Therese Poletti’s Tech Tales: The days of money-losing tech startups getting funded because VCs liked their founder is over — for now

by | Mar 31, 2023 | Stock Market

For more than a decade in Silicon Valley, ambitious tech entrepreneurs have received billions from a flush venture-capital community to fund companies, many with questionable economics and a culture of “moving fast and breaking things.” But now that the tech boom has ended, exacerbated by the swift demise of Silicon Valley Bank, that era is done.

“The East Coast terms start creeping into term sheets that add structure into finance that is not founder-friendly,” said Duncan Davidson, a general partner at Bullpen Capital. “Traditionally the West Coast is more founder-friendly, the East Coast thinks more like bankers.” Even before the digital bank run that led to the sudden collapse and FDIC takeover of Silicon Valley Bank, the number of venture-capital deals investing in startups was falling. In 2022, for example, venture funding in the U.S. fell 31% to $238.3 billon, down from $344.7 billion, a peak, in 2021. Davidson noted that late-stage funding had already dropped and mid-stage companies were getting smaller rounds. Don’t miss: The rise of the ‘zombie VCs’ — Expect dark times after Silicon Valley lost its favorite bank In a fourth-quarter 2022 survey, called the Silicon Valley Venture Capitalist Confidence Index from the University of San Francisco, the mood was already darker, with many tal …

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