{"id":110354,"date":"2024-06-10T07:44:40","date_gmt":"2024-06-10T11:44:40","guid":{"rendered":"https:\/\/www.bu.edu\/law\/?post_type=bu-article&#038;p=110354"},"modified":"2024-06-21T16:05:58","modified_gmt":"2024-06-21T20:05:58","slug":"a-way-up-and-out","status":"publish","type":"bu-article","link":"https:\/\/www.bu.edu\/law\/record\/articles\/2024\/a-way-up-and-out\/","title":{"rendered":"Looking for a Way Up and Out"},"content":{"rendered":"\t<div class=\"wp-block-editorial-leadin record-block-editorial-leadin is-style-side-by-side has-media has-wider has-flip has-media-focus-center-middle\">\n\t\t<div class=\"container-lockup\">\n\n\t\t\t<div class=\"wp-block-leadin-media\">\n\t\t\t\t\n\t\t\t\t<img width=\"630\" height=\"810\" src=\"\/law\/files\/2024\/06\/BU__Full-page_02_Color.png\" class=\"\" alt=\"Illustration of different people walking through doorways marked \u201cENTER\u201d and \u201cEXIT\u201d\" loading=\"lazy\" srcset=\"https:\/\/www.bu.edu\/law\/files\/2024\/06\/BU__Full-page_02_Color.png 630w, https:\/\/www.bu.edu\/law\/files\/2024\/06\/BU__Full-page_02_Color-495x636.png 495w, https:\/\/www.bu.edu\/law\/files\/2024\/06\/BU__Full-page_02_Color-530x682.png 530w, https:\/\/www.bu.edu\/law\/files\/2024\/06\/BU__Full-page_02_Color-268x344.png 268w, https:\/\/www.bu.edu\/law\/files\/2024\/06\/BU__Full-page_02_Color-411x529.png 411w, https:\/\/www.bu.edu\/law\/files\/2024\/06\/BU__Full-page_02_Color-535x688.png 535w\" sizes=\"(max-width: 630px) 100vw, 630px\" \/>\n\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t\t\t<p class=\"wp-block-editorial-leadin-caption wp-prepress-component-caption\">Illustrations by Michelle Mildenberg<\/p>\n\t\t\t\n\n\t\t\t\n\t\t\t\t<div class=\"container-words-outer\">\n\n\t\t\t\t\t\n\t\t\t\t\t<div class=\"container-words-inner\">\n\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"wp-prepress-tag\">Transactional Law<\/span>\n\t\t\t\t\t\t\t\t<h1 class=\"head\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\tLooking for a Way Up and Out\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/h1>\n\t\t\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t<h4 class=\"deck\">Venture capital investment has trended down since its peak a few years ago, but faculty and alumni say the cyclical nature of the market means happier days are ahead.<\/h4>\n\t\t\t\t\t\t\n\t\t\t\t\t<\/div>\n\n\t\t\t\t<\/div>\n\n\t\t\t\n\t\t<\/div>\n\n\t\t\n\t<\/div>\n\n\t\n<div class=\"wp-prepress-component-metabar record-prepress-layout-metabar\">\n\t<div class=\"wp-prepress-component-metabar-wrapper\">\n\t\t\t\t\t<div class=\"wp-prepress-component-metabar-date\">June 10, 2024<\/div>\n\t\t\n\t\t\t\t<div class=\"wp-prepress-component-metabar-credits\">\n\t\t\t\t\t\t\t\t<ul data-credit-type=\"By\">\n\t\t\t\t\t\t<li><a href=\"https:\/\/www.bu.edu\/law\/record\/authors\/rebecca-beyer\/\">Rebecca Beyer<\/a><\/li>\n\t\t\t\t\t<\/ul>\n\t\t\t\t\t\t\t<\/div>\n\t\t<div class=\"wp-prepress-component-metabar-share js-bu-prepress-share-tools\">\n\t\t\t<span class=\"icon-twitter\"><span>Twitter<\/span><\/span>\n\t\t\t<span class=\"icon-facebook\"><span>Facebook<\/span><\/span>\n\t\t\t<span class=\"icon-action\"><\/span>\n\t\t<\/div>\n\t<\/div>\n<\/div>\n\n\t\n\n\n<p class=\"has-drop-cap\">For several years at <a href=\"http:\/\/www.hollandhart.com\" target=\"_blank\" rel=\"noreferrer noopener\">Holland &amp; Hart<\/a>, the Denver law firm where <a href=\"https:\/\/www.linkedin.com\/in\/lauren-schoeffler\/\" target=\"_blank\" rel=\"noreferrer noopener\">Lauren Schoeffler (\u201913)<\/a> is a partner working on venture capital financing and other corporate matters, there was an entire class of associates who had never handled a \u201cdown round,\u201d where the value of a business declines from the previous investment period.