Every startup wants an extension round, but there aren’t enough to go around

As venture funding continues to slow, founders are scrambling to extend their runways, regardless of how much cash they already have in the bank. But the startups that need the cash infusions the most are running into the most trouble.

Last week, I wrote about the current state of bridge financing after multiple pre-seed investors started getting emails from companies — some in a state of desperation — to get more time in the form of cash. To the investors, it seemed like everyone was struggling. But while founders are reporting that it is more difficult to raise across the board, it seems significantly harder for some than others.

Wa’il Ashshowwaf, co-founder and CEO of Reyets, a social justice app that helps people discover what their rights are in different situations, thinks it will be more difficult for founders like himself who are targeting more impact-driven narratives. He told TechCrunch that his company had multiple verbal commitments for bridge financing this year — before a proper round next year — but all investors pulled out just weeks before checks were supposed to be written.

“Investors are responding to [startups] that are more sure bets than the ones that are early and unproven,” Ashshowwaf said. “For us in the impact space, the line between business and benefit corp or a social venture makes [the investment opportunity] a lot harder for them to digest rather than, say, manufacturing a widget.”

It also appears VCs are focused on backing startups that already have meaningful revenue numbers and customer bases. David Astoria, founder and CEO at broadcast media startup Pranos, attributes most of his company’s recent bridge financing success to its existing traction. He thinks the fact that Pranos already had cash in the bank was a big positive to its investors.

“I think the roadblock with these bridge financing investors is you have to prove you are really building the bridge,” Astoria said. He added that a banker recently told him, “we can help you build a bridge, but we aren’t trying to help you build a pier.”