In the spring of 2022, we announced there was a paradigm change in the venture capital marketplace. That is, the pendulum of company-friendly terms versus investor-friendly terms was moving rapidly towards investor-friendly terms and there would be downward pressure on valuations. As the public markets in tech had a major price correction last year, so it would follow that the private markets too would correct. Although partially true, the marketplace is more nuanced than it is typically described in the media. In fact, it has been a “tale of two cities.” While valuations have decreased for social media, consumer product goods, and many advertising revenue-based companies, the decrease in valuations has not been across the board. For entrepreneurs in AI, cyber security, and climate change technologies (thanks to the Inflation Reduction Act), it remains the “best of times” and valuation trends remain steady.
As in most things, context matters. For investors, it is an interesting time to invest in good companies with sustainable business models in the currently depressed sectors. In the hot sectors, it is a wonderful time to create new businesses and get well capitalized. At Mintz, we are especially attuned to the context of each transaction and can help guide you in this intriguing investment environment.
Apropos of the nuanced investment landscape, we lead off this newsletter with an excellent article on extension rounds for emerging companies. We follow with a piece regarding New York’s new program to provide matching investment funds for certain qualified early stage start-ups. And lastly, our company highlight is on Moolah Kicks, an exciting new company that is the first and only women’s basketball footwear brand with sneakers made to biomechanically fit female athletes (a perfect article to read in anticipation of March Madness).
Be sure to visit our website for emerging companies @ mintzedge.com, and please sign up here to receive email alerts when new articles are posted to MintzEdge. We thank you for your continuing support.
Be safe and be well,
Dan + Sam