Startup Extension and Bridge Rounds Surged in 2023

Founders and VCs did an unprecedented amount of creative financing last year.

Raising a priced VC round was really tough in 2023, as we all know. So what did thousands of founders do instead?

They raised an extension / bridge round using convertible notes or SAFEs.

Again, all of these convertible financings happened AFTER a company has already raised the primary round.

In 2020, $58M went into Series C companies on convertible notes. Just 3 years later, that number ballooned up to $874M.

With the messiness of seed-stage trends, I'm unsurprised that a lot of cash is moving to those companies through SAFEs or notes even after a priced round.

But Series B and C? That suggests a serious inability to raise primaries and represents a pretty large and uncertain bet by founders and investors on those middle growth scaleups.

But at least this is a little bit of the answer to "where will all the dry powder go?"

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