Early-Stage Pitch Volume Plunges 90% as Tourist Founders Exit Market
Gumroad CEO and rolling fund investor Sahil Lavingia reports a 90% drop in founder pitches since March, revealing a stark shift in early-stage venture capital dynamics.
Gumroad CEO Sahil Lavingia reports a dramatic 90% drop in founder pitches since March, shifting from 20 to 40 well-vetted decks a week down to just two to four. This steep decline in early-stage fundraising activity contradicts the common venture capital narrative that newborn startups remain immune to macroeconomic downturns and that recessions automatically spark a wave of new company creation.
Lavingia categorizes the current founder landscape into three distinct groups to explain the sudden market quiet. He observes that "tourist founders," or those who only build companies during bull markets, have entirely vanished from the scene. Additionally, "immigrant founders" who carefully weigh risk and return have decreased by half, while even the essential "born and raised" founders are starting companies at a much slower rate because they already raised capital during the 2020-2021 boom.
Despite the significant market slowdown, Lavingia successfully raises $2.8 million for his quarterly rolling fund and remains hopeful that founder volume recovers by the fourth quarter. However, he expresses concern that institutional limited partners lack the patience required for this idle period, noting that almost all funds experience this 90% drop in new rounds but stay silent to avoid admitting their newly raised capital sits unused.