This Week in Startups Market Update and Trends w/ Becki DeGraw | Wilson Sonsini Startup Legal Basics
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Aug 28, 2025 Becki DeGraw, a Partner at Wilson Sonsini, specializes in advising startups on legal aspects of fundraising. In this engaging discussion, she breaks down why down rounds and structured deals are becoming the norm. Becki explains the 'pay-to-play' mechanism and its significance in securing participation from investors. She dives into the shifting M&A landscape and the strategies VCs are using to protect their investments amid talent shortages. Founders and investors alike will gain vital insights into the evolving startup market.
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Dry Powder Creates Deployment Pressure
- Venture funds raised massive pools in 2020-22 and then deployment slowed, leaving excess dry powder.
- That mismatch creates pressure now to deploy capital into deals with more structure.
Valuation Correction Fuels Structured Deals
- Many 2021-era companies haven't 'grown into' their inflated valuations, prompting corrections.
- That reality drives more down rounds and structured financings across the market.
Align Your Board Before Asking For A Bridge
- Prepare your board early and transparently when you need a bridge or pay-to-play to avoid surprise.
- Get insiders aligned before asking others to fund the bridge to improve chances of participation.
