Dropoff in venture capital funding triggers uptick in pre-emptive deals with investors desperate to back the hottest startups
Deals often come about when VCs want to double down on businesses that they believe are exciting, in buzzy sectors like AI.
Tom Mendoza, a partner at EQT Ventures, said there was a"clear flight to quality" and that the best rounds were getting done"fast and are competitive." In the absence of fresh opportunities the trend of multi-stage funds moving down the pipe into earlier stage rounds has become more prevalent, one Parisian venture capitalist said. The relative increase is also part of doubling down by large funds into the best companies with another London investor saying it was a case of"stuffing as much money into them as early as possible."
Valuations for pre-empted rounds are often competitive despite businesses having little to no major change in traction since their prior funding round, one Berlin-based VC told Insider.
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