Precisely how much capital Gusto raised to extend its Series E is slightly more opaque; however, it appears to be around the $55 million mark.
With its extension, Gusto now likely has sufficient cash to see it through the present trough and perhaps to go public once the IPO window opens. How long of a wait that will prove is not clear, making the act of taking on additional funding reasonable.
The extension, along with a secondary offering Gusto conducted (also of unclear size), was executed to satisfy high investor demand for the Series E, a source with knowledge of the matter told TechCrunch.
How many such rounds we will see is not clear, and it is also unclear how many we will be able to detect. Extensions are a bit quieter in filing terms and from a PR perspective; companies that trumpeted huge rounds last year that they extend in the present downturn may not want to broadcast that they are selling more shares at a dated price. If that’s indeed true, they will be making an error.
Why? One issue that later-stage private companies have compared to their public counterparts is the cost of opacity. More simply, public companies can be vetted by potential customers as solvent. Private companies are harder to see inside of. If a unicorn shares that it raised another chunk of funds at a flat price this year, it would combat market concerns about continuing viability in today’s turbulent market.
This fits neatly in TechCrunch’s more general perspective that sharing more information, as opposed to less, would be good not merely for our ability to cover the startup market, but for the companies themselves.