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More investors, more problems

by Ana Lopez
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And apparently less money

In the midst of breaking records in 2021 financing activity, it was not unusual for startups to assemble rounds consisting of numerous small checks from a large number of companies and angel investors. But as said companies look for expansion financing, they’re realizing that more investors don’t always mean more money in the future.

Last year, FOMO was running high and investors seemingly did anything to get into rounds: taking a secondary stake instead of a primary stake, foregoing a board seat, writing a small check to get into a hot deal.

Many founders leaned on this, and how can you blame them? Investors wanted to put more money into their company and each investor brings their own added value and network. In theory, that seems like a good thing. But the benefits of increasing party rounds quickly dry up as the market turns — and many companies are starting to realize that.

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