weeks after lay off about 30% of staffMainStreet would raise another round of funding with a valuation of $200 million, sources tell businesstraverse.com.
The news is important in that main Streetthat helps other startups discover tax credits raised $60 million in March 2021 at a post-money valuation of $500 million† SignalFire led that round, which also included participation from the likes of Ashton Kutcher’s Sound Ventures and Tusk Venture Partners.
Sources say the downturn is because MainStreet is also pursuing a recapitalization, with older investors selling their holdings at a reduced valuation (yay, liquidity) with new ones coming in on friendlier terms. The combination of a fundraising and recapitalization indicates that the fintech may have lost the faith of its early investors, but wants more capital to continue its operations.
businesstraverse.com has reached out to the San Jose, California-based company for more information about this latest fundraiser and will update this post as and when we learn more.
The deal — which sources say is still in the works and not yet final — is another sobering example of current market conditions. For founders, recapitalization events are rarely good news, as investors leaving are a negative signal. The looming round also suggests that MainStreet was unable to land an extension round from its existing investors, so it had to settle for a smaller round. So the final valuation of the company is a mix of what a bit older investors who have known the company since launch think it’s worth, and what a new cadre of investors think it is today.
In early May, businesstraverse.com reported that the company had made the layoffs. At the time, CEO Doug Ludlow did not comment directly, but did speak about the move in a tweet†
In that tweet, Ludlow said MainStreet “has taken the difficult step of reorganizing and restructuring the company.” He did not say whether these cuts affected all teams in the company or whether executives were fired. He also didn’t say exactly how many workers were affected by the move.
“We believe there is a very high probability that today’s incredibly rough market will only get worse, and may continue for months, if not years,” Ludlow continued in his Twitter thread.
So MainStreet’s new listed value could be a sign of investors in need of cash, and yet another data point of tech startups experiencing valuation discounts. Earlier this month, TC’s Alex Wilhelm examined new data showing a spectrum of declines in the average valuation for startups (businesstraverse.com+ subscription required) that startups Map has insight into – thousands of deals from tens of thousands of companies – that matched current venture capitalist chatter that the value of startups has changed dramatically since the highs of 2021. To unknown persons, Carta is a unicorn whose software helps companies manage their dressing table.
MainStreet is backed by Shrug, Moxxie Ventures, Weekend Fund, Gradient Ventures and SV Angels. According to Crunchbasethe company has raised $64.7 million in known venture capital to date.
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