like fintech the venture capital market goes, so does the venture capital market itself. Why? Because fintech investments have historically accounted for about a fifth of every venture capital dollar invested, at least in recent years. And after investments in fintech and venture capital itself went a bit bonkers last year, both are facing a new, more conservative reality.
For fintech startups, the downturn is real, and many start-ups – we learned this in our recent survey of fintech investors – are looking to avoid de novo rounds that include re-valuation (nobody wants increase one turn downwards!). Therefore, extension towers are an attractive option for many founders.
But as TechCrunch reported, while extension towers are popular even beyond fintech today, there are often more startups looking for the type of tower than there are. checks. So, to better understand the fintech extension cycle market today, we have another set of responses from a group of fintech venture capitalists we interviewed. Here is the question we asked:
How popular are extension towers? Do you see more companies choosing to raise extensions rather than new rounds compared to, say, 2021 and 2020?
Eight investors responded: Paul Stamas of General Atlantic, Alda Leu Dennis of the Initialized Capital, Michael Gilroy of Coatue, Justin Overdorf from Lightspeed Venture Partners, Addie Lerner from Avid Ventures, David Jegen of F-Prime Capital, Nik Milanovic of the Fintech Fund, Jay Ganatra of Infinity Ventures. (Their answers have been slightly edited for clarity.)
Michael Gilroy, General Partner and Co-Head of Fintech, Coatue