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May 4, 2022 04:45 pm
Original Link: https://news.slashdot.org/story/22/05/04/1614243/a-minsky-moment-for-venture-capital?utm_source=rss1.0mainlinkanon&utm_medium=feed
A Minsky Moment for Venture Capital?
Venture capital returns have puked this year. The next dangerous stage is investor outflows. Financial Times: Back in the halcyon days of ... early 2021, it looked like venture capital was the hottest game in town. Hedge funds were piling in. Even private equity firms were getting involved in early-stage company investing. Investors loved the combination of fat returns and the lack of volatility in private markets. But the VC cycle now looks like it has hit a sudden stop. Refinitiv's venture capital index, which uses the performance of individual VC portfolios and listed stocks to mimic the performance of the broader industry, tanked another 24.2 per cent in April, taking its 2022 loss to a comically bad 45.8 per cent (NB, the Nasdaq is "only" down 19.7 per cent YTD). That is comfortably its worst monthly performance since worst of the dotcom bust two decades ago. Of course, a lot of venture capital funds are unlikely to be marking down their books to anywhere near these levels. Some may just be doing better than others (performance persistence is higher in VC than in any other investment industry), but the advantage of private market accounting and negotiated and infrequent funding rounds means that valuations and returns can be massaged a little. There might even be a bit of schadenfreude at the pain suffered by Tiger Global lately, which many venture capitalists saw as an annoyingly uppity interloper-dilettante in Silicon Valley. But the reality is that the bottom has dropped out of tech stock valuations lately -- both public and private -- and anyone who is not marking down their positions heavily might actually unnerve investors more than assuage them.Read more of this story at Slashdot.
Original Link: https://news.slashdot.org/story/22/05/04/1614243/a-minsky-moment-for-venture-capital?utm_source=rss1.0mainlinkanon&utm_medium=feed
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