Financing still exists but its tight --- new trade-offs will wreck startups

(Sarah McBride, Abhinav Ramnarayan, Jill R Shah and Aggi Cantrill, Bloomberg, “Tech Startups Find One of Their Last Funding Sources Is Drying Up,” pg online @ https://www.bloomberg.com/news/articles/2023-05-11/startups-find-one-of-their-last-funding-sources-is-drying-up //um-ef)

For some privately held startups, the downturn and banking shakeup could make it more difficult to get loans from regular lenders, particularly those without a background dealing with Silicon Valley players. Many lenders are inclined to be increasingly choosy about which companies they finance. “When you’re in a bull market, it looks like an easy business,” Structural Capital’s Tse said. To price the risk properly, “you have to know the companies, you have to spend time with them, you have to have skills that regular commercial bankers don’t.” It’s not clear how bad any slowdown in tech lending will be. There are still banks and other firms providing financing. But many lenders take cues from equity fundraising, where valuations are typically unchanged or lower, said Ted Wilson, a former Silicon Valley Bank vice president who joined Stifel Bank in March. That’s making it harder for companies to borrow, he said. “There are often insider rounds, follow-on rounds, flat rounds,” Wilson said, referring to deals that don’t increase the valuation of a startup or don’t include new investors. “Those are not quite as attractive from a lending perspective.”