Risk Index Report 2023 | embroiderer

The boot environment feels like it’s changing faster than ever. And no wonder: The founders are facing one unprecedented event after another in 2023. This has been going on for more than three years and shows no signs of slowing down.

For founders, this “new normal” is starting to feel all too familiar. At Embroker, we wanted to explore how the startup community is dealing with current pressures and what steps they are taking to combat future risks. To that end, we are announcing our second annual risk index report.

In March 2023, Embroker conducted a comprehensive survey of 500 VC-backed startup founders to help us understand how founders are faring and how the surprises of the past year have affected them and their businesses. In the report that followed, we break down those numbers, discuss the key findings, and reveal the strategies founders used to ensure their success and thrive in a pre-recession economy.

SVB, remote work and… PR?

2023 Startup Risk Index Report
Based on a survey of more than 500 VC-backed startup founders in the US, the report shows what they’re most concerned about this year, what they’re doing about it, and what they’re not doing.

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Here’s a sneak peek at some of our findings:

• This year, the collapse of Silicon Valley Bank (SVB), which affected 84% of founders since the last crash during the Great Depression, was a top concern in the founding community, and rightly so. In response, the founders have adjusted their risk mitigation strategies, realizing the impending challenges of tougher economic times. Many have taken proactive steps by building up a substantial reserve of liquid capital, making sure they are well prepared for potential difficulties ahead. While this is a good solution to implement on an invisible timeline, it’s only short-term.
• Startup founders have also shared their two main goals: grow your product and expand your business. While the path to success is challenging, even the most successful founders must sacrifice some things. They are willing to invest their personal time and financial resources to achieve these goals. However, founders are increasingly cautious about protecting their reputation and brand. Unlike in previous years, a growing number of founders (35%) refuse to compromise their reputations or relinquish control of their companies. In addition, 33% prioritize preserving personal relationships and staying true to their initial vision.
• Effective communication is another crucial aspect of risk mitigation. Ebroker introduced a new category of risk: problems related to social movements directed at companies. This risk shared first place with inflation of 24%, which was the common concern in the previous year. The founders recognize that the perception of their business and their personal image present significant risks. In response, almost half of the founders (46%) sought help from PR agencies and professionals to manage their messaging after the SVB event.
• Apart from the external the greatest internal risk it is mainly people-related challenges. The report shows that 25% of founders had trouble hiring the right talent, while 30% reported difficulties managing remote workers. Both customers and employees look for businesses that align with their values. Consequently, many startups have turned to human resource (HR) programs as a leading solution. By implementing these programs, the founders seek to attract and retain people who share their values, creating a solid foundation for sustainable growth.

Lately, the startup environment is characterized by constant change: it is no longer possible to rely on the success of the past and maintain the status quo. Founders must adapt in the face of mounting adversity.

Founders who proactively assess risk, develop their strategies, and seize opportunities are better equipped to navigate the evolving marketplace and build thriving, resilient businesses. This report serves as a valuable resource for founders, enabling them to gain a deeper understanding of risks and help them navigate the industry with greater confidence and success.

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