As venture funding continues to slow down, the founders are struggling to expand their runways, no matter how much money they already have in the bank. But startups, which need the most cash injections, have the most problems.
Last week I wrote about the current state of bridge funding after several pre-investors began receiving emails from companies – some in a state of desperation – asking for more time in the form of cash. It seemed to investors that everyone was struggling. But while the founders report that raising capital across the board is more difficult, for some it seems significantly more difficult than for others.
Wail Ashshouwaf, co-founder and CEO Reyets, a social justice app that helps people know what their rights are in different situations, believes it will be harder for founders like him to navigate more impact-oriented narratives. He told TechCrunch that his company had several verbal bridge funding commitments this year – before a proper round next year – but all investors pulled out just a few weeks before the checks were due to be written.
“You know there’s a lot of money out there, but those checks seem to be harder to get.” Elian Savodiwker, founder of Nabü
“Investors are responding to [startups] these are more sure bets than the early and unproven ones,” Ashshowwaf said. “For us, in the field of impact, the line between business and a charitable corporation or social enterprise makes [the investment opportunity] it’s much harder for them to digest than, say, making a widget.”
It also seems that VCs are focusing on supporting startups that already have significant revenue figures and a customer base. David Astoria, founder and CEO of broadcast media startup Pranos, attributes much of his company’s recent success in bridge financing to its existing success. He believes that the fact that Pranos already had cash in the bank was a big plus for his investors.
“I think the barrier for these investors funding the bridge is that you have to prove that you are actually building the bridge,” Astoria said. He added that a banker recently told him, “We can help you build a bridge, but we’re not trying to help you build a pier.”
Credit: techcrunch.com /