<\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"alignright size-large\"><img loading=\"lazy\" width=\"859\" height=\"1024\" src=\"\/law\/files\/2024\/06\/LAUREN_SCHOEFFLER-CMYK-vs3-859x1024.png\" alt=\"Illustration of Lauren Schoeffler\" class=\"wp-image-110375\" srcset=\"https:\/\/www.bu.edu\/law\/files\/2024\/06\/LAUREN_SCHOEFFLER-CMYK-vs3-859x1024.png 859w, https:\/\/www.bu.edu\/law\/files\/2024\/06\/LAUREN_SCHOEFFLER-CMYK-vs3-533x636.png 533w, https:\/\/www.bu.edu\/law\/files\/2024\/06\/LAUREN_SCHOEFFLER-CMYK-vs3-768x916.png 768w, https:\/\/www.bu.edu\/law\/files\/2024\/06\/LAUREN_SCHOEFFLER-CMYK-vs3-1288x1536.png 1288w, https:\/\/www.bu.edu\/law\/files\/2024\/06\/LAUREN_SCHOEFFLER-CMYK-vs3-693x826.png 693w, https:\/\/www.bu.edu\/law\/files\/2024\/06\/LAUREN_SCHOEFFLER-CMYK-vs3-572x682.png 572w, https:\/\/www.bu.edu\/law\/files\/2024\/06\/LAUREN_SCHOEFFLER-CMYK-vs3-866x1032.png 866w, https:\/\/www.bu.edu\/law\/files\/2024\/06\/LAUREN_SCHOEFFLER-CMYK-vs3-1108x1321.png 1108w, https:\/\/www.bu.edu\/law\/files\/2024\/06\/LAUREN_SCHOEFFLER-CMYK-vs3-289x344.png 289w, https:\/\/www.bu.edu\/law\/files\/2024\/06\/LAUREN_SCHOEFFLER-CMYK-vs3-444x529.png 444w, https:\/\/www.bu.edu\/law\/files\/2024\/06\/LAUREN_SCHOEFFLER-CMYK-vs3-577x688.png 577w, https:\/\/www.bu.edu\/law\/files\/2024\/06\/LAUREN_SCHOEFFLER-CMYK-vs3-887x1058.png 887w, https:\/\/www.bu.edu\/law\/files\/2024\/06\/LAUREN_SCHOEFFLER-CMYK-vs3-1144x1364.png 1144w, https:\/\/www.bu.edu\/law\/files\/2024\/06\/LAUREN_SCHOEFFLER-CMYK-vs3-839x1000.png 839w, https:\/\/www.bu.edu\/law\/files\/2024\/06\/LAUREN_SCHOEFFLER-CMYK-vs3.png 1342w\" sizes=\"(max-width: 859px) 100vw, 859px\" \/><figcaption>Lauren Schoeffler (\u201913)<\/figcaption><\/figure><\/div>\n\n\n\n<p>\u201cMy colleague and I were joking about it recently,\u201d says Schoeffler. \u201cWe had a whole generation of people who only knew good times.\u201d<\/p>\n\n\n\n<p>Not anymore.<\/p>\n\n\n\n<p>Since its peak in 2021, almost everything about the venture capital market has been trending down <em>except<\/em> down rounds. Those are up. So are painful pay-to-play deals, where investors must provide additional funding or lose some of their ownership rights. Also up: initial public offerings and acquisitions in which a company is valued below everyone\u2019s original expectations. Schoeffler calls those \u201csad exits.\u201d<\/p>\n\n\n\n<p>\u201cGood exits were hard to come by for companies in 2023,\u201d she says. \u201cI\u2019ve become something of a specialist in the not-so-fun exits where everyone but the buyer is disappointed.\u201d<\/p>\n\n\n\n<p>Schoeffler\u2019s experience isn\u2019t unique. After years of low interest rates, when start-ups notched higher and higher valuations from investors looking for a way to generate big returns on the Next Big Thing\u2014including during the pandemic\u2014deals began to slow and sour around the end of 2022. BU Law alumni and faculty who work with emerging companies say most investors and founders are still trying to find their footing.