Nearly 1 in 4 US venture rounds were down rounds last quarter.
That's a little more than 2x the historical average, which hovers around 10%. And more than 4x the rate of Q1 2022.
Some obvious reasons why here - valuation overhangs from the boom time of 2021, an inability of companies to fundraise normally given those large valuations, and a time component thrown in (long enough from the downturn beginning that other options have been exhausted).
Was kinda hoping this percentage would decline this quarter, but you know what? This is a good thing.
Not the down rounds themselves, those can be a real trial for founders, employees, and even investors.
But at least the two sides (founder and investor) are coming to an agreement that these companies are worth continuing even if the cap table needs to be restructured.
Many great companies had to go through a down round before heading off to an ultimately successful exit.
And a clean down round can be preferable in many cases to a "flat" round that comes with onerous structure involved.
Salute to the founders out there willing to bite the bullet and revalue their startups to set the foundation for future growth. Be sure to explain the details to your employees as well - they deserve it.
Full Q1 data out early next week - get a copy of the report sent straight to your inbox by signing up here: https://lnkd.in/gNa_Dk-F
#cartadata #downround #startups #founders #fundraising
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