A continuation of the
cooling?
Introduction
How quickly sentiment changes. In January, during the writing of the last U.S.
Venture Industry Report, the media was awash with headlines containing dire
predictions regarding venture capital activity. The nadir was doubtless the rout
in tech stocks that occurred in early February. However justified many of the
warnings were, particularly when it came to the need for a retilting of focus
toward profitability as opposed to sheer growth, it was clear the pendulum of
media narrative had overcorrected.
Now in early April, the pendulum is shifting back, albeit not as heavily. Investors
are still wary, as overall activity indicates, while founders are doubtless battening
down the hatches, but there is still plenty of VC flowing in the U.S. It’s just not
flowing as freely as it so recently did. Positive indicators, such as the mild, recent
recovery in public market performance of companies that went public in the past
couple years, as well as strong fundraising, have encouraged a modest uptick
in optimism. On the other hand, sustained weakness in certain developed and
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emerging economies is still inducing concern in global public markets, which
in turn is affecting venture investment more than ever. This is primarily due to
investor perceptions that nontraditional VCs—which contributed considerably to
With data on:
the overheating of late-stage valuations—are more exposed to macro concerns,
Companies
while the scale of some of the largest VC-backed companies that have remained
Investors
private also renders them more susceptible to global