Venture funding is such a high stakes game. As a founder, it's crucial to be aware of the risks of taking early VC funding. For many it ends in zombie status!!

Either, your startup becomes a zombie:

- You take early money from a VC that immediately puts pressure on you to spend to reach growth targets required for follow on funding.

- When you inevitably miss the mark, investor appetite dries up. Your startup becomes a zombie.

- It has spent its initial investment, is now unable to get new investment and either hobbles along somehow in limbo with dwindling morale, shuts down or goes into harvest mode to return some capital to investors.

Or, your VC becomes a zombie itself:

- Your VC has been unable to make impressive returns for their institutional backers.

- They are still operating but are unable to raise any new capital. They can't invest in new nor provide follow on investment in existing portfolio companies.

- Instead they focus on managing existing portfolios before eventually winding down.

The two outcomes are of course related.

We can see the rise in Zombie VCs in the chart.

In 2023, 15,303 unique investors participated in at least one VC deal in the US.

But this year, that figure has dropped to 11,425 investors, according to PitchBook

Pitchbook article is here: https://lnkd.in/eVFE39CJ