As VC funding decreases, Eric and I are seeing more inbound emails from companies and their advisors. Quite a few are coming from the west coast, where we don’t invest, and quite a few are from people we don’t know. Some emails to me include someone who got our firm’s name wrong and someone who referenced our Growth Fund, which we don’t have.

The capital markets are always in flux and are always in a cycle. You get periods of over capitalization that are followed by periods of under capitalization. You go from a time when capital is cheap to when it is expensive. We almost are never in a Goldilocks period when everything feels “just right.”

Right now, the cost of capital is very high.

I mentioned this to one of our CEOs, who asked me what signs point to a reversal in the cycle. IMO, it is when a tech IPO is over-subscribed. That’s when teams suddenly want to file also and when VCs become bullish.

Then, the whole cycle will repeat itself. The rising tide injects optimism into the system and both entrepreneurs and VCs again begin to lean in. Mainstream media will again profile an entrepreneur who exited at a high price. Corporate VC will again be robust. More start-ups will get funded.

These patterns are predictable. It’s difficult to know when the tide turns, but it always does.