EnjoymentThe HR technology unicorn, worth nearly $ 10 billion, has raised an extension for its own 2021 Series E funding cycle. This funding event included $ 175 million in initial capital, a tranche of secondary shares and a tender offer. EquityZen noted for the first time Gusto’s new capital increase based on a review of publicly available documents, which TechCrunch can confirm.
Exactly how much Gusto has raised to expand its E-Series is a little more opaque; however, it appears to be about $ 55 million.
The fact that Gusto is raising money as a continuation of its E-series, which suggests that it has added capital at a fixed valuation to its increase in 2021, should not be considered a negative sign. There is a market for start-up investments has changed radically since the end of 2021, as the public value of technology companies has been negative for almost two quarters; companies that rose last year are now facing a new reality in terms of investor expectations.
With its expansion, Gusto probably already has enough money to take it out of the current trough and may become public after the IPO window opens. How long this will take is not clear, which makes the act of taking on additional funding reasonable.
The expansion, along with Gusto’s secondary offering (also of obscure size), was implemented to meet the high demand from Series E investors, a source familiar with the matter told TechCrunch.
The company is not alone in increasing its latest fundraising. As TechCrunch reported recentlyFaire also added more capital to its treasury as an extended circle.
“In the current market environment, an ‘equal’ extension to an increase in 2021 must be considered a profit ‘,” Phil Haslet, co-founder and chief strategic officer of EquityZen, told TechCrunch. Haslet noted that raising “equal” extensions can help companies avoid downgrading or declining ratings and that he expects to see more of these types of increases than “even the strongest companies.”
How many such cartridges we will see is not clear, and it is also not clear how many we will be able to find. Extensions are a bit quieter in terms of submission and in terms of PR; companies that are trumpeting for huge rounds last year that continue in the current downturn may not want to broadcast that they are selling more shares at current prices. If this is true, they will make a mistake.
Why? One problem that private companies have at a later stage compared to their public counterparts is the cost of non-transparency. Simply put, public companies can be checked by potential customers as solvent. Private companies are harder to see from the inside. If the unicorn says it has raised some more money at a fixed price this year, it will fight market concerns about the continued viability of today’s turbulent market.
This fits in well with TechCrunch’s more general perspective that sharing more information, not less, would be good not only for our ability to cover the start-up market, but for the companies themselves.
The apartment is new. Again.