Preparing For A Booming Market: A Playbook for VCs And Founders
On the other side of the U.S. election, expanding global conflicts and tariff wars, the markets have demonstrated surprising resilience that’s beginning to turn cautiously optimistic.
Equities, despite the volatility and uncertainty, have held up. Bitcoin recently posted a new all-time high and the development of the crypto space is booming. The battle-tested startup market is generating more revenue earlier than ever before while the AI boom continues to attract capital.
It is looking more and more likely that we are at the beginning of a bull cycle that investors and founders have been praying for. Markets are cyclical, and while challenging times test resilience, booming markets present a unique set of opportunities and risks for both venture capitalists and founders. Success in an upswing requires preparation, strategy and focus.
Here’s how to get ready for the next big wave.
For VCs: stay disciplined
In previous cycles, the beginning of the end has traditionally been marked by such extreme froth in the market that VCs chase deals outside of their focus, cut due diligence corners, and disregard fundamentals.
Don’t repeat those mistakes. Double down on sectors and models you deeply understand and believe in and ignore the pressure to chase trends. The FOMO will be real and the desire to get in on deals quickly to outcompete other investors will be strong.
Resist. Don’t compromise due diligence standards and don’t lower the bar for fundamentals. Capital efficiency, durable competitive advantages, clear paths to revenue and scalability still matter in a booming market and you’ll regret compromising your standards when this cycle ends. At peak-hype cycle, it’s easy to chase the hottest deals — oftentimes to the neglect of your existing portfolio and founders.
Stay focused on relationships, both with your existing founders and LPs. It’s easier to raise that next fund during a booming market, so instead of chasing overvalued deals the best VCs use these cycles to play the long game by doubling down on their winners and securing fresh investor commitments.
For founders: build the foundation for growth
For startup founders, boom cycles are often characterized by an endless, perpetual state of raising money. As capital becomes more accessible, the competition also increases so founders find themselves dedicating an enormous amount of their time to fundraising.
Knowing this is coming, founders should prepare by clarifying their vision, sharpening their pitch, fortifying their balance sheet, investing in talent and warming up existing strategic partnerships.
The more you can do to create efficiencies for yourself in the coming funding cycle by polishing pitch assets and preparing for due diligence cycles, the less time you’ll have to spend during crunch time and the faster you’ll be able to move in the highly competitive race for capital.
Internally, you can create some efficiencies for yourself by beginning long lead recruitment cycles, knowing that the capital to chase that growth is just a few months away. Those partnerships you’ve established? They are going to be tough to leverage during the chaos of the cycle, so make sure you establish plans and channels to capital on those relationships when it matters most.
Prepare, don’t chase
Both VCs and founders must remember that booming markets are as much about timing and preparation as they are about opportunity. For VCs, the goal is to deploy capital thoughtfully and avoid the pitfalls of hype-driven investing. For founders, the focus should be on scaling sustainably while seizing the advantages of favorable market conditions.
Booming markets don’t last forever, but companies and funds built on strong foundations can thrive long after the cycle turns. The best time to prepare is now — before the wave begins.
As the co-founder and managing partner of MGV, Marc Schröder is committed to establishing MGV as the premier venture firm for world-class tech entrepreneurs to accelerate their visions. Under Schröder’s stewardship, MGV has swiftly ascended to a top-quartile firm, surpassing the performance of 95% of venture funds. The performance of MGV is driven by Schröder’s unique approach to venture investing — that providing intensive sales training, devising robust fundraising strategies and securing follow-on investments is the best way to support founders and drive the deepest return for investors. Business Insider has recognized him as one of the Top 100 global seed investors, and his perspectives are published regularly in Crunchbase News and other leading publications.
Illustration: Dom Guzman
