In the absence of an active exit market, many venture-backed companies will need to raise
capital in 2024. A challenging financing environment means they are more likely to
accept less favorable terms. In fact, in the third quarter of 2023, 17% of all venture financings
were “down rounds,” the highest figure in a decade according to Pitchbook.
In 2024, we expect to see additional bridge rounds, tranched financings, and down rounds, further
affecting valuations. We also expect to see more portfolio triage as venture managers examine their
existing positions against the backdrop of these additional incremental investments.
Overall, 2023 was a continuation of what we saw in 2022 and while, for many companies, “down is the
new flat,” the highest quality companies – albeit a lower number of them – are finding traction and
even seeing upticks in their valuations.
