Dry powder versus wet powder: The numbers have spoken

Bridge rounds boomed at the end of last year

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Lux Capital partner Josh Wolfe predicted that “dry powder” would prove to be “wet powder ” as venture capital funds opt to support existing portfolio companies through rough times over making new investments. Data from Carta seems to confirm that his hunch was right: The frequency of bridge rounds boomed during the last quarter of 2022. — Anna

The calls for help might be coming from your own portfolio

One month ago, I warned that it would be a mistake to assume that the record levels of dry powder we kept hearing about would automatically go to new startups. While it is true that VCs in the U.S. alone are sitting on billions in overhang, they might have to dedicate a large share of this capital to supporting ailing startups that are already part of their portfolio.

This is why Lux Capital partner Josh Wolfe says that dry powder is actually already wet. “All the money raised at valuation peaks will get spent propping up ‘walking dead’ zombie companies that can’t raise outside money and instead have to turn to insider rounds,” he said.

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