VC firm Torch Capital's founder Jonathan Keidan advised startup founders to be open to raising down rounds.
Keidan asserts that raising down rounds is better than accepting onerous terms — such as ratchets — or raising venture debt that may have its own financial covenants.
Founders that are adamant about retaining their startup's previous valuations may find that if "that goes the wrong way, that company's over," according to Keidan.
- He added, "The good founders are willing to just figure it out and take the lumps."
- Per Business Insider, late-stage startups already reduced their valuations after IPO opportunities were reduced and scrutiny for tech M&As increased.
- In Mar. 2023, Stripe raised $6.5B in funding at a $50B valuation, nearly half its peak valuation of $95B.
Last month, the New York-based VC firm raised $116M for its second flagship fund and $89M for its first opportunity fund
