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WSJ: Uncertain Markets Have Startups Rethinking IPOs


Gloomy economic forecasts, combined with ongoing public-market turbulence and a dearth of venture-capital deal making, may have early-stage startups rethinking their long-term goals. For some, that includes the idea that a blockbuster initial public offering is the ultimate prize for venture-backed companies.

Instead, some startup leaders say their objective is to build a profitable company, stay private, and eventually buy out their early backers. Not all investors are on board with the strategy, though many agree that focusing on profitability is a healthier model than growth for growth’s sake—marking something of a paradigm shift after years of chasing lofty private-market valuations through successive fundraising rounds until it is time to cash out.

For their part, investors are welcoming a return to sound business practices: “This is a clarion call and a chance to cut the hype, trim spending and return to best practices for lean, long-term growth,” said David Blumberg, founder and managing partner of early-stage VC investing firm Blumberg Capital. “Instead of excessive focus on negotiating the highest valuation and top-line growth at all costs, it’s more important to demonstrate that your business is robust, resilient and properly resourced,” he said.   

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