38% of VCs Disappeared From Dealmaking in 2023 36
Marina Temkin, writing at PitchBook: Boston-based OpenView stunned the VC world with news in early December that it laid off most of its employees and would stop all new investments months after raising its $570 million seventh fund. The 17-year-old firm, which managed $2.4 billion, was too prominent to keep its closure under wraps. But OpenView was far from the only investor that stopped backing startups this year.
The number of active investors in US VC, which we defined as making two or more deals, plummeted by 38% in the first three quarters of 2023 compared to the same period last year, according to PitchBook data. That translates to 2,725 fewer firms making deals. The decline in active investors is far higher than the 28% decrease in deal count during the period, the Q3 2023 PitchBook-NVCA Venture Monitor shows. The data indicates that investors are not merely writing fewer checks. Some dealmakers may have run out of funds and could be deemed zombie funds. Others, such as crossover investors, may have stopped allocating to the VC asset class.
The number of active investors in US VC, which we defined as making two or more deals, plummeted by 38% in the first three quarters of 2023 compared to the same period last year, according to PitchBook data. That translates to 2,725 fewer firms making deals. The decline in active investors is far higher than the 28% decrease in deal count during the period, the Q3 2023 PitchBook-NVCA Venture Monitor shows. The data indicates that investors are not merely writing fewer checks. Some dealmakers may have run out of funds and could be deemed zombie funds. Others, such as crossover investors, may have stopped allocating to the VC asset class.
Um... duh (Score:1, Informative)
It didn't do anything for inflation, since that was just profiteering, but it did cost a bunch of people their jobs and a bunch of us who still have jobs aren't getting raises or bonuses this year.
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Do you have a finance advice and education blog? I'd love to visit. You have really interesting ideas about the economy.
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Indeed he does. You can read all about it here: https://www.econlib.org/librar... [econlib.org]
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Nope. Can confirm...Prices are coming down (Score:3, Interesting)
Or are the books being cooked? I still see significant price rises happening.
Beyond official numbers, I can see prