Evidence from 2023–2024 shows the pattern Sacks described did in fact emerge for many startups with venture debt overhang during the funding crunch.

1. Funding crunch and heavy use of venture debt. In 2023, equity funding into startups fell sharply (e.g., Indian startup equity funding down ~70% vs 2022), while venture debt volumes rose or stayed high as founders tried to bridge rounds and extend runway without dilution.(business-standard.com) This matches the “upcoming funding crunch” backdrop Sacks was talking about.

2. Runway shorter than expected due to dependence on venture debt. When Silicon Valley Bank collapsed in March 2023, a large provider of venture credit, founders suddenly lost access to expected debt facilities. A GeekWire report noted that “many startups are waking up today to find that their runway is much shorter than they expected without that venture debt,” explicitly tying venture-debt assumptions to overestimated runway.(geekwire.com)

3. Lenders moving to protect themselves before companies run out of cash. Venture debt agreements commonly include covenants such as minimum cash balances and performance thresholds; breaching them can trigger default and allow lenders to accelerate repayment or impose stricter terms—i.e., move to collect while the company still has money. Multiple practitioner guides and analyses from 2023–2025 emphasize these covenants and note that default can lead to accelerated repayment or forced restructuring.(insightfulcfo.blog) This is structurally identical to Sacks’s point that banks “are going to try and collect the debt before they start running out of money.”

4. Concrete cases of debt shortening effective runway in the crunch. Reporting from 2024 shows several startups that leaned on venture debt during the funding winter—such as Good Glamm Group, Reshamandi, Arzooo and Waycool—later struggling to meet repayments and asking lenders for extensions as cash got tight. Lenders are described as reluctant to grant relief and having to decide which borrowers to support, underscoring that debt service and lender behavior were constraining these companies’ usable runway sooner than hoped.(livemint.com)

5. Lenders pushing for exits before total failure. By early 2025, TechCrunch reported that many lenders, facing challenged loans originated in the 2020–2022 boom, were “increasingly pushing startups to sell themselves to minimize potential losses,” with many companies “at the end of the rope.”(techcrunch.com) That is consistent with lenders acting to realize value while there is still cash or enterprise value left, not waiting for companies to hit zero.

Taken together, these points show that during the 2023–2024 crunch, startups that had layered on venture debt often discovered their real, usable runway was shorter than the headline cash balance implied, and that lenders’ covenants and repayment demands effectively forced earlier reckoning. While not every startup with venture debt experienced this, the mechanism and timing Sacks predicted are well supported by the subsequent funding environment and case reporting, so his prediction is best judged as right.