By the time summer hit, the leadership team of the home-care software provider realized its lagging growth rate – 80 per cent of target – wasn’t just a blip, after the third quarterly miss in a row. The pipeline for new business had slowed, and AlayaCare, whose platform manages the work of home-care staff, found its customer companies were struggling to hire and retain workers.
Investors have turned fearful of the entire sector. Valuations have come crashing down. Funding is drying up. Soaring interest rates and an economic slowdown have sent stock prices into a tailspin.
The linked write up does what it does best: infantile discourse. However, this boom-bust cycle requires a careful scrutiny. What at the VC’s trying to achieve in the first place? Why is capital being burnt at such a scorching phase? Is it money laundering? Is it some fancy accounting scam? I am not aware of the specifics though.
Jacques Bernier, managing partner of Montreal’s Teralys Capital, one of Canada’s leading venture capital financiers, says he’s seeing more term sheets outlining liquidation preferences. If a company is sold or goes public, certain investors are first to be repaid, and receive a locked-in return on their investment before the balance is paid to other investors. Such terms were a feature of past downcycles, but have been so rare for so long, Mr. Bernier quips, that “young analysts have never heard the word.”
I will be worried to crystal gaze such a sector that’s showing signs of volatility. Better avoid than being sorry.
RadOncNotes 