• Howie Town
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  • The State Of The Venture Capital Market - 2023

The State Of The Venture Capital Market - 2023

Good morning.

I am off to Dallas today for meetings. I can't remember the last time I was there for a night. I am looking forward to seeing some friends as well.

Onward...

Silicon Valley Bank has released their 'State of The Markets' focused on the innovation economy.

There is A LOT of cash out there on the sidelines in the private/venture markets.

In 2021, there was $320 billion deployed, in 2022, $240 billion deployed (both record years) and there is still $300 billion raised to be deployed on the sidelines.

Most companies are cutting burn as we speak.

There are so many ways to read the numbers, and that is before you throw in macro predictions.

A couple of my quick thoughts...

The 'tourist' investors of the last three years will not disappear as quickly as most believe. They are price takers, not price makers. That will keep startup prices higher for the time being which will likely be a continued drag on returns for most.

Great founders will recognize the shift in technologies and markets and take advantage of the abundant capital, talent movement and experienced investors looking to create great new companies.

I continue to believe the biggest issue/challenge facing founders and venture capitalists is valuation compression (especially at the later stages), so it is really important to get aligned on valuation and expectations early and through the lifecycle of the startup.

Have a great day.

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