As venture funding continue slow, the founders are trying to expand their runway, no matter how much cash they already have in the bank. But the startups that need the cash the most are struggling the most.
last week, I wrote about the current state of demand finance after many pre-seed investors started receiving emails from companies – some in a desperate situation – for more time in the form of cash. For investors, it seems everyone is having a hard time. But while founders are reporting that it’s harder to raise wages across the board, some seem significantly harder than others.
Wa’il Ashshowwaf, Co-Founder and CEO of Reyets, a social justice app that helps people discover their rights in different situations, thinks it will be more difficult for founders like him, who are targeting stories that have more impact. He told TechCrunch that his company had made several verbal commitments to fund the bridge this year — ahead of a proper round next year — but all investors withdrew just weeks before the checks are supposed to be written.
“You know there’s a lot of money out there, but it seems like getting those checks is harder.” Elian Savodivker, founder, Nabü
“Investors are responding [startups] Ashshowwaf said. “For us in the impact space, the line between business company and social interest or venture creates [the investment opportunity] a lot harder for them to digest than to produce a widget.”
It looks like VCs are focusing on supporting startups that already have meaningful revenue and customer bases. David Astoria, founder and CEO at promotional media startup Pranos, attributes most of his company’s recent bridge financing success to its existing traction. He thinks Pranos already having cash in the bank is a positive for its investors.
Astoria said: “I think the barrier for the investors to fund this bridge is that you have to prove that you are actually building the bridge. He added that a banker recently told him, “we can help you build a bridge, but we’re not trying to help you build a pier.”