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Between his roles as co-leader of Mayfield Fund’s engineering biology practice and founder at IndieBio, Arvind Gupta reviewed approximately 470 startup pitches last year.

He characterizes his process as “simple,” but that is a bit reductive: after reviewing a deck and scheduling a meeting with the founders, he’ll spend many hours acquainting himself with both the underlying technology and the individuals on the team.

“For seed deals, I spend a maximum of 10 days so I can give an answer to a founder and I make it a pledge,” he said last week during a TC+ Twitter Space. “In 10 days, I can do the primary research and work with the founders to come to a conclusion there. For a larger Series A check. It could take a little bit longer than that, but not that much.”

I interviewed Gupta last month to find out more about the opportunities he’s looking for and get his advice for first-time founders, but last week’s Space was a chance to dive deeper. When I suggested that the downturn in the public markets might give startups a chance to focus on finding product-market fit instead of chasing growth, he gave me a personal market correction:

Recessions or downturns are always the hardest times to build businesses, always, for the entrepreneurs, for VCs, for everyone involved. Because no one cares if the market is terrible. It’s not like you get a buy: “forget it, we’ll just never mind that returns are terrible.”

Our conversation unearthed a lot of useful advice about fundraising in a down market, why he believes now is still a good time to start up, and how founders can avoid waving one big, red flag that discourages many investors:

“Just like [some] VCs are arrogant, I think it’s important to have a learning mindset for entrepreneurs.” Gupta said. “Entrepreneurs that believe they know everything had better be right, because it’s gonna be hard to learn on the fly if you already know everything.”

This transcript has been edited for space and clarity.

TC: The downturn in the public markets is impacting early-stage valuations, but seed-stage funding still seems pretty stable. Is this still a good time to start up?

Arvind Gupta: I think it is, especially in what I do, which is reversing climate change and curing disease. It’s always a good time to start up, because those things can’t wait.

What’s happened with the stock market is, as valuations have come down, multiples have compressed… So let’s say revenues are $100 million and if the IPO value of a company is $2 billion, that’s 10x sales. That has gone down considerably, about 30% from where it used to be. The private markets don’t get repriced every single day, so it takes some time for that to catch up.

Late-stage investing has definitely dried up quite a bit… It’s just a matter of time before it sort of trickles down, but there’s a lot of cash in the system right now. Most large VCs raise huge seed funds, there’s microfunds everywhere, and angels are extremely active. There’s a lot of optimism that technology can still create real solutions that can drive real value creation. So I haven’t seen a slowdown at all really, in the seed, pre-seed or Series A areas.

Seed-stage actually persists even during economic downturns because people still seem willing to make small bets. What’s your sense as far as why that is?

When you’re investing huge buckets of money, generally you’re not investing in a story and a hope and a dream, you’re investing in a business that’s showing traction. Now, there’s some extremely capital-intensive businesses where you need buckets of money before that traction is generated, and that becomes harder to finance in downturns.

You can still finance hopes and dreams, but just with smaller dollars, and you’re generally going to give up a little bit more of your company in terms of dilution during an economic downturn, so I expect that to start happening as well in the next year.

Who’s going to have a harder time in this new environment?

I’ve always said that the low-interest rate environment that we’ve had really since 2008 has generated an interest-free loan on risky startups.

So when you start looking at, “oh, it’s gonna be $150 million before we generate our first dollar of revenue,” that’s going to generate a deep breath in the meeting. After that $150 million is in, tell me about that next stage — that’s going to require more creative business models, different go-to-market strategies that generate revenues along the way. For good entrepreneurs, there’s always a path, right? It’s just different in different economic environments, it’s never shut, so to speak.

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You asked me for some categories? I think climate investing, what I do, is still extremely brisk. And there seems to be very little hesitation by investors to wonder about business models or downstream capex, I think for for other sectors, you know, with SaaS and things like that, those are traditional businesses, where you have the revenues, you have the metrics, there are multiples, it’s almost like an equation that people plug in: “Okay, this is what this company is worth.”

I think it depends on where the world goes in the next year: If the world stays kind of like this and goes laterally, everything will be fine. And there’ll be plenty of money to go around.

What sort of market conditions should we look for that would precede a rebound in late-stage startup funding?

What will happen is, as the IPO market opens back up, a lot of these IPOs that are underwater right now start to go back to the original IPO price and LPs that are writing down their portfolio start to see their portfolio come back up, that allocation for venture capital continues to grow, and then venture capital continues to deploy and redeploy the money that comes in.

The exit value is what drives it all. So seeing the technology sector and the NASDAQ start to rebound near its old highs, or even within 20% of its old highs, that’ll be the precipitating factor of the market staying open and money flowing.