Founders - don't rely on the headline about the billions in "dry powder".
Yes, VC funds raised record amounts in 2021 and early 2022. And yes, that capital will be deployed (eventually). But the expected deluge of cash into venture is likely to appear more like a drip, for a few reasons:
1. VCs are deploying capital much more slowly than in prior years. Diligence is taking longer, fewer deals are getting done, and LPs are generally happy with a reduced pace.
2. Lots of cash will end up going to bets VCs have already made. The percentage of rounds on Carta that were bridge rounds (same or close valuation, led by prior investors) vs net new primary rounds has risen dramatically.
3. VC timelines and founder timelines are unlikely to match! If a fund needs to deploy capital over the next 2-4 years, it is cold comfort to the founder who has 8 months of runway left.
2023 looks to be the year of the bridge round. Relying on the hopes of dry powder in the near term is a risky strategy.
More data on round structure and composition in our Data Minute newsletter in the coming weeks (sign up in first comment)
#cartadata #bridgerounds #drypowder #venturecapital #startups #founders
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