Image Credits: Getty Images
Regardless of how much cash they have in the bank, founders are scrambling to extend their runways as venture funding slows. The startup that needs the most cash is in the most trouble.
I wrote about the current state of bridge financing last week after a number of pre-seed investors started getting emails from companies asking for more time in the form of cash. It looked like everyone was struggling to make ends meet. It seems like it is more difficult for some people than others.
Wa'il Ashshowwaf is the co-founder and CEO of Reyets, a social justice app that helps people discover what their rights are in different situations. The company had multiple verbal commitments for bridge financing this year, but all investors pulled out just weeks before checks were supposed to be written.
“You know there is a lot of money out there, but it feels like it is harder to get those checks.” Elian Savodivker, founder, Nabü
Ashshowwaf said that investors are responding tostartups that are more sure bets. The line between business and benefit corp or a social venture makes it hard for them to digest the investment opportunity.
It looks like VCs are focused on backing companies that already have a lot of customers. The founder and CEO of Pranos attributes most of his company's recent success to its traction. The fact that Pranos had money in the bank was positive for its investors, according to him.
The roadblock with bridge financing investors is that they have to prove that they are actually building the bridge. He said that a bank recently told him, "we can help you build a bridge, but we don't want to help you build a pier."
All Rights Reserved © 2024
