The pace of startup shutdowns has increased to start 2024.
Among startups on Carta that have raised at least $5million in priced equity, 61 shut down in January and February of this year.
That's more than the total that closed up shop in Q4 2023 and we haven't added in March yet.
Some more dispiriting figures:
January was the highest month of startup shutdowns on Carta for Seed-stage, Series A, and Series B companies. For Series C and beyond, the worst month was February.
More startups that had raised at least $10M shut down in the first two months of 2024 than did in Q4 2023 (prior record quarter).
More startups that had raised at least $20M shut down in the first two months of 2024 than did in Q4 2023 (prior record quarter).
Worst 2-month period for Fintech, SaaS, Healthtech, and Medical Device shutdowns in all of Carta data.
What is happening?
I do think some of the increase is due to seasonality - maybe founders gave themselves until the end of 2023 to find a different solution. Some is a little noise (the process to shut down a company is lengthy).
But a lot of it is structural. 2023 was a year where many startups were kept afloat through bridge financings from their investors. I'd bet that we see fewer bridges this year as attention turns back to primary rounds - which leaves companies that couldn't find their footing with few options.
Unfortunately I think our data is also an undercount, as many companies end without letting us know immediately (or at all, sometimes).
M&A is another route, of course, but typically companies that attempt to sell themselves as a last resort are disappointed.
Hug your founder friends 🙏
#cartadata #startups #founders #shutdowns ___________
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