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Changing priorities of investorsIn the late stages of a startup’s growth, expensive cash and a lack of big deals can leave many late-stage Web3 companies cash-strapped. And time is running out.
People already are. Pretend That’s what venture capitalists are used to, turning from crypto to AI on the hunt for the next big thing. For startups stuck in the passé category right now, it can’t feel good to look elsewhere for venture dollars, even though fluctuations in capital flows are common.
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TechCrunch recently delved into venture capital data to understand how investor interest in Web3 companies is developing through 2023. We also sought to glean what we could from similar searches on AI-related startup fundraising.
What did we learn? The data suggests that Web3 companies are likely to raise private capital at a slightly slower rate than previously (perhaps as much as 80% if trends hold in Q1 2023). The picture for AI-related funding is a little less clear.
It’s as simple as a glacial meltdown that there are good late-stage startups – in the web3 space and others – stuck between their final funding round, the price set during the transaction and a new market reality that investors don’t seem to care about. They are very interested in further funding their efforts.
We’ve touched on it before and even recently I wondered how far from the cliff of unicorn death it is. Excitingly, we can bring our question this morning about the genre focus of the venture market and the terminal funding day for already richly valued startups.
Recently, tech investor and founder Elad Gil wrote an interesting piece on the cash balances of companies that raised money in the last quarter of 2021-era Venture Zine:
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