How startups can lower their chance of a down round in a downturn

Here on the eve of Thanksgiving in the United States, this column spent a good portion of the morning hunting up something to be thankful for in startup land.

There are options: The world has never been more software-centric, meaning that the core startup product is well-aligned with long-term macroeconomic trends. That’s good. Consumers are also holding up better than some expected given the global backdrop of rising interest rates and hard-to-tame inflation. And despite endless calls for a recession either tomorrow or the day after, key economies in tech continue to grow.

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Sadly, for many startups, the news is overall more negative than positive. For example, toptechtrends.com/2022/10/06/the-us-venture-capital-slowdown-doesnt-look-that-bad/”>tech investment is falling, toptechtrends.com/2022/11/14/the-startup-and-venture-markets-are-coming-back-to-square-one/”>valuations are down, IPOs are frozen, layoffs toptechtrends.com/tag/layoffs/”>abound, and startups that decided to put off fundraising due to turbulent market conditions may wind up with the short end of the valuation stick. (The good-news version of this point is that some startups did raise during the earlier quarters of the present tech-market downturn, which wound up being the right move!)

Data from Forge’s November 2022 report — the company operates a secondary market for the trading of private-market tech shares — indicates that startups that raised earlier in the present downturn wound up collecting fewer down-rounds and received better overall pricing than their more reticent brethren.

toptechtrends.com/2022/11/23/how-startups-can-lower-their-chance-of-a-down-round-in-a-downturn/”>How startups can lower their chance of a down round in a downturn by toptechtrends.com/author/alex-wilhelm/”>Alex Wilhelm originally published on toptechtrends.com/”>TechCrunch