On a recent episode of the Odd Lots podcast [1], they discussed an interesting phenomenon where hot startups won’t want to raise when markets are down, even if funding is available, because they don’t want to do a down round. Doing a down round marks the company to market and shows up as a materialized loss in the VC’s fund, whereas they can keep the old valuation if they don’t raise.
Coming from this side, I was surprised that Joe and Tracy were unaware of that phenomenon, especially Tracy given her background covering debt markets during periods of low liquidity.
[1] https://www.bloomberg.com/news/articles/2022-06-23/the-behin...