Earlier this year, IVP general partner Tom Loverro declared that the post-pandemic economic slump is a thing of the past. For companies that have made it this far, he advises prioritizing growth over cost-cutting. However, there are still thousands of companies struggling to secure financing or stay afloat, according to Brian Hirsch, co-founder of Tribeca Venture Partners.

Tribeca Venture Partners, a firm established 13 years ago, has a unique late-stage investment strategy. Unlike typical growth funds, they invest in companies that are in the position of raising capital at a valuation the same or lower than their previous round. In these cases, existing investors are willing to offer additional funding, but they need a third party like Tribeca Ventures to assess the deal, Hirsch mentioned.

Venture capitalists are keen on supporting artificial intelligence (AI) companies at high valuations, but other sectors are facing challenges, according to Hirsch. The latest valuation data from Carta shows a significant discrepancy in the valuations of different companies at similar stages of development.

For non-AI startups, the fundraising environment is vastly different. Even with decent revenue growth, startups that raised a Series A round about 18 months ago might struggle to secure Series B funding. Hirsch compares founders of non-AI startups to high school students who didn’t get invited to the cool party – they may have a solid business, but it’s not getting the attention it deserves.

Carta’s data indicates that only 9% of Series A companies manage to secure Series B funding within two years, a considerable decrease from the previous 25%. Tribeca Ventures is stepping in to assist more established startups with high valuations in negotiating down rounds. These startups often have revenues exceeding $20 million and are growing steadily, but their valuations are out of sync with the current market.

“We’re still undergoing an unwinding process,” Hirsch remarked. “We believe there’s at least a couple more years of cleanup work ahead.”