When Capital Tightens, Simplification Matters Most

Originally published 2022-06-28Robin’s commentary (as of June 2022)

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English translation of the Chinese post originally published 2022-06-28. Translated 2026-10-31 with AI assistance. Historical figures and claims have not been updated or independently verified. 中文原文

Reading guide

Robin looks back at years of abundant global capital, when FOMO and the belief that another buyer would always come along encouraged fast decisions even on marginal deals. Since the second half of the previous year, tighter capital has made investors more rational and slowed peers’ decisions: deals they might once have taken or passed on are now declined. Startups must reconsider their venture and explain why it is necessary; simplification becomes the central concern. Investors should return to fundamentals, verify more, and judge independently. Do not convince yourself too easily: the person most likely to deceive you may be yourself.

Key points

When capital is abundant, investors often fund deals they could just as easily pass on.
As capital tightens, investment decisions become slower and more rational.
Startups must reconsider the venture and their explanation of why it is necessary.
Investors need more verification and independent judgment; do not persuade yourself too easily.

Trees at different stages of growth with connected roots on cream paper, suggesting patient cultivation and lasting value. — Venture capital & investmentThematic illustration · AI generated

Full text — English translation

A brief digression from me. In recent years, global capital was abundant. Driven by FOMO—fear of missing out—people rushed boldly into investments. When everyone expects the economy to remain strong, or assumes another buyer will always take over as long as they are not the last fool left holding the bag, many deals that could be taken or passed on get funded, sometimes very quickly. Global capital began tightening in the second half of last year. It feels as though the overall effects will continue—or have not even begun. Investors have become more rational, in large part because their peers are no longer so frenzied or eager to close deals. Decisions take longer, and startups need to prepare mentally. Deals that might previously have gone either way now become a pass. Startups must therefore reconsider the entire venture and how they explain its necessity. Simplification has become the most important consideration right now. Investors must focus more on fundamentals rather than be swayed by the surrounding environment. Verify more and exercise independent judgment. Also, do not convince yourself too easily. I have come to feel that the person most likely to deceive you may be yourself, rather than someone else.

These articles are personal notes, book excerpts, and collected reprints. Figures and events reflect the time of the original publication, are not current information, and do not constitute investment advice.

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