Will the growth-stage venture funding market recover, and what would trigger that recovery?
5 recorded positions from 4 people, first said Oct 21, 2022. They do not agree — the readings below are what each one actually argued.
Also on the record
Martín Escobari · Nov 11, 2022
Rationality has been restored: companies that stayed efficient and hold cash reserves will consolidate and redefine their industries
Reimagining industries from a position of having done your homework is more rewarding than competing for deals on two weeks' notice at 20x, which he considers irresponsible with LPs' capital
16:41 Disciplined cash rich companies consolidate and redefine industries in downturn
Semil Shah · Nov 21, 2022
We are only in the early innings of the downturn and the pain will be quite prolonged
There is far less cash in the system and far more risk stacked around us
53:10 Downturn is only in its early innings and will be prolonged
Kyle Harrison · Oct 21, 2022 · hedged
The growth market will be better in twelve months only if founders get a reality check on what valuations fundamentally mean; valuations will come down and fundraising will stay hard but improve from today
Right now founders still expect billion-dollar valuations on $10-50M of revenue while investors have no idea how to price anything; both sides will get more thoughtful over time
41:34 Recovery requires founders accepting realistic valuations
Harry Stebbings · Oct 21, 2022
The growth market has split into two worlds: for 98% of companies fundraising is a desert, while the top 2% of obviously generational companies still raise at near-peak prices, concentrating capital in a flight to safety
He is observing this bifurcation directly in growth deals
42:24 Market has bifurcated into a safe haven for consensus generational companies and a desert for everyone else
Kyle Harrison · Oct 21, 2022
The flight to safety toward consensus darlings will only break if a company everyone was convinced was generational absolutely implodes, and that hasn't happened yet
High-profile failures so far, even Theranos, were not the traditional VC darlings and had few traditional VCs involved, so nothing has undermined confidence in the top companies
43:00 Flight to safety persists until a perceived generational company implodes
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