<\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"alignleft size-large\"><img loading=\"lazy\" width=\"859\" height=\"1024\" src=\"\/law\/files\/2024\/06\/PRITHVI_TANWAR-CMYK-859x1024.png\" alt=\"Illustration of Prithvi Tanwar\" class=\"wp-image-110377\" srcset=\"https:\/\/www.bu.edu\/law\/files\/2024\/06\/PRITHVI_TANWAR-CMYK-859x1024.png 859w, https:\/\/www.bu.edu\/law\/files\/2024\/06\/PRITHVI_TANWAR-CMYK-533x636.png 533w, https:\/\/www.bu.edu\/law\/files\/2024\/06\/PRITHVI_TANWAR-CMYK-768x916.png 768w, https:\/\/www.bu.edu\/law\/files\/2024\/06\/PRITHVI_TANWAR-CMYK-1288x1536.png 1288w, https:\/\/www.bu.edu\/law\/files\/2024\/06\/PRITHVI_TANWAR-CMYK-693x826.png 693w, https:\/\/www.bu.edu\/law\/files\/2024\/06\/PRITHVI_TANWAR-CMYK-572x682.png 572w, https:\/\/www.bu.edu\/law\/files\/2024\/06\/PRITHVI_TANWAR-CMYK-866x1032.png 866w, https:\/\/www.bu.edu\/law\/files\/2024\/06\/PRITHVI_TANWAR-CMYK-1108x1321.png 1108w, https:\/\/www.bu.edu\/law\/files\/2024\/06\/PRITHVI_TANWAR-CMYK-289x344.png 289w, https:\/\/www.bu.edu\/law\/files\/2024\/06\/PRITHVI_TANWAR-CMYK-444x529.png 444w, https:\/\/www.bu.edu\/law\/files\/2024\/06\/PRITHVI_TANWAR-CMYK-577x688.png 577w, https:\/\/www.bu.edu\/law\/files\/2024\/06\/PRITHVI_TANWAR-CMYK-887x1058.png 887w, https:\/\/www.bu.edu\/law\/files\/2024\/06\/PRITHVI_TANWAR-CMYK-1144x1364.png 1144w, https:\/\/www.bu.edu\/law\/files\/2024\/06\/PRITHVI_TANWAR-CMYK-839x1000.png 839w, https:\/\/www.bu.edu\/law\/files\/2024\/06\/PRITHVI_TANWAR-CMYK.png 1342w\" sizes=\"(max-width: 859px) 100vw, 859px\" \/><figcaption>Prithvi Tanwar (\u201908)<\/figcaption><\/figure><\/div>\n\n\n\n<p>Eventually, they will. That\u2019s the nature of the markets, the practitioners say. <a href=\"https:\/\/www.linkedin.com\/in\/prithvitanwar\/\" target=\"_blank\" rel=\"noreferrer noopener\">Prithvi Tanwar (\u201908)<\/a>, a partner at <a href=\"https:\/\/www.polsinelli.com\/\" target=\"_blank\" rel=\"noreferrer noopener\">Polsinelli<\/a> in Boston, points out that things began to improve last year: in the second quarter, there were more flat rounds\u2014valuations stayed stable from one funding round to the next\u2014than in the previous quarter, and \u201cglimmers of normalcy\u201d even appeared in the third quarter.<\/p>\n\n\n\n<p>\u201cFlat rounds were the new up round,\u201d Tanwar jokes.<\/p>\n\n\n\n<h2><strong>\u201cWild Time\u201d<\/strong><\/h2>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"alignright size-large\"><img loading=\"lazy\" width=\"859\" height=\"1024\" src=\"\/law\/files\/2024\/06\/TONY_LEWIS-CMYK-859x1024.png\" alt=\"Illustration of Tony Lewis\" class=\"wp-image-110368\" srcset=\"https:\/\/www.bu.edu\/law\/files\/2024\/06\/TONY_LEWIS-CMYK-859x1024.png 859w, https:\/\/www.bu.edu\/law\/files\/2024\/06\/TONY_LEWIS-CMYK-533x636.png 533w, https:\/\/www.bu.edu\/law\/files\/2024\/06\/TONY_LEWIS-CMYK-768x916.png 768w, https:\/\/www.bu.edu\/law\/files\/2024\/06\/TONY_LEWIS-CMYK-1288x1536.png 1288w, https:\/\/www.bu.edu\/law\/files\/2024\/06\/TONY_LEWIS-CMYK-693x826.png 693w, https:\/\/www.bu.edu\/law\/files\/2024\/06\/TONY_LEWIS-CMYK-572x682.png 572w, https:\/\/www.bu.edu\/law\/files\/2024\/06\/TONY_LEWIS-CMYK-866x1032.png 866w, https:\/\/www.bu.edu\/law\/files\/2024\/06\/TONY_LEWIS-CMYK-1108x1321.png 1108w, https:\/\/www.bu.edu\/law\/files\/2024\/06\/TONY_LEWIS-CMYK-289x344.png 289w, https:\/\/www.bu.edu\/law\/files\/2024\/06\/TONY_LEWIS-CMYK-444x529.png 444w, https:\/\/www.bu.edu\/law\/files\/2024\/06\/TONY_LEWIS-CMYK-577x688.png 577w, https:\/\/www.bu.edu\/law\/files\/2024\/06\/TONY_LEWIS-CMYK-887x1058.png 887w, https:\/\/www.bu.edu\/law\/files\/2024\/06\/TONY_LEWIS-CMYK-1144x1364.png 1144w, https:\/\/www.bu.edu\/law\/files\/2024\/06\/TONY_LEWIS-CMYK-839x1000.png 839w, https:\/\/www.bu.edu\/law\/files\/2024\/06\/TONY_LEWIS-CMYK.png 1342w\" sizes=\"(max-width: 859px) 100vw, 859px\" \/><figcaption>Tony Lewis (\u201912)<\/figcaption><\/figure><\/div>\n\n\n\n<p>Despite concerns of a recession and the fact that millions of people lost their jobs, the pandemic turned out to be a boon for much of the economy, including venture