RE: LeoThread 2023-12-08 20:07

[jimmy.adames]

1/9 / #threadstorm / My 7 Key Points from the TechCrunch article "Startups are doing fine, but scale-ups and unicorns are in deep water, The perils of staying private forever" written by Alex Wilhelm, Anna Heim

Comments

[jimmy.adames]

2/9

1. Early-stage startups are seeing stronger valuations and smaller declines in available capital, while late-stage investment has been in retreat.

[jimmy.adames]

3/9

1. Carta data shows seed stage is most immune to declines - only 58% decline in funding Q3 2023 vs Q4 2021. In contrast, Series A-C rounds down 80%+.

[jimmy.adames]

4/9

1. So grouping startups by maturity stage gives a different picture than narrative of startup recession. The younger the startup, the better fundraising prospects.

[jimmy.adames]

5/9

1. This suggests staying private as long as possible approach to take advantage of private market may not be as winsome as thought. Perhaps earlier IPOs make sense.

[jimmy.adames]

6/9

1. Seed, A, B, and C valuations declined but rose QoQ. Notably though, late stage valuations dropped more than early stage QoQ.

[jimmy.adames]

7/9

1. Late stage investors seem to be taking offline time to determine what fair value may be in anticipation of when public comps catch up w/ reality.

[jimmy.adames]

8/9

1. The data indicates early-stage startups should be able to raise, while late-stage founders may need to lower the valuation benchmark in their mind.

[jimmy.adames]

9/9

The data shows early-stage startups are faring relatively well in fundraising, while more mature unicorns and scale-ups are facing a harsh late-stage crunch - suggesting the era of staying private indefinitely may be ending.

Link to the full article: https://techcrunch.com/2023/12/08/startups-early-vs-late/