You've likely seen the alarming reports in recent weeks about a dramatic drop in valuations. Like you, we wondered what's behind this and whether there will be a bounce-back soon — or whether we are entering an entirely new long cycle.
For an insider’s perspective on how this volatility is affecting AgeTech startups, we turned to Abby Levy, managing partner and co-founder of PrimeTime Partners, an early-stage investment fund and AgeTech Collaborative™ participant.
This interview has been edited for clarity and length.
Can you tell us what PrimeTime Partners is all about?
PrimeTime Partners is an early-stage investment fund dedicated to improving the quality of living of older adults. We invest in startups from seed to Series A, across the things that older adults care about: their health, their financial security and having meaningful experiences. Since launching two years ago, we’ve looked at about 850 companies, and have made 25 investments across health tech, FinTech, consumer, products and media.
Those are a lot of different verticals. What's the common denominator you look for across them all?
One common denominator we look for is that the company is serving an audience that's 50-plus. That’s a horizontal lens that we look at. And we’re always asking, “How do we help build an ecosystem of startups who are engaging an audience that, for the most part, entrepreneurs have been underserving forever?”
There’s been a lot of scary news lately about valuations going down. What’s going on?
I think there are two things happening. First, is on the supply side. COVID really accelerated the number of companies looking for funding. Between 2020 and 2021, you couldn’t open a newspaper without hearing about nursing homes and the statistics about older adults. And for the first time, as a society we really oriented around talking about the issues around aging. And that opened the floodgates for entrepreneurs. So in terms of the supply of companies interested in these issues, that has just exploded — and that’s not going to change.
What about the financing side?
Valuations absolutely have come down. That’s because until recently valuations were, I would say, “speculative”: There was a lot of capital to put to work, and venture funds were vying with each other to put money into good businesses, and that inflated valuations. So founders had a lot of choice, and that gave them a lot of leverage around valuation.
Now, later-stage businesses are being more conservative on valuation, which is then causing the early-stage businesses to be more conservative on valuation. And because founders are getting nervous that the window for funding is closing, they’re being more flexible on valuation.
Is there any good news?
Actually, the capital is still there. It’s just that the check sizes are smaller. So the money is still flowing, but multistage venture capital firms are saying, “We may not pay for the bigger deals, but we can still write a check for a half million dollars, or a million dollars.” So seed investing remains quite strong.
And I think of the AgeTech space as “non-cyclical,” meaning that it’s not as prone to recession dynamics, or the cycle of inflation and deflation. The reason for that is because most of the money in the AgeTech space is not being spent by consumers — most of it is being spent by healthcare payers, employers, nonprofits, the government and so on. Those budgets are already funded, and they’re not going anywhere.
If I’m a founder of a seed stage company in the current environment, what recommendations would you have for me as I seek funding?
Getting to profitability faster is important, I think, because if you have the option to self-fund and you have revenue from operations, you don’t have to rely on outside funding as much.
Another piece to understand is that while enterprise customers exist, their sales cycles are going to be much longer, because everyone is more cautious in this economy. We’ll meet with founders who say, “Look at my pipeline of enterprise contracts and the money that is just around the corner.” But now it's more important to have actual contracts versus having them in a pipeline.
Essentially, you need more proof points for your ideas. The proof point isn’t a pipeline, it’s a contract. It’s not, “Here’s my idea,” it’s “Here are 50 people who are on our waitlist, who love what we are doing and who are going to be ambassadors for us.” Those are the kinds of things you need to get your idea further validated before trying to raise money.
Do you have any final thoughts you’d like to share?
AgeTech is a unique space. I have found it to be the warmest, friendliest, most collaborative place to build a business, because you can’t talk about an aging population without a piece of it being about positive social impact. And people want to help founders — consumers want to help you; enterprises want to help you; nonprofits, the government, investors all want to help you. And that’s why founders should keep doing what they’re doing.
So please make sure that while you're swimming upstream with growing your business, you're also reaching out. Go find a founder in a business that may be a few steps ahead of you. Reach out to them, and you'll be amazed — they'll tell you everything that they've learned.
And if anyone has an idea for a business they want to start, or want to contribute to a business they’ve heard about, please reach out to us at PrimeTime partners at hello@primetimepartners.com.
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