Rising interest rates are driving VCs back to their tracks.


Perhaps aggressive, multi-level investing was the trick in low interest rates.

between silicon In the wake of the chaos of the past few days led by Valley Bank, Y Combinator has made an interesting announcement: It’s walking away from its late-stage investment. It won’t be the last venture capital group to pull back from traditional investment expansion.

In the early years of the Covid-19 pandemic, the pace at which venture capital firms raised funds accelerated. According to Pitchbook data, US venture capitalists saw their capital go from $23.5 billion in 2012 to $51.4 billion in 2016. But the invested group was just getting started: it raised $202.1 billion in revenue from $60.5 billion in 2018 to $154.1 billion. billion by 2022.

Data visualization by Miranda Halpern.Created with It blooms


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This dramatic increase in capital available to investors has had several interesting effects on the startup market. First, startups are able to scale more, faster, more often. Some beginners even grow two or three times a year. This has resulted in fantastic marks and paper prices that are out of touch with reality today.

Another result of the growth of venture capital funding is the ability of companies to expand their investment footprint. It was a trend that lasted for years in the final stages of startup growth. Late-stage Investors go to the first stage. The logic here is that if big venture funds can invest a round or two early, they can get ownership of great companies at average share prices. This will eventually lead to ease Bad He will return.

To give some examples of this effort, recall that Andreessen Horowitz, a firm that has raised 12 funds over $1 billion in its lifetime, announced a 2021 seed effort and a 2022 pre-seed effort, according to Crunchbase data.





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