capital. Interest rates were low, so investors were looking for profitable places to put their money and often found themselves competing to invest in promising companies, causing valuations to skyrocket. According to <a href=\"https:\/\/www.linkedin.com\/in\/lewisanthonym\/\" target=\"_blank\" rel=\"noreferrer noopener\">Tony Lewis (\u201912)<\/a>, cofounder of <a href=\"https:\/\/www.aumni.fund\/\" target=\"_blank\" rel=\"noreferrer noopener\">Aumni<\/a>\u2014a data analytics company that analyzes the venture capital industry and was recently acquired by JP Morgan\u2014valuations around the first quarter of 2022 were up 100 percent over the prior year.<\/p>\n\n\n\n<p>\u201cThere was more supply of cash than quality companies,\u201d Lewis explains. \u201cValuations just went up so fast.\u201d<\/p>\n\n\n\n<p>Schoeffler, who had previously worked in biotech financing, moved to <a href=\"https:\/\/www.hollandhart.com\/\" target=\"_blank\" rel=\"noreferrer noopener\">Holland &amp; Hart<\/a> in 2020 to work in the firm\u2019s consumer packaged goods practice. When the pandemic hit, \u201ceveryone thought it was going to be a tough time,\u201d she says. \u201cBut, at least in my industry, things were going crazy. Money was flooding in. It was a wild time.\u201d<\/p>\n\n\n\n<p>A variety of factors contributed to the post-pandemic slowdown in the market, including rising interest rates\u2014which made safer investments more attractive\u2014and uncertainty in general about the markets and a war-torn world. There was also just a sense among investors that things couldn\u2019t keep growing and growing and growing.<\/p>\n\n\n\n<p>\u201cPeople realized they were behaving irrationally based<br>on factors that were not going to continue indefinitely,\u201d<br>Tanwar says.<\/p>\n\n\n\n<p>Lewis says he doesn\u2019t like to use words like \u201cbubble\u201d; nevertheless, he agrees, \u201ca lot of people called it a bubble.\u201d<\/p>\n\n\n\n<p>By last year, any bubble there might have been had burst. Valuations for Series B and Series C financing rounds were down 60 percent or more in the first half of 2023, according to Aumni. The number of deals was down 85 percent from the prior peak, and the total capital raised was down 24 percent from the final six months of 2022. One of the biggest deals of 2023 was actually a down round: in April 2023, Crunchbase credited Stripe\u2019s $6.5 billion round with helping prop up the first quarter of the year, but the massive deal actually came with a valuation ($50 billion) almost 50 percent lower than two years prior ($95 billion).<\/p>\n\n\n\n<p>For founders, the question now is how to make the money they have last longer, Lewis says.<\/p>\n\n\n\n<p>\u201cMany founders were betting that the market would bounce back to those high-water marks on a faster timeline,\u201d he adds. \u201cI don\u2019t think that\u2019s coming.\u201d<\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"alignleft size-large\"><img loading=\"lazy\" width=\"859\" height=\"1024\" src=\"\/law\/files\/2024\/06\/TOM_PATTEN-CMYK-859x1024.png\" alt=\"Illustration of Tom Patten\" class=\"wp-image-110369\" srcset=\"https:\/\/www.bu.edu\/law\/files\/2024\/06\/TOM_PATTEN-CMYK-859x1024.png 859w, https:\/\/www.bu.edu\/law\/files\/2024\/06\/TOM_PATTEN-CMYK-533x636.png 533w, https:\/\/www.bu.edu\/law\/files\/2024\/06\/TOM_PATTEN-CMYK-768x916.png 768w, https:\/\/www.bu.edu\/law\/files\/2024\/06\/TOM_PATTEN-CMYK-1288x1536.png 1288w, https:\/\/www.bu.edu\/law\/files\/2024\/06\/TOM_PATTEN-CMYK-693x826.png 693w, https:\/\/www.bu.edu\/law\/files\/2024\/06\/TOM_PATTEN-CMYK-572x682.png 