Did Facebook IPO Ruin Fundraising For Startups?

A missive posted by Paul Graham, founder of investment firm Y Combinator, warned that there may be funding hurdles for startups in the future as a result of Facebook’s less-than-dynamic initial public offering performance.

A missive posted by Paul Graham, founder of investment firm Y Combinator, warned that there may be funding hurdles for startups in the future as a result of Facebook’s less-than-dynamic initial public offering performance.

In the note, which appeared on the company’s website, Graham seemed certain that the Facebook IPO has hurt the funding market for early-stage startups. The two main concerns he outlined were:

  • It may now be harder for startups to raise money at all, regardless of price; and,
  • Companies that previously raised money at high valuations will now face “down rounds,” which can be damaging.
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