5 ms·
On a recent episode of the Odd Lots podcast [1], they discussed an interesting phenomenon where hot startups won’t want to raise when markets are down, even if
by KerrickStaley 4y ago
On a recent episode of the Odd Lots podcast [1], they discussed an interesting phenomenon where hot startups won’t want to raise when markets are down, even if funding is available, because they don’t want to do a down round. Doing a down round marks the company to market and shows up as a materialized loss in the VC’s fund, whereas they can keep the old valuation if they don’t raise.
[1] https://www.bloomberg.com/news/articles/2022-06-23/the-behind-the-scenes-mess-now-facing-the-vc-industry?srnd=oddlots-podcast https://www.bloomberg.com/news/articles/2022-06-23/the-behin...
- samsonradu 4y agoMuch like a non-liquid stock, stop all the trading and the company valuation will (on paper) be computed using the last trade’s price.
- __derek__ 4y agoComing from this side, I was surprised that Joe and Tracy were unaware of that phenomenon, especially Tracy given her background covering debt markets during periods of low liquidity.
- gbourne 4y agoLike most VC questions, the answer is in Silicon Valley (tv show). "Why the f* didn't anyone tell me I could take less?" https://www.youtube.com/watch?v=hsmmznL9sFg https://www.youtube.com/watch?v=hsmmznL9sFg