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Let’s talk party rounds – Technology Flow

When it comes For venture capital instrument types, party rounds are about as controversial as they come. A party round is an early-stage financing round that usually takes place between the pre-seed and series A stages and includes a laundry list of individual investors – or “the party”. This differs from a more traditional round, which may appear to be led by one or two institutional investors, with some equity investors also participating.

The investment tool has been around for over a decade and has been a hot topic for a long time. The positives are clear: with more investors on their cap table, startups have more avenues for distribution, contacts and advice throughout their lifecycle.

The downsides are more complicated. Is party round investment as helpful as capital from less, more committed sources? Are there too many cooks in the kitchen? Is it a negative sign that this startup had to raise from dozens of people instead of one trusted partner? During the retreat, is the party all about the confetti and no allergy-friendly foods?

While this argument is nothing new, it does introduce current market dynamics that make party rounds a little more complicated than bringing some of your favorite entrepreneurs and thought leaders to your cap table.

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