572w, https:\/\/www.bu.edu\/law\/files\/2024\/06\/TOM_PATTEN-CMYK-866x1032.png 866w, https:\/\/www.bu.edu\/law\/files\/2024\/06\/TOM_PATTEN-CMYK-1108x1321.png 1108w, https:\/\/www.bu.edu\/law\/files\/2024\/06\/TOM_PATTEN-CMYK-289x344.png 289w, https:\/\/www.bu.edu\/law\/files\/2024\/06\/TOM_PATTEN-CMYK-444x529.png 444w, https:\/\/www.bu.edu\/law\/files\/2024\/06\/TOM_PATTEN-CMYK-577x688.png 577w, https:\/\/www.bu.edu\/law\/files\/2024\/06\/TOM_PATTEN-CMYK-887x1058.png 887w, https:\/\/www.bu.edu\/law\/files\/2024\/06\/TOM_PATTEN-CMYK-1144x1364.png 1144w, https:\/\/www.bu.edu\/law\/files\/2024\/06\/TOM_PATTEN-CMYK-839x1000.png 839w, https:\/\/www.bu.edu\/law\/files\/2024\/06\/TOM_PATTEN-CMYK.png 1342w\" sizes=\"(max-width: 859px) 100vw, 859px\" \/><figcaption>Tom Patten<\/figcaption><\/figure><\/div>\n\n\n\n<p><a href=\"https:\/\/www.bu.edu\/law\/profile\/tom-patten\/\" target=\"_blank\" rel=\"noreferrer noopener\">Tom Patten<\/a>, a lecturer and clinical instructor in the Venture &amp; Finance group within the <a href=\"https:\/\/www.bu.edu\/law\/experiential-learning\/clinics\/bu-mit-student-innovations-law-clinic\/\" target=\"_blank\" rel=\"noreferrer noopener\">BU\/MIT Student Innovations Law Clinic<\/a>, puts it this way:<\/p>\n\n\n\n<p>\u201cWhen that interest rate goes up, investments like treasury bonds become more appealing\u2014now [founders are] competing against those safer investments,\u201d he says.<\/p>\n\n\n\n<p>Indeed, Schoeffler and Tanwar say founders are facing an environment of investors prioritizing the fundamentals of running a business over the potential for future growth.<\/p>\n\n\n\n<p>\u201cIt was almost like something flipped,\u201d Tanwar says. \u201cThe focus went from acquiring scale to becoming more capitally conservative\u2014that\u2019s almost diametrically opposed to the message a few months earlier, which was \u2018Why aren\u2019t you spending my money? Why aren\u2019t you hiring?\u2019\u201d<\/p>\n\n\n\n<p>The fourth quarter of 2022, he adds, was \u201cthe season of the RIF [reduction in force].\u201d<\/p>\n\n\n\n<p>Schoeffler agrees. Company founders are often driven by ideas. But ideas aren\u2019t enough in the current environment.<\/p>\n\n\n\n<p>\u201cA lot of founders have had to learn how to run a business in the past year or so,\u201d she says. \u201cFunds are not\u2014at least in the near future\u2014going to be giving money on a prospect, a hope, a dream. They want to see real value.\u201d<\/p>\n\n\n\n<h2><strong>Market Cycles<\/strong><\/h2>\n\n\n\n<p>Of course, all markets experience ups and downs, including devastating and long-lasting drops like the one that followed the financial crisis of 2008, the year Tanwar graduated from BU Law.<\/p>\n\n\n\n<p>\u201cIt was the deep freeze,\u201d he remembers. \u201cThere was no money moving around.\u201d<\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"alignright size-large\"><img loading=\"lazy\" width=\"859\" height=\"1024\" src=\"\/law\/files\/2024\/06\/DAVID_LE-CMYK-859x1024.png\" alt=\"Illustration of David Le\" class=\"wp-image-110371\" srcset=\"https:\/\/www.bu.edu\/law\/files\/2024\/06\/DAVID_LE-CMYK-859x1024.png 859w, https:\/\/www.bu.edu\/law\/files\/2024\/06\/DAVID_LE-CMYK-533x636.png 533w, https:\/\/www.bu.edu\/law\/files\/2024\/06\/DAVID_LE-CMYK-768x916.png 768w, https:\/\/www.bu.edu\/law\/files\/2024\/06\/DAVID_LE-CMYK-1288x1536.png 1288w, https:\/\/www.bu.edu\/law\/files\/2024\/06\/DAVID_LE-CMYK-693x826.png 693w, https:\/\/www.bu.edu\/law\/files\/2024\/06\/DAVID_LE-CMYK-572x682.png 572w, https:\/\/www.bu.edu\/law\/files\/2024\/06\/DAVID_LE-CMYK-866x1032.png 866w, https:\/\/www.bu.edu\/law\/files\/2024\/06\/DAVID_LE-CMYK-1108x1321.png 