Evidence from 2023–early 2025 shows a broad, time‑bounded distress period for startups that raised at peak 2020–2021 valuations and later struggled on revenue growth or burn, matching the normalized prediction.

• Down rounds became unusually common, especially 2023–Q1 2024. Carta’s State of Private Markets reports show that in 2023 roughly 19–20% of all US venture rounds were down rounds every quarter—the highest rates since at least 2018, leading Carta and multiple analysts to dub 2023 “the year of the down round.”(carta.com) In Q1 2024, down rounds climbed further to about 23–24% of all deals, a five‑year high.(linkedin.com) That is roughly double the pre‑2022 norm of ~10%.(forbes.com)
• Bridge rounds and stalled progression (i.e., inability to raise “well”) spiked. Carta data shows that in 2023–2024 around 40% of seed and Series A financings were bridge rounds rather than clean new priced rounds, reflecting companies that could not secure traditional up‑rounds.(carta.com) Axios, citing Carta, notes that by Q1 2024, 46% of seed deals were bridges and that Series A activity had plunged 79% versus 2022, indicating severe difficulty raising new institutional capital on favorable terms.(axios.com)
• Most seed‑stage companies from the 2020–2022 boom could not raise a proper Series A. Multiple analyses of Carta data show that only about 15% of companies that raised seed in early 2022 managed to raise a Series A within two years—roughly half the historical graduation rate (~30%).(konvoy.vc) That implies that most of that cohort either failed outright, remained stuck on extensions/bridges (effective restructurings), or raised at unattractive terms if they raised at all.
• Explicit link to 2020–2021 “peak valuation” cohorts running out of runway. A 2023 venture deal‑points study notes that down rounds in 2023 were 2.25× the average of 2020–2022, and explains this by saying that companies which raised at very high pandemic‑era valuations had exhausted their cash runways and prior bridge strategies and were “forced to go back to the market in 2023, where valuations were markedly lower.”(mondaq.com) That is precisely the scenario the prediction describes: 2020–2021 vintage companies, now out of money and underperforming, facing down rounds or equivalent.
• Restructurings and shutdowns surged in the same 1–2 year window. Carta‑based analyses show startup shutdowns rose 58% between Q1 2023 and Q1 2024 as funding tightened, with capital increasingly concentrated in a small set of favored areas (notably AI).(axios.com) Separate Carta data reported by the Wall Street Journal show that 2023 was the first year in at least five years in which startup headcount shrank in aggregate, driven by layoffs and hiring freezes as companies restructured to conserve cash amid tight capital markets.(wsj.com)
• The stress period was indeed about 1–2 years and then began to ease. By mid‑2024, Carta’s Q2 2024 report notes that down‑round rates fell from ~24% in Q1 to ~17% and suggests that, as the 2020–2021 high‑valuation vintages work through the system, the incidence of such harsh repricings should decline.(carta.com) This supports the idea of a discrete 2023–early‑2024 distress window rather than an indefinite new normal.

Taken together, the data shows that from roughly early 2023 through early/mid‑2024 there was a broad, historically severe funding squeeze in which:

• Down rounds and punitive terms were at multi‑year highs;
• Bridge rounds and extensions were ubiquitous at seed and Series A;
• The majority of seed‑stage companies from the 2020–2022 boom could not progress to normal new rounds; and
• Shutdowns, layoffs, and restructurings spiked.

This lines up with the normalized claim that most underperforming 2020–2021‑vintage startups running out of money would face down rounds, restructurings, or an inability to raise on acceptable terms over a 1–2 year period starting around Q1 2023. While we lack a perfect census of every such company, the scale and timing of the documented distress strongly support judging the prediction as broadly correct rather than inconclusive or wrong.