Bridge / extension rounds are all the rage right now.
I was fairly certain that 2024 would bring with it a reduction in the bridge round percentage. Felt like VCs were moving back towards funding new companies and were less excited about extending current portcos (in some cases for the second time).
Well - I was wrong! The percentage of bridge rounds was actually higher in Q1 across Priced Seed, Series A, and Series B.
And this data doesn't even include all the convertible notes, SAFEs, etc that are being signed between primaries (of which there are many).
So what does this mean?
Bridges and extensions are not always done from a position of weakness. In some cases, the VC wants to double down on a company before their impressive growth triggers a big valuation increase in the next round.
But - a lot of the time these are done when the founders just don't think they can hit the metrics needed for the next round of funding without some more capital.
They are costly (in dilution for the founding teams) and complicated (many bridge rounds have more structure attached in the form of liquidation preference and participating preferred stock).
Wouldn't call this a super bullish signal.
Full report from Q1 2024 out early next week from us: we'll cover total fundraising, valuations, dilution, down rounds, M&A, employee exercises, PTEP, 409A, layoffs, geographic analysis...so much. Sign up at the link in the graphic for your own copy!
#cartadata #startups #fundraising #bridgerounds #founders
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