And fewer cash, apparently
Amid 2021’s record-breaking funding exercise, it wasn’t unusual to see startups elevate rounds composed of quite a few small checks from numerous companies and angel buyers. However now that mentioned firms need to elevate extension financing, they’re realizing that extra buyers doesn’t at all times imply extra future cash.
Final 12 months, FOMO was operating excessive, and buyers had been doing seemingly all the things to get into rounds: taking a secondary stake as a substitute of a major, forgoing a board seat, writing a tiny examine simply to get right into a sizzling deal.
Many founders leaned into this, and how are you going to blame them? Traders needed to place more cash into their firms, and every investor brings their very own value-add and community to the desk. In principle, that appears like a superb factor. However, the professionals of elevating occasion rounds dry up shortly when the market turns — and loads of firms are beginning to notice that.