1108w, https:\/\/www.bu.edu\/law\/files\/2024\/06\/DAVID_LE-CMYK-289x344.png 289w, https:\/\/www.bu.edu\/law\/files\/2024\/06\/DAVID_LE-CMYK-444x529.png 444w, https:\/\/www.bu.edu\/law\/files\/2024\/06\/DAVID_LE-CMYK-577x688.png 577w, https:\/\/www.bu.edu\/law\/files\/2024\/06\/DAVID_LE-CMYK-887x1058.png 887w, https:\/\/www.bu.edu\/law\/files\/2024\/06\/DAVID_LE-CMYK-1144x1364.png 1144w, https:\/\/www.bu.edu\/law\/files\/2024\/06\/DAVID_LE-CMYK-839x1000.png 839w, https:\/\/www.bu.edu\/law\/files\/2024\/06\/DAVID_LE-CMYK.png 1342w\" sizes=\"(max-width: 859px) 100vw, 859px\" \/><figcaption>David Le (\u201907)<\/figcaption><\/figure><\/div>\n\n\n\n<p><a href=\"https:\/\/www.linkedin.com\/in\/david-v-le\/\" target=\"_blank\" rel=\"noreferrer noopener\">David Le (\u201907)<\/a> also experienced the Great Recession as a young attorney.<\/p>\n\n\n\n<p>\u201cThat was very, very hard for many people and businesses,\u201d he says. \u201cAnd, at the same time, there are corrections that happen on a periodic basis, for better or worse. These things can be very cyclical.\u201d<\/p>\n\n\n\n<p>Le has worked on all sides of the venture capital table. He began his career at Pillsbury in its emerging companies practice; led mergers and acquisitions at Electronic Arts; then joined Lyft to build out its corporate and commercial legal teams, eventually leading the rideshare app\u2019s $2.3 billion IPO in 2019. He also has served as an angel investor and start-up advisor himself and now advises portfolio companies as operating partner at <a href=\"https:\/\/www.autotechvc.com\/\" target=\"_blank\" rel=\"noreferrer noopener\">Autotech Ventures<\/a>, a VC firm that seeks to solve the world\u2019s transportation and logistics challenges with technology.<\/p>\n\n\n\n<div class=\"wp-block-bu-pullquote record-block-bu-pullquote is-style-pop has-quaternary-theme\"><div class=\"wp-block-bu-pullquote-inner\"><blockquote><div class=\"container-lockup\"><div class=\"container-icon-outer\"><div class=\"container-icon-inner\"><\/div><\/div><div class=\"container-text\"><hr\/><div class=\"quote-sizing\">\u201cEvery wildfire is followed by fresh growth.\u201d<\/div><footer class=\"caption\">Prithvi Tanwar (\u201908)<\/footer><hr\/><\/div><\/div><\/blockquote><\/div><\/div>\n\n\n\n<p>For many years, he says, the attitude of some founders and investors was \u201cgrowth at all costs.\u201d<\/p>\n\n\n\n<p>\u201cNow if you ask investors, \u2018Do you value growth or profitability?\u2019 they just say: \u2018Yes,\u2019\u201d he says. \u201cThe free flow of capital has turned off.\u201d<\/p>\n\n\n\n<p>Instead, investors are being more cautious with their deployable funds and demanding answers to hard questions.<\/p>\n\n\n\n<p>\u201cDeals that we used to do in four or five weeks now take 10 or 12 weeks,\u201d Tanwar says. \u201cThere is a ton more diligence, a ton more fixation on risk.\u201d<\/p>\n\n\n\n<h2><strong>Value over Valuation<\/strong><\/h2>\n\n\n\n<p>Despite the pain for particular people who are unsuccessful in seeking capital, down markets can have positive effects, too, Tanwar says.<\/p>\n\n\n\n<p>\u201cEvery wildfire is followed by fresh growth,\u201d he says. \u201cWhen the economy crashes and there are layoffs, there is a massive amount of uncertainty. But, in all of that, some really smart people are now given the opportunity to think about building things for themselves.\u201d<\/p>\n\n\n\n<p>Also, when investors prioritize businesses that are focused on fundamentals, genuinely valuable companies have a better chance of success.