Forget the idea that a credit crunch is looming. It’s been here for some time. Look to Silicon Valley. 

In the first quarter, venture funding was down 60 percent compared to last year. The number of deals declined for a fifth straight quarter. Private valuations are finally getting marked down. Fund sizes are shrinking. Peter Thiel said it won’t be easy to make money on a $2 billion fund going forward and Y Combinator has shut their late-stage investing business.

Exit activity for venture-backed startups in the fourth quarter plunged more than 90 percent from a year earlier to $5.2 billion, the lowest quarterly total in more than a decade. There hasn’t been a notable venture-backed tech IPO since late 2021, and none appear to be on the horizon. 

According to The Information’s Kate Clark, startups find themselves in the unenviable position of entering into “cram down” financings. 

If you grew up in the era of easy money, ultralow interest rates and 100 times multiples, it’s possible you’ve never heard about one of these deals, in which investors from previous rounds see their stakes dramatically reduced or wiped out entirely during a company’s desperate plea for cash. These deals, which represent a punishing response to efforts by some startups to survive, are becoming a fixture of dealmaking. 

A cram down requires preferred investors to invest pro-rata in future financings. If an investor subject to a pay-to-play provision chooses not to follo