PitchBook News - Are VC's go-go years about to end?

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The Weekend Pitch

January 16, 2022

Presented by Masterworks

(Rudy Sulgan/Getty Images)

Veteran investors have been nervous on and off for several years about the risk of a potential bubble forming in the venture capital markets. That anxiety has been especially pronounced among VCs who saw their portfolio companies obliterated in the dot-com crash of March 2000.

Today those same industry veterans are increasingly vocal about the heightened risk of the market going through yet another sharp correction, drawing comparisons between 2000 and a hawkish Fed and the new wave of hyper-driven valuation increases.

I'm Marina Temkin and this is The Weekend Pitch. You can reach me marina.temkin@pitchbook.com or @MTemkin on Twitter.

For a time, many VCs worried about meager exits after building up massive gains on paper. That angst turned out to be unwarranted when liquidity finally took off in the past couple of years, with US VC exit values hitting $774 billion in 2021—most of it through public offerings, PitchBook data shows.

This helped venture capital outperform every other major asset class over the last few years, and, as a result, the industry attracted about three times more funding last year than in 2015.

There's no denying that venture capital has expanded and thrived in ways that few could have predicted.

But despite notching hefty returns and raising record sums of capital, many veteran VCs are once again being haunted by the memories of historic debacles like Pet.com and Webvan.

Quote/Unquote

"Despite the controversies with NFTs, they continue to be a powerful onboarding ramp for new blockchains."

—Former Lightspeed partner Amy Wu, who recently joined FTX Ventures, a $2 billion venture fund launched by crypto exchange FTX Trading

Deal Flow

(Matthias Kulka/Getty Images)

2021 was an exceptionally strong year for venture capital investment across the US. But despite the surge in overall numbers, companies founded solely by women garnered only 2% of the dollars invested in VC-backed startups.

We recently took a deep dive into the US investment trends for women in VC. Want more? You can also check out our Female Founders Dashboard.

Datapoints

US venture capital firms had already raised about $12.8 billion across 15 funds in the first week of 2022, according to PitchBook data.

The bulk of that funding came from Andreessen Horowitz, which announced last week that it had closed $9 billion in fresh capital across three vehicles. Which other firms helped 2022 get off to an extraordinary start?

Did you know ...

(Tim Robberts/Getty Images)

… That some venture capitalists are hopeful that new venture deals will start pricing at meaningfully lower valuations if the stock market remains depressed for a sustained period?

The recent dramatic jump in US valuations may demonstrate how some investors are taking on too much risk by pouring massive amounts of capital into companies that might never become profitable.

Here's a closer look at why some in the industry think the overheated venture market could be poised for a cooling off period.

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For several years, Sameer Goyal and Pragya Goyal were living the Indian American Dream. Then they became part of the Great Immigrant Resignation. [The Information]

Clean energy has one major drawback. Could gravity and concrete blocks be the answer? [Wired]

Once taboo, cigarettes seem to be making a comeback among younger people. Is it part of a 1980s revival, the pandemic, or something more? [The New York Times]

Why it may be time to start posting memes if you want to work in venture capital. [Fortune]

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This edition of The Weekend Pitch was written by Marina Temkin and Priyamvada Mathur. It was edited by Alexander Davis, Angela Sams and Sam Steele.

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PitchBook News - Are VC's go-go years about to end?

Quote/Unquote

Deal Flow

Datapoints

Did you know ...

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