February 7, 2023

Eureka News

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More investors, more problems

And apparently less money

Amid record-breaking funding activity in 2021, it wasn’t uncommon to see startups raising rounds consisting of numerous small checks from a large number of corporate and angel investors. But now, as said companies try to raise renewal financing, they’re realizing that more investors don’t always mean more future cash.

Last year, FOMO ramped up, and investors seemed to do anything to get in the way: take a secondary holding instead of a primary, forego a seat on the board, write a tiny check just to get into a hot deal come.

Many founders have let themselves into this, and how can you blame them? Investors wanted to put more money into their companies, and each investor brings their own value and network to the table. In theory, that looks like a good thing. But the benefits of party rounds quickly dry up as the market turns — and many companies are beginning to realize that.