MainStreet’s valuation may drop by 60% to $ 200 million amid pursuit of investor recapitalization – Technewscity

Weeks after dismissal of about 30% of staffMainStreet is said to be raising another round of funding for a $ 200 million valuation, sources tell Technewscity.

The news is significant, as MainStreet, which helps other startups hedge tax deductions, raised $ 60 million in March 2021 to a post-money valuation of $ 500 million. SignalFire led the round, which also included participation from, among others, Ashton Kutcher’s Sound Ventures and Tusk Venture Partners.

Sources say the down-round is coming as MainStreet also pursues a recapitalization where older investors sell their shares at a discounted valuation (yay, liquidity) with new ones coming in on friendlier terms. The combination of a fundraise and recapitalization signals that fintech may have lost some faith from its earliest investors, but wants more capital to continue operations.

Technewscity has contacted the company in San Jose, California for more information on this latest fundraiser and will update this post if and when we learn more.

The agreement – which is still under way and not yet final, according to sources – is another sober example of current market conditions. For founders, recapitalization events are rarely good news because outgoing investors are a negative signal. The looming round also suggests that MainStreet was unable to land an extension round from its existing investors, so it had to settle for a smaller round. The ultimate valuation of the company is thus a mix of what older investors who have known the company since launch think it is worth and where a new cadre of investors think it is today.

In early May, Technewscity reported that the company had completed the layoffs. At the time, CEO Doug Ludlow did not comment directly, but addressed the move in one tweet.

In that tweet, Ludlow said MainStreet “took the difficult step of reorganizing and restructuring the company.” He did not say whether these cuts affected all teams across the company, or whether any managers were laid off. He also did not say exactly how many employees were affected by the move.

“We believe there is a very high chance that today’s incredibly tough market will only get worse and potentially remain so for months, if not years,” Ludlow continued in his Twitter thread.

Thus, MainStreet’s new mentioned value may be a sign that investors need cash, and yet another data point for tech startups experiencing haircuts. Earlier this month, TC’s Alex Wilhelm examined new data that showed a spectrum of declines in the average valuation for startups (Technewscity + subscription required) in which startup Carta has visibility – thousands of trades from tens of thousands of companies – that matched the current venture capitalist talk that the value of startups has changed dramatically since the highs of 2021. For the unknown, Carta is a unicorn whose software helps companies manage their cap board.

MainStreet is backed by Shrug, Moxxie Ventures, Weekend Fund, Gradient Ventures and SV Angels. According to Crunchbasethe company has raised $ 64.7 million in known venture capital to date.

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