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What Happened to Early-Stage Capital?

It’s a question we’ve been asking ourselves over the last 18 months, but sometime between March 9th and 10th, it became even more apropos and urgent.

On March 12th, the Science Center convened a panel of entrepreneurs and investors at the Amplify Philly House at SXSW to explore the capital markets generally, and the Silicon Valley Bank (SVB) collapse specifically. Here are our takeaways from the conversation.

Even before the Silicon Valley Bank turmoil, we’ve been seeing capital markets dry up over the last 18 months making it more difficult for startups to get the funds they need. Jessica Karr, General Partner at San Francisco-based Coyote Ventures explained that the consumer health fund has had to raise the bar on the companies they’re investing in and slow down on the number of deals.

Juliana Garaizar, Lead Investor at Portfolia and Chief Development and Investment Officer at Houston-based Greentown Labs stated that while they’ve been able to find pockets of money for Black & Brown founders, Portfolia is now in crisis management mode in the wake of SVB. Her team at Greentown Labs is also figuring out how to help companies banking with SVB.

Juliana Garaizer (left) speaking with Joanna Nathan

Diversify Funding

Joanna Nathan, CEO of Prana Thoracic noted that while her company just closed a round, it’s been a more challenging landscape than previous raises and that the medical device company is looking at alternative sources of funding like SBIR grants. She’s indicated that killing off things that won’t drive the most value is a necessary step for startups in this market. “The benefit to being in an ecosystem like Houston or Philly is that the ‘scale at all costs’ mentality isn’t as prevalent as other markets. We have discipline and efficiency.”

The benefit to being in an ecosystem like Houston or Philly is that the ‘scale at all costs’ mentality isn’t as prevalent as other markets. We have discipline and efficiency.

Joanna Nathan, CEO of Prana Thoracic

For Garaizar, startups with non-dilutive funding signal that they have hustle. “From equity, debt, and crowdfunding, we’re seeing more diversification of funding. Startups need to be more risk prone, get more grants, non-dilutive funding, and generally need to find a way to make more money available.”


“Be efficient with your budget. Cut where you can – and sometimes layoffs are necessary,” said Karr who suggested startups seek bridge rounds if possible. If you’re making sales, focus on becoming profitable. “This is a time to prove your validity and your success,” said Karr.

Karr’s recommendation for startups is to develop relationships early and maintain communication with existing investors, specifically suggesting an investor newsletter which can be adapted for future investors a startup may be courting.

  • Joanna Nathan, Co-Founder & CEO of Prana Thoracic
  • Jessica Karr, Coyote Ventures

“Last year we felt a recession coming,” said Garaizar. “We told companies to try to oversubscribe if they were raising and getting traction. For other companies, we’re in triage mode and asking founders to be lean and mean.”

Her other piece of advice: “never stop fundraising.”

Nathan is planning to do just that. After just closing a Series A round, she plans to start raising again in August. “I assume it’ll take longer and will take time to build trust with investors.”

Avoid these Mistakes

Karr stated that she wants to see ambitious financial projections, particularly from female founders who tend to be more conservative.

This is a time to prove your validity and your success.

Jessica Karr, General Partner at Coyote Ventures

Garaizar added that she finds that women and diverse founders often possess a higher level of grittiness and resilience, and she wants them to remind investors that their money lasts longer. “I know women and diverse founders will stretch your invested money and won’t overhype expectations.”

As a founder, Nathan stated that she always wants to appear focused to an investor. Given the current market she suspects there will be a lot of pivots and that it’s important to prepare investors – and the board – for any potential changes in the startup roadmap.

“We love pivots,” says Galaizar. “Entrepreneurs need to have a plan A, B, C, and D because you never know how markets will shift.”

Heath Naquin, Science Center VP of Government & Capital Engagement

A Return to Normal?

“Tough times will continue another year,” Karr said. “The turnaround will happen when exits increase again.” As a signal of hope, she stated that she’s already seeing some companies putting out forms in case the mark begins to turn.

“I think we’ll see things getting better around June although things are changing quickly with Silicon Valley Bank,” said Garaizar. “It’s up to us to make sure we don’t make it worse. It’s our responsibility to deploy faster and bigger.”

Panel moderator Heath Naquin had the last word, “the ripple effect is too profound.” The Science Center VP of Government & Capital Engagement expects that for the next 6-12 months, there will be damage control on existing portfolio companies within the venture and investment community before new investments will be thought about as things settle out. “Depending on market conditions, we’re looking at two years before things start inching toward where they should be.”