The never-ending funding round

Hi, it’s Priya in San Francisco. During the tech boom, funding rounds could happen in just days; now, they never end. But first...Today’s mu [View in browser]( [Bloomberg]( Hi, it’s Priya in San Francisco. During the tech boom, funding rounds could happen in just days; now, they never end. But first... Today’s must-reads: • Shares of Google parent [Alphabet rose]( after the company showed ad sales recovering • The man accused of fatally stabbing Bob Lee in San Francisco will [plead not guilty to murder]( • Sam Bankman-Fried’s favorite video game is [shutting down]( The long hustle There’s a saying in the startup industry: Founders are always fundraising. It refers to the venture capital treadmill for young companies, perpetually hunting for investors to bankroll their next phase of growth. But now that [tech funding is sinking](, the adage is truer than ever. Back in the pandemic boom times, funding rounds could close in just days, as investors raced to pile into startups at ever higher valuations. Today, the process is taking longer, VCs say. Some companies have left the door open for investors to join their rounds for as long as a year. For example, drone startup Skydio took a year to raise its latest $230 million round, [announced in February](. And LayerZero Labs, a blockchain protocol company, [announced in the spring]( that it had raised a $120 million after starting the search last May, according to [reports](. While yearlong funding rounds may be outliers — like a house with a “for sale” sign for hundreds of days — most timelines have lengthened, said Andrew Schoen, a partner at New Enterprise Associates. In 2021, deals happened fast, Schoen said. He would meet a company’s executives on a Wednesday, and they would follow up with him with a term sheet and say the deadline was Friday. “That is very, very rare in this market,” Schoen said. “I actually think that’s healthy. It’s reducing the proportion of shotgun wedding funding rounds – a venture firm and a founder who haven’t met, interacted and built a relationship over time.” Part of the reason the pace of dealmaking has slowed is that investors are becoming more cautious — if they’re investing at all. In the first quarter of this year, venture funding fell to its [slowest pace since late 2017](, according to data from the research firm PitchBook. Investors, newly focused on profitability and cash flow, are conducting additional due diligence on potential investments. The tech downturn has also led to greater uncertainty over [what startups are really worth](. “People are still not exactly sure where to price things,” said Jenny Fielding, managing partner at The Fund. Founders are reluctant to agree to lower valuations in funding rounds — deals known as down rounds, which are dreaded by startups. “I’ve talked to a few founders who said, ‘Yeah, the round is stalled.’ I’m like, ‘Great, lower the price,’ ” Fielding said. “It is about supply and demand.” Founders are loath to lower prices, and VCs are reluctant to invest if they don’t. “There’s a little bit of a disconnect. A lot of founders haven’t gotten the message that valuations are coming down,” Fielding said. For investors, she said, the stakes are higher than they were before. “No one wants to look like an idiot.” —[Priya Anand](mailto:panand20@bloomberg.net) The big story Apple is working on an artificial intelligence-powered health coaching service and new technology for tracking emotions, its latest attempt to lock in users with [health and wellness features](. Get fully charged Netflix lost more than 1 million users in Spain in the first three months of 2023, a sign that the streaming giant’s [crackdown on password sharing]( could backfire. Microsoft’s profit and sales surpassed projections, fueled by corporate demand for its [cloud-computing products](. Meta’s head of global affairs, Nick Clegg, invoked anti-China rhetoric in the company’s campaign against TikTok, [questioning the TikTok’s values](. Watch: Bloomberg TV grapples with the social media question du jour— can the Jack Dorsey-backed [Bluesky can take on Twitter](? 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