The recent shutdown of startups like Bench and Convoy emphasizes the ongoing struggles in the startup ecosystem as lenders seek to recover investments through forced sales. Many startups funded in 2020-2021 with lax diligence are failing, with projections suggesting further collapses in 2025. The risk of venture debt—$41 billion invested in record numbers—can overshadow initial growth by potentially leading to insolvency and forced sales. Industry experts warn that lenders are now more inclined to push for acquisitions of struggling startups to mitigate losses.
"We're getting to the end of the rope for a lot of companies," said David Spreng, founder and CEO of venture debt provider Runway Growth Capital.
Concerned about the future of their investments, lenders are increasingly pushing startups to sell themselves to minimize potential losses, Spreng believes.
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