Why isn’t the industry spending its enormous pile of cash?
following puzzle. In 2021 venture capitalists raised $150bn in fresh cash, a record amount. Despite a market slowdown, they broke the record once again in 2022, raising more than $160bn. Chunks of this have already been spent, but close to $300bn of “dry powder” sits waiting to be put to use. Indeed, spending fell throughout 2022. Fledgling firms appear cheap.
This especially hurts funding for late-stage startups that in normal times might be close to a public listing. Some firms, flush with cash from fundraising in 2021, are choosing to wait things out, reducing the pace of new deals. The smaller number continuing with plans must hope to avoid a dreaded “down-round”, in which a startup raises cash at a lower valuation than in a previous round—a let-down for employees and early investors who are forced to confront losses on their shares.
But spending at a breakneck pace would almost certainly prove to be self-defeating in the long-run. Venture capitalists periodically raise money from limited partners, such as endowments and pension funds. Many of these now want to reduce their exposure to venture capital, since public markets have taken a hit and they seek to keep allocations to different asset classes in rough proportion.
United States Latest News, United States Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Why I wrote ITV's Maternal – and why we can't let working mothers downWhy I wrote ITV's Maternal – and why we can't let working mothers down ✒️ JacquiHM for ipaperviews
Read more »
Al Roker announces 'dream come true' venture away from Today ShowToday Show's Al Roker has announced he has a 'dream come true' project coming soon on PBS Kids titled Weather Hunters
Read more »
New venture coming to New Look in NottinghamShoppers will be able to buy vintage and pre-loved items
Read more »
BBC Radio Northampton - Annabel Amos, Elaine Coe: 'No teacher wants to strike'NEU member and teacher in Northampton explains why teachers have voted for strike action.
Read more »
Ex-Braves GM John Coppolella discusses life on, and after, MLB’s banned listWhy did MLB reinstate ex-Braves GM John Coppolella from the 'permanently ineligible' list and what has he been doing since 2017? He hasn't spoken publicly since he resigned. Until now. 'I did it to myself.'
Read more »
What was the Church Committee That the GOP Hopes to Emulate?It might have taken House Republicans 15 rounds of voting to elect a Speaker, but they’ve wasted little time since then getting started on one of their central campaign promises—to use the levers of Congress to investigate the Biden administration
Read more »