This Week in Startups Fundraising hurdles and M&A slowdown with Becki DeGraw | Wilson Sonsini Startup Legal Basics
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Sep 5, 2024 Becki DeGraw, a partner at Wilson Sonsini, specializes in startup legal matters, particularly fundraising and M&A. In their discussion, she highlights the current fundraising landscape, marked by down rounds and investor expectations. Becki also delves into the slowdown in M&A activity, impacted by regulatory challenges and antitrust laws. She advocates for reform in M&A regulations to stimulate activity. Additionally, the importance of compliance and cybersecurity strategies for startups is emphasized, making it a must-listen for aspiring entrepreneurs.
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Fundraising Challenges
- The fundraising market has become more challenging, even for good companies.
- Later-stage companies face greater fundraising difficulties.
Penny Warrants
- Understand penny warrants: Investors use them to achieve a lower effective valuation while allowing companies to maintain a higher nominal valuation.
- They grant the right to buy additional shares at a very low price, effectively diluting other shareholders upon execution.
M&A Slowdown
- The M&A market is experiencing a significant chill, with deals unexpectedly falling apart late in the process.
- This uncertainty makes buyers hesitant and anxious, leading to renegotiations or deal cancellations even after significant investment.