The new rules of early stage venture capital valuation and potential responses: Meet the bridge SAFE and extension round
In our current economic environment, you would have to be hiding in a cave not to see, hear and feel valuations sliding downwards across the eco-system.
👉It started in January 2022 when large-cap, mid-cap and then smaller-cap public companies started to fall in price. Past a certain point, we began to see private equity and venture capital investors applying these lessons to late stage private companies. In the time since February, we have seen the slide come all the way through the business food chain until it reached the startup.
👉In the global Silicon Valley, venture capital firms are getting much more cautious when it comes to valuation points when deciding to invest in new deals, and startups are facing an interesting dilemma. Do they risk waiting for future funding rounds when they would likely have to sell shares at a reduced price, or do they look for a more creative solution?
👉What’s happening, really? We are seeing plenty of venture capital funds with fresh piles of dry powder — the capital is present. But private equity and venture capital investors made promises to their own limited partner investors and need to return capital and make returns.
