Two years into the most significant contraction of the innovation economy since the dot-com bubble, and signs of normalization — dare we say recovery — are on the horizon. It feels like we are closer to the end than the beginning. Late-stage tech valuations reached the bottom in mid-2023, ticking up in the back half of the year. Seed activity remains resilient as valuations still trend up. Investment, while not growing, seems to have stabilized.
Many companies are only now facing the full effect of the venture capital (VC) investment downturn. The combination of near-record cash runway at the start of 2022 and drastic reductions in burn helped delay down rounds, closures, and the need to raise a funding round. But the reckoning is upon us. Down rounds make up one in four Series D+ deals (and many more go unreported).
For companies unable to raise, a good buyer is hard to find. Companies looking for soft landing M&A deals are coming up empty with shutdowns and selloffs mounting. The storm won’t pass overnight, and we don’t expect investment to tick up quickly or return to prior highs anytime soon.