2022 has had a series of black swan events for venture capital, making it one of the best times in history to be in venture capital. Never in history has more money flowed into venture, and never in history has there been a better time to invest.
What’s going on?
- More Capital to VCs: The stock market correction has caused tens of billions of dollars of money to flow into venture capital, which is number one performing asset class.
- Lower Investment Valuations: Lower stock prices for public companies is pushing down valuations of startups, making valuations attractive to venture capitalist that are now flush with cash.
- Industry Disrupting Dealflow: The pandemic has disrupted almost every industry worldwide, from restaurants to travel, creating countless opportunities for hyper growth startups.
- Increased Availability of Top Talent: The great resignation is freeing corporate talent and later stage companies are cutting staff as a result of reduced valuations, creating a talent pool for the disrupting startups.
- Large Cash Exits: Established corporations have strong revenues and large balance sheets, so more large acquisitions are being done that provide venture investors with cash on cash returns.
The venture investing conditions are historically good, particularly in the early stages. Expect to see heavy venture investing from Q4 of 2022 through Q2 of 2023, as new “mega funds” and their smaller counterparts begin to deploy capital. See here and here.