<\/p>\n\n\n\n<p>\u201cSlowdowns can be a positive,\u201d Tanwar explains. \u201cThey can separate valuable products from people who just raise a lot<br>of capital.\u201d<\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"alignright size-large\"><img loading=\"lazy\" width=\"859\" height=\"1024\" src=\"\/law\/files\/2024\/06\/VIVIAN_ETTER-CMYK-vs6-859x1024.png\" alt=\"Illustration of Vivian Etter\" class=\"wp-image-110373\" srcset=\"https:\/\/www.bu.edu\/law\/files\/2024\/06\/VIVIAN_ETTER-CMYK-vs6-859x1024.png 859w, https:\/\/www.bu.edu\/law\/files\/2024\/06\/VIVIAN_ETTER-CMYK-vs6-533x636.png 533w, https:\/\/www.bu.edu\/law\/files\/2024\/06\/VIVIAN_ETTER-CMYK-vs6-768x916.png 768w, https:\/\/www.bu.edu\/law\/files\/2024\/06\/VIVIAN_ETTER-CMYK-vs6-1288x1536.png 1288w, https:\/\/www.bu.edu\/law\/files\/2024\/06\/VIVIAN_ETTER-CMYK-vs6-693x826.png 693w, https:\/\/www.bu.edu\/law\/files\/2024\/06\/VIVIAN_ETTER-CMYK-vs6-572x682.png 572w, https:\/\/www.bu.edu\/law\/files\/2024\/06\/VIVIAN_ETTER-CMYK-vs6-866x1032.png 866w, https:\/\/www.bu.edu\/law\/files\/2024\/06\/VIVIAN_ETTER-CMYK-vs6-1108x1321.png 1108w, https:\/\/www.bu.edu\/law\/files\/2024\/06\/VIVIAN_ETTER-CMYK-vs6-289x344.png 289w, https:\/\/www.bu.edu\/law\/files\/2024\/06\/VIVIAN_ETTER-CMYK-vs6-444x529.png 444w, https:\/\/www.bu.edu\/law\/files\/2024\/06\/VIVIAN_ETTER-CMYK-vs6-577x688.png 577w, https:\/\/www.bu.edu\/law\/files\/2024\/06\/VIVIAN_ETTER-CMYK-vs6-887x1058.png 887w, https:\/\/www.bu.edu\/law\/files\/2024\/06\/VIVIAN_ETTER-CMYK-vs6-1144x1364.png 1144w, https:\/\/www.bu.edu\/law\/files\/2024\/06\/VIVIAN_ETTER-CMYK-vs6-839x1000.png 839w, https:\/\/www.bu.edu\/law\/files\/2024\/06\/VIVIAN_ETTER-CMYK-vs6.png 1342w\" sizes=\"(max-width: 859px) 100vw, 859px\" \/><figcaption>Vivian Etter<\/figcaption><\/figure><\/div>\n\n\n\n<p><a rel=\"noreferrer noopener\" href=\"https:\/\/www.bu.edu\/law\/profile\/vivian-etter\/\" target=\"_blank\">Vivian Etter<\/a> is a lecturer and clinical instructor who heads the Venture &amp; Finance group in the BU\/MIT clinic. She points out that venture capital financing is extremely rare no matter how the market is doing\u2014less than one percent of companies receive funds from VCs in a given year, according to sources like the Kauffman Foundation, a nonprofit that supports entrepreneurship and diversity in the venture capital field.<\/p>\n\n\n\n<p>\u201cWe get approached as though VC funding were the norm, when statistically, it\u2019s more of an outlier,\u201d she says. \u201cFunders are looking for that sexier product\u2014it\u2019s really about something that\u2019s innovative and unique and can be scaled up well.\u201d<\/p>\n\n\n\n<p>But even in down markets, good ideas\u2014or the trendiest ones\u2014will still attract investors. For now, all VC roads lead to artificial intelligence (AI). According to Aumni\u2019s report, the median post-money valuation among AI-related companies was higher than software companies generally in the first half of 2023. \u201cAI has experienced a massive upswing,\u201d Tanwar says. \u201cIt\u2019s really countercultural in terms of the broader patterns of VCs. You have funders really pushing for more revenue discipline, and, on the flip side, they are pouring money into these AI companies that have very little to show so far.\u201d<\/p>\n\n\n\n<p>(Case in point: Schoeffler says she represents a fund that is looking to invest in \u201canything AI-related.\u201d)<\/p>\n\n\n\n<p>Despite the challenges of the current market, practitioners say working with emerging companies is a reward in and of itself.<\/p>\n\n\n\n<p>Le says he has spent his career trying to be \u201cin the room\u201d where decisions are made about what to fund and why. That quest led him to his current role at Autotech Ventures.