In the Press
March 17, 2023

SVB's Fall Portends Even Leaner Times For Private Startups (Law360)

Venture-backed startups appear likely to cut costs in order to weather harsher market conditions following the failure of once-prominent lender Silicon Valley Bank, whose collapse leaves a void in an already lean funding environment for private companies. "If anything, it may make people even more aggressive on cutting costs to try to extend their runway," Technology partner Chris Shoff said to Law360. Because down rounds can erode a startup's morale or discourage investors, companies will often exhaust alternatives first. For instance, companies can raise capital through convertible-note sales that don't require performing a full business valuation, Shoff noted. Advisers to early-stage firms noted that the rise in down rounds began last year and has carried into 2023. "We're seeing more now than we were three to six months ago," Shoff said.