Albert Golukhov is the CEO of ExcessLogic, a company specializing in helping businesses optimize their inventory/asset management.
When Klarna’s valuation plummeted from $45.6 billion to $6.7 billion in 2022, it highlighted a broader market correction. Today, the more than 1,400 unicorns globally, collectively worth $4.8 trillion, face similar pressures.
As someone with extensive experience working with both large and small startups in volatile markets, I’ve witnessed firsthand the challenges companies are facing. This is a critical moment for CEOs and CFOs, especially those leading businesses with fewer resources than unicorns. Understanding market shifts and adjusting liquidity and asset management strategies accordingly will be essential for navigating the current landscape.
The Perfect Storm: Market Metrics
Venture capital (VC) funding saw significant declines in 2023. Global VC investment dropped to $344 billion that year, a 35% decline from $531.4 billion in 2022, and deal volumes globally fell to just 37,808, a five-year low, according to KPMG. This reduction in funding can particularly affect later-stage companies that rely on large capital infusions to grow.
In the first quarter of this year, quarterly global funding grew and reached $121 billion, but deal count still declined for the fourth quarter in a row, according to The State of Venture Q1’25 Report by CB Insights (registration required). “The divergence highlights growing capital concentration,” the report said.
For leaders in today’s market, I believe these shifts highlight the growing need to prioritize operational efficiency and consider exploring alternative funding sources. When venture capital is challenging to access, businesses must focus on building financial resilience through smart cash flow management and strategic planning.
Investment Climate
At the time of this writing, the federal funds interest rate remains at around 4.25% to 4.5%. Meanwhile, fundraising cycles have been getting longer in recent years. In 2023, the median time for venture funds to close reached 15 months, a 46% increase since 2021, according to PitchBook.
For CEOs and CFOs, this environment calls for decisive financial strategies, including optimizing liquidity and reducing costs. Diversifying revenue streams and securing non-dilutive funding options may be beneficial for businesses facing tighter credit conditions.
Public Market Metrics
The public markets have been providing little relief. In 2023, there were only 108 IPOs in the U.S. market. At the time, companies were facing higher interest rates, lower valuations and recession fears, according to Ernst & Young (EY). In fact, “2022 and 2023 saw the weakest IPO market since the global financial crisis,” EY said. While 2024 showed some signs of recovery, IPO issuance was still lower than the 10-year average before 2020. And this year, some tech and financial technology firms are putting a pause on their IPO plans “amid the stock market fall and investor uncertainty” surrounding tariffs, Pymnts reported.
I believe this demonstrates the need for businesses to reassess their exit strategies. For many, preparing for a favorable market recovery may mean focusing on strengthening core operations, optimizing costs and maintaining financial flexibility.
Turnaround Strategies
In response to these pressures, companies can explore turnaround strategies to position themselves for success. However, the impact of these strategies depends on swift action and strategic changes, particularly in operational restructuring, asset recovery and downsizing.
Operational Restructuring
Effective restructuring could yield substantial improvements, such as reduced operating expenses, improvements in working capital, smaller real estate footprints and optimized workforce costs. These improvements can dramatically enhance a company’s financial health, especially in challenging times.
CEOs and CFOs can begin by conducting a thorough audit of operational costs, focusing on identifying inefficiencies, reducing waste and implementing automation. This will free up resources to be allocated more effectively across the business.
Asset Recovery And Monetization
In addition to operational restructuring, companies may be able to preserve value through asset recovery and monetization. Options include remarketing unused equipment, consolidating data centers and renegotiating hardware leases for cost reductions.
Furthermore, intellectual property can create new revenue streams, such as through patent licensing or application programming interface commercialization. CEOs and CFOs can assess their noncore assets and consider alternative revenue channels to help strengthen their balance sheets.
Strategic Downsizing
Downsizing is another strategy. Companies that focus on core business units and streamlined operations could see improvements in margins, cash generation from selling noncore assets and a reduction in overhead costs.
This approach can help ensure businesses remain agile and can continue to focus on their most profitable operations. However, it’s important that downsizing efforts are strategic, targeting areas of inefficiency without compromising essential functions.
Keys To Successful Turnarounds
To succeed in a turnaround, companies must act quickly and efficiently. The first 100 days are critical; quick wins within the first 30 to 60 days can build momentum and secure stakeholder buy-in.
Critical success factors include:
• Speed Of Implementation: Aim to achieve rapid results in the first 100 days.
• Stakeholder Management: Work to retain key employees and vendor relationships.
• Financial Restructuring: Optimize working capital, and consider renegotiating debt terms.
For leaders, executing these strategies with precision is essential to stabilizing the business and preparing it for future growth.
Conclusion
Today’s market presents considerable challenges, but companies that adopt comprehensive turnaround strategies can help themselves survive and thrive. By focusing on operational restructuring, optimizing assets and making strategic downsizing decisions, businesses can navigate turbulent times and emerge more resilient.
The key to overcoming obstacles lies in decisive action. Companies that can streamline operations, manage costs effectively and adjust their strategies in response to evolving market conditions will be best positioned to lead their industries in the future.
The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.
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