MainStreet’s valuation might fall 60%

Weeks after laying off about 30% of its staff, MainStreet is claimed to be elevating one other spherical of funding at a $200 million valuation, sources inform TechCrunch.

The information is important in that MainStreet, which helps different startups uncover tax credit, reportedly raised $60 million in March of 2021 at a post-money valuation of $500 million. SignalFire led that spherical, which additionally included participation from Ashton Kutcher’s Sound Ventures and Tusk Enterprise Companions, amongst others.

Sources say the down spherical comes as MainStreet additionally pursues a recapitalization, by which older traders are promoting their stakes at a reduced valuation (yay, liquidity) with new ones coming into at friendlier phrases. The mixture of a fundraise and recapitalization indicators that the fintech might have misplaced some perception from its earliest traders however desires extra capital to proceed operations.

TechCrunch has reached out to the San Jose, California-based firm for extra info concerning this newest fundraise. The CEO declined to touch upon the report.

The deal — which continues to be within the works and never but closing, in response to sources — is one other sobering instance of present market situations. For founders, recapitalization occasions are hardly ever excellent news as a result of departing traders are a detrimental sign. The looming spherical additionally means that MainStreet was not capable of land an extension spherical from its current traders, so it needed to accept a smaller spherical. The final word valuation of the corporate is thus a mixture of what older traders that knew the corporate since launch suppose it’s value, and the place a brand new cadre of traders suppose it’s in the present day. 

In early Could, TechCrunch reported that the company had conducted the layoffs. On the time, CEO Doug Ludlow didn’t remark immediately however did handle the transfer in a tweet.

In that tweet, Ludlow mentioned MainStreet “took the troublesome step of reorganizing and restructuring the corporate.” He didn’t say if these cuts impacted all groups throughout the corporate or if any executives had been laid off. He additionally didn’t state precisely what number of workers had been impacted by the transfer.

“We imagine that there’s a very robust probability that in the present day’s extremely tough market is simply going to worsen, and probably stay so for months, if not years,” Ludlow continued in his Twitter thread.

Thus, MainStreet’s new mentioned worth might be an indication of traders wanting money, and one more information level of tech startups experiencing valuation haircuts. Earlier this month, TC’s Alex Wilhelm examined new information that showed a spectrum of declines in the average valuation for startups (TechCrunch+ subscription required) that startup Carta has visibility into — 1000’s of offers from tens of 1000’s of corporations — which matched present enterprise capitalist chatter that the worth of startups has dramatically modified since 2021 highs. For the unacquainted, Carta is a unicorn whose software program helps corporations handle their cap desk.

MainStreet is backed by Shrug, Moxxie Ventures, Weekend Fund, Gradient Ventures and SV Angels. According to Crunchbase, the corporate has raised $64.7 million in recognized enterprise capital so far.

Present and former MainStreet workers can contact Natasha Mascarenhas by e-mail at [email protected] or on Sign, a safe encrypted messaging app, at 925 609 4188.

TechCrunch’s weekly fintech publication, The Interchange, launched on Could 1! Join here to get it in your inbox.

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