As we’ve previously discussed, fundraising by startups remains well below its 2021 heydays. However, there continue to be signs of improvement. Compared to the same period in 2023, fundraising in the first ¾ of 2024 grew by 14% on a $ basis, though it fell by 10% on a # of deals basis. Both figures are likely undercounting due to a lag in reporting.
Looking Towards The Future
While the macroeconomic outcome is uncertain, there are steps founders can take to best position themselves. At Tau, we advise all our entrepreneurs to maintain at least six months of cash, though ideally one year. Expect that raising a new round will take at least three months. If you’re unsure of your ability to raise your next round, explore other options, including M&A and venture debt, to the extent available. Keep in mind that acquisitions are typically the result of long-standing conversations spanning multiple years. Engaging with potential buyers doesn’t prevent you from raising a successful round; on the contrary, understanding all your options increases your bargaining power and the likelihood of a better outcome. Finally, if you need to consider a down round, take it as an opportunity to clean up your cap table and position your company for future success.
