This Week in Startups Navigating startup funding market trends with Becki DeGraw | Wilson Sonsini Startup Legal Basics
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Aug 8, 2024 Becki DeGraw, a Partner at Wilson Sonsini with expertise in startup legal matters, joins to shed light on the current funding landscape. They dive into trends showing resilience among seed and Series A investments despite challenging conditions. Anti-dilution strategies are discussed, emphasizing their necessity for investor communication. Becki also shares insights on re-incentivizing management teams, navigating down rounds, and the critical importance of meticulous documentation during fundraising efforts to ensure transparency and successful governance.
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Current State of Startup Funding
- The startup funding market is currently "choppy" after a period of growth.
- Seed and Series A funding remain strong, driven by large AI deals.
Fundraising in a Down Market
- Ensure sufficient runway for fundraising, as deal cycles are now longer.
- Good companies can still secure funding, even in a down market.
Down Rounds and Anti-dilution
- Down rounds trigger anti-dilution provisions, adjusting preferred stock conversion rates.
- This doesn't give investors more shares but changes the common stock conversion ratio.