[kozikow]

I think what should be mentioned in the article is bridge rounds. I know various startups that have done it. In my feeling, at least half of the 38% would be explained by VCs raising bridge rounds for their existing portfolio companies.

Rather than come clean that all your valuations came down by 2-3x (the reality of what valuations are circulating on the market nowadays) just do things like raise convertible note with a cap of last round valuation and don't announce it on pitchbook/crunchbase.

It's not easy for VCs to just pause investing or invest in some other stuff than their "thesis" - some have agreements legally binding on what they would invest in and timeframes for spending the capital.

[jgalt212]

> don't announce it on pitchbook/crunchbase

Isn't the entire value of pitchbook that they get data that is not "announced"?

[rightbyte]

> In my feeling, at least half of the 38% would be explained by VCs raising bridge rounds for their existing portfolio companies.

Heh. That sounds like a sunk cost fallacy on the VCs end.

Either an investment is a good deal or not.

[smurda]

Only the companies in an investor’s portfolio that they truly believe in get a bridge - otherwise it’s a bridge to nowhere.

IMO bridge rounds aren’t driven by the investor’s fear of a markdown - they’re driven by the belief that the founder+team can figure it out and get to the next stage. When risking even more cash on a company that isn’t an obvious winner, you really have to believe in the team.

[hn_throwaway_99]

Early investors are in the same boat as founders: a down round would hurt them just as much.

So a bridge round isn't about "throwing good money after bad", it's about VCs still believing in the business and not wanting to have to sell another part of the company on the cheap.

[riffraff]

Not necessarily, a VC needs to show it's doing good business to raise money from investors, hiding your losses helps with that, in the short term.

[dgellow]

What are bridge rounds?

[remus]

A round of funding in between major rounds of funding, often in the form of more cash from existing investors.

https://learn.angellist.com/articles/bridge-round