving Change
In brief, it’s important to note that there’s less risk than ever for job seekers right now. The trends of employees leaving for better pay elsewhere, retiring early to enjoy life, or even moving to a new venture completely have empowered a positive attitude within the workforce in general. Skilled workers are welcomed with open arms to fill the gaps left by those retiring to spend time with family or on their passions.
The pandemic has driven a “life’s too short” mindset, encouraging innovators to try out new ideas and even launch their own startups. Home fitness apps, food delivery or cooking apps, and communication technology solutions have never been more popular, thanks to a stay-at-home nation that’s still not quite ready to launch full-throttle back into “normal” life. Proptech apps have been able to leverage technologies like augmented reality (AR) to offer virtual tours as a permanent fixture. Fintech companies have a new focus on sustainability and forecasting based on the possibility of possible pandemics and disasters, helping to reassure clients of all sizes. The Great Resignation might be driving folks to follow their passions, yet it’s not all clear skies over the funding landscape for even the most innovative startups.
Venture Capitalists Retiring
One of the startling facts of the Great Resignation is that even experienced investors seem to be calling it a day. In September 2021, news outlet Axios reported that plenty of top-level venture capitalists were retiring well before the usual age. This could be, in part, driven by the success of funding in 2021 and the accelerated rate of VC funding cycles, bringing in more money faster and allowing those investors to reach their financial goals and move on to new pastures. Does this mean there are fewer opportunities for startups to get funded? Not exactly, but it means that the investors taking the place of those retiring on the back of their gains might have different priorities, and they could also be more cautious in a volatile financial marketplace.
Professionals Starting Over
That marketplace is becoming a little crowded, as more and more skilled professionals realize they can potentially see bigger successes by heading out on their own. All over the world, the registration of new businesses has soared. In America, new business applications rose by 95% in 2021, a complete switch from the previous trend of declining numbers of startups. Digital transformation was suddenly a “must-have” rather than some distant goal, and savvy innovators have made the most of that by jumping in to create solutions for consumer and business needs in industries from real estate to banking.
In 2021, this led to record levels of funding for startups, but 2022 sees that trend decline due to a busy tech market combined with more cautious investors. Startups need to really stand out from the crowd, and look to where the money is being spent. Currently, for example, proptech companies have enjoyed $4 billion in funding in Q1 2022. Property developers need help meeting new and more stringent sustainability requirements, opening a gap for proptech that focuses on managing decarbonization.
Final Word
Finding your niche during the Great Resignation is key. It won’t last forever, especially if funding for startups continues to tighten up. Right now is the best time to work on your innovation, especially if it answers a challenge in these days of supply chain and logistics issues, digital transformation needs, and climate-focused business. Make sure you have the right marketing strategy in place to get your venture in front of the right people. Set up a 15-minute introductory call with Arch Collective and leverage our extensive experience with startups just like yours to take your business to the next level.
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