Early-stage Series A and B venture funding were down 22% last quarter and startup seed funding was down 11% from last year’s crazy times.

This is not a crash for tech startups. It’s a modest belt-tightening by early-stage investors. That’s still almost $20B in funding.

It’s not the 50%-75% downturn we have seen in high-flying big public tech stocks this year. And late-stage unicorn private investment is way down overall too.

For startups, this just means fewer companies will get funded by professional or angel investors.

There are just fewer serious early-stage companies that can meet the return to higher standards by professional investors.

Early-stage investors are demanding more proof of:

• Product-market fit. Happy customers and lots more like them.
• Efficient customer acquisition costs
• Minumum burn rate or breakeven
• Proven customer and revenue traction
• Tight expense and headcount management

That sounds pretty reasonable to me.

Investors are still betting that a few tech startups will grow big and change the world.

We’re just back to the slightly-less-crazy times of a couple of years ago.

I don’t think there will be a big downturn in startup funding from here. Why?

Investors raised a record $139 billion in funding last year. It has to go somewhere.

For bootstrapped and efficient software businesses that don’t need big funding, this means exit valuations will be less crazy if they want to sell their companies soon.

So hang in there and keep growing profitably.

We won’t see another overheated crazy market like 2021 for a long time.

But it will be back. It always comes back.