[{"id":2463893,"date":"2023-01-03T10:27:20","date_gmt":"2023-01-03T18:27:20","guid":{"rendered":"https:\/\/techcrunch.com\/?p=2463893"},"modified":"2023-01-03T11:01:09","modified_gmt":"2023-01-03T19:01:09","slug":"techcrunch-roundup-normalizing-down-rounds-2023-climate-trends-term-sheet-basics","status":"publish","type":"post","link":"https:\/\/techcrunch.com\/2023\/01\/03\/techcrunch-roundup-normalizing-down-rounds-2023-climate-trends-term-sheet-basics\/","title":{"rendered":"TechCrunch+ roundup: Normalizing down rounds, 2023 climate trends, term sheet basics"},"content":{"rendered":"
The “Pineapple Express” that dropped several inches of rain over the Bay Area last week left the ground saturated. The next storm front expected to arrive tomorrow is expected to bring disruption and destruction on a massive scale.<\/p>\n
It’s a decent metaphor for our startup ecosystem: Just as there aren’t enough sandbags in San Francisco to keep everyone’s house dry, rising interest rates, skittish investors and looming economic uncertainty are poised to bring valuations down even further in 2023.<\/p>\n
“In a culture where growing valuations are worn like a badge of honor, founders may fear that taking a down round would render them Silicon Valley pariahs,” writes Holden Spaht, managing partner at private equity firm Thoma Bravo.<\/p>\n
Full TechCrunch+ articles are only available to members. In a TC+ column, Spaht encourages entrepreneurs to revisit the operational and fundraising tactics<\/a> they leaned on in the bygone era of cheap money.<\/p>\n “The funding route you take has enormous consequences for the future of your company, and so it shouldn\u2019t be clouded by ego or driven by media appetites,” he says.<\/p>\n Cutting back is always an option, but not every company is in a position to bootstrap or freeze hiring, which is why Spaht suggests exploring “trade-offs” like convertible notes.<\/p>\n Everyone gets wet when it rains, but accepting a down round allows founders to keep building, “and you have the benefit of resetting expectations of value in a challenging market,” writes Spaht.<\/p>\n Happy new year!<\/p>\n Walter Thompson
\nUse discount code TCPLUSROUNDUP<\/strong><\/a> to save 20% off a one- or two-year subscription.<\/i><\/p>\n
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\nEditorial Manager, TechCrunch+
\n@yourprotagonist<\/a><\/p>\n