The current rocky macroeconomic climate has significantly shortened the cash runway for many startups. According to recent data from Vestbee's Q1 2024 report, venture activity in Central and Eastern Europe (CEE) has experienced a decline, with total VC funding reaching approximately €0.5 billion, a 40% decrease compared to the previous quarter. This trend mirrors the broader global decline in venture activity, with notable decreases in seed and Series A investments.

In today's volatile economic climate, securing funding is more challenging than ever for startups. The metrics required to achieve Series A or Series B funding have increased significantly compared to 12 to 18 months ago, as evidenced by the evolving SaaS Funding Napkin. Traditional funding rounds are now taking longer to close, pushing many early-stage companies to explore alternative financing methods such as revenue-based financing, venture debt, and crowdfunding to extend their runway and sustain growth amid the tightened venture capital landscape.

Understanding Bridge rounds and Extensions

Bridge Rounds are interim funding rounds that occur between primary financings, typically using instruments like Convertible Notes. They offer a quick influx of capital, helping startups maintain operations and bridge the gap until the next major funding round.

Extensions allow a reopening of the latest funding round, leaving room for current investors to increase their stakes or new investors to join. It provides additional capital without the need for a completely new funding round.

Introducing Rolling Facilities: A new fundraising approach

In the challenging landscape of startup funding, we introduce the Rolling Facility on SeedBlink Syndicates, leveraging our expertise and infrastructure to help founders raise capital without headaches.

This innovative approach allows continuous fundraising, reducing the pressure on founders and enabling them to engage with potential investors at any time. By consolidating multiple small investments into a single entity, Rolling Facility streamlines cap table management, making it easier for startups to plan financially. This model not only maintains operational stability but also empowers startups to scale efficiently, converting productive conversations into commitments without waiting for traditional funding rounds.

Key benefits of the Rolling Facility

1. Continuous fundraising: Startups can keep their funding open indefinitely, collecting funds as they grow. This is ideal for founders who anticipate future capital needs but do not require immediate funding.
2. Reduced pressure on founders: Unlike traditional rounds that demand closing deals within tight timelines, Rolling Facilities offer a flexible timeline, backed by SeedBlink’s support, allowing founders to engage investors without the usual urgency.
3. Leveraging productive conversations: Any promising discussion with a potential investor can be turned into a commitment without waiting for a new funding round, maintaining momentum and ensuring business focus.
4. Streamlined investment management: Rolling Facilities consolidate multiple small investments into a single entity, simplifying cap table management and future financial planning for both founders and investors.

The success of continuous funding

Consider the case of a European tech startup that leveraged Rolling Facility to manage its fundraising process. Rather than waiting for their cash runway to deplete, the company adopted a strategy of keeping their funding open continuously. This approach allowed them to secure commitments from investors at various stages, ensuring a steady inflow of capital. By utilizing a Convertible Loan Agreement (CLA), they were able to close funding rounds in a timely manner that suited their needs—let's say every six months.

This strategy has significant advantages:

• They avoided the financial stress of sporadic large-scale funding.
• They could seize growth opportunities without urgent fundraising.
• The founders could concentrate on strategic planning rather than immediate capital needs.

The continuous funding approach transformed their fundraising from a reactive, high-stress activity into a proactive, manageable process, contributing to their sustained growth and success.

In an environment where traditional fundraising is fraught with challenges, bridge rounds, extensions, and Rolling Facility provide viable alternatives that offer flexibility and security.

By maintaining continuous funding, startups can navigate economic uncertainties more effectively, convert promising leads into investors, and grow without the constant pressure of closing new funding rounds.

At SeedBlink, our goal is to empower founders with the tools and support they need to thrive, ensuring a robust and sustainable growth trajectory. Get in touch.

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Editorial written by Eric Bartha, our Head of Revenue at SeedBlink. As an alumnus of Vienna University of Economics and Business, Eric focuses on identifying ambitious founders eager to integrate a European community of investors into their VC fundraising efforts. His role also involves building connections with local partners and family offices.