<\/p>\n\n\n\n<p>\u201cIf you\u2019re able to identify an idea that might disrupt an industry, that might change the world\u2014that\u2019s pretty exciting,\u201d he says. \u201cHow do you filter for that?\u201d<\/p>\n\n\n\n<p>Patten says he loves his work in the BU\/MIT Student Innovations Law Clinic because \u201cyou have no idea what\u2019s going to come in your door that day.\u201d<\/p>\n\n\n\n<p class=\"is-style-end-of-article\">Founders are generally \u201cwildly passionate about what they are doing\u2014they see a need in society that they want to correct and participate in,\u201d he says. \u201cWorking with that type of person can be really exciting.\u201d&nbsp;<\/p>\n\n\n\n\n\n<p><\/p>\n","protected":false},"excerpt":{"rendered":"<p>For several years at Holland &#038; Hart, the Denver law firm where Lauren Schoeffler (\u201913) is a partner working on venture capital financing and other corporate matters, there was an entire class of associates who had never handled a \u201cdown round,\u201d where the value of a business declines from the previous investment period. <\/p>\n","protected":false},"author":19416,"featured_media":110362,"comment_status":"closed","ping_status":"closed","template":"","meta":{"bu_prepress_billboard":"{\"post_id\":110380,\"hed\":\"From 1L to Founder\",\"dek\":\"Next Article\",\"class\":\"wp-block-editorial-billboard record-block-editorial-billboard is-style-half-photo has-light-overlay has-media\",\"backgroundId\":\"110635\",\"backgroundUrl\":\"\\\/law\\\/files\\\/2024\\\/06\\\/24-1026-LAWZENG-001A-1-700x456.jpg\",\"backgroundType\":\"image\",\"backgroundOpacity\":\"100\"}","_bu_prepress_primary_term":"Transactional Law","_bu_prepress_primary_term_manual":""},"tags":[2330,643,1764,4256,1282],"bu-publication":[3742],"record-article-category":[4135,3786],"record-topic":[4292],"bu_edition":[4317],"media_type":[],"_links":{"self":[{"href":"https:\/\/www.bu.edu\/law\/wp-json\/wp\/v2\/bu-article\/110354"}],"collection":[{"href":"https:\/\/www.bu.edu\/law\/wp-json\/wp\/v2\/bu-article"}],"about":[{"href":"https:\/\/www.bu.edu\/law\/wp-json\/wp\/v2\/types\/bu-article"}],"author":[{"embeddable":true,"href":"https:\/\/www.bu.edu\/law\/wp-json\/wp\/v2\/users\/19416"}],"replies":[{"embeddable":true,"href":"https:\/\/www.bu.edu\/law\/wp-json\/wp\/v2\/comments?post=110354"}],"version-history":[{"count":18,"href":"https:\/\/www.bu.edu\/law\/wp-json\/wp\/v2\/bu-article\/110354\/revisions"}],"predecessor-version":[{"id":110799,"href":"https:\/\/www.bu.edu\/law\/wp-json\/wp\/v2\/bu-article\/110354\/revisions\/110799"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.bu.edu\/law\/wp-json\/wp\/v2\/media\/110362"}],"wp:attachment":[{"href":"https:\/\/www.bu.edu\/law\/wp-json\/wp\/v2\/media?parent=110354"}],"wp:term":[{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.bu.edu\/law\/wp-json\/wp\/v2\/tags?post=110354"},{"taxonomy":"bu-publication","embeddable":true,"href":"https:\/\/www.bu.edu\/law\/wp-json\/wp\/v2\/bu-publication?post=110354"},{"taxonomy":"record-article-category","embeddable":true,"href":"https:\/\/www.bu.edu\/law\/wp-json\/wp\/v2\/record-article-category?post=110354"},{"taxonomy":"record-topic","embeddable":true,"href":"https:\/\/www.bu.edu\/law\/wp-json\/wp\/v2\/record-topic?post=110354"},{"taxonomy":"bu_edition","embeddable":true,"href":"https:\/\/www.bu.edu\/law\/wp-json\/wp\/v2\/bu_edition?post=110354"},{"taxonomy":"media_type","embeddable":true,"href":"https:\/\/www.bu.edu\/law\/wp-json\/wp\/v2\/media_type?post=110354"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}