In the early days of the rolling fund, an AngelList tool that lets investors raise money on a subscription-like basis, Sahil Lavingia of Gumroad got his start in venture capital as one of the early testers. In 2020, it was the case. By the year 2022, a great deal has changed.

What if it’s one of those alterations? How many startup entrepreneurs are trying to raise money with their pitches. There has been a 90 percent drop since March,” Lavingia said. In the past, “I was probably seeing more than most—perhaps 20 to 40 well-vetted decks a week—and that number is now down to approximately two to four each week.” Aside from the continual stream of layoffs, he’s also seen a surge in the calibre of talent available to Gumroad employees, which he partly attributes to the steady flood of laid-off employees.

Businesses may not be as impervious to macroeconomic changes as some investors think based on a decline in the amount of cash raised by founders, but a rise in new startups would reinforce the assumption that recessions — and the ensuing wave of layoffs — are the period when startups emerge.

Founders might be classified as “tourist founders, immigrant entrepreneurs, or ‘born and raised’ founders,” according to Lavingia. Entrepreneurs who only establish businesses in bull markets, he added, are tourists, a group that has decreased by roughly 100 percent.

Even in down markets, “they’re seldom fundable,” as Lavingia put it. “They need to outsource the construction of their products.” It is less important to immigrant entrepreneurs to build a company’s brand and standing, but they do consider the risks and rewards. This group of founders has been reduced in size by Lavingia. To sum it up, entrepreneurs who are “born and raised” are founders no matter what the market conditions are.“They all existed and therefore raised money in 2020-2021, so they too are not starting companies and raising money at the same rate.”