In this episode of This Week in Startups, Jason Calacanis interviews Becki DeGraw, a partner at Wilson Sassini, about the current market dynamics affecting seed stage and Series A startups. They discuss the perfect storm of factors leading to the present conditions, including the influx of capital into funds during 2020-2022 and the subsequent slowdown in deal flow, particularly in later stages. They explore the reasons behind the massive fund sizes, the impact of protective provisions, and the increasing prevalence of down rounds and structured deals like pay-to-play scenarios. The conversation also covers the psychology of VCs, the lack of blockbuster exits, regulatory challenges to M&A for larger companies, and emerging trends like mid-market acquisitions and private equity firms targeting SaaS companies. Finally, they address investor protections in the face of talent wars, including preferred stock redemption clauses and preferred stockholder consent over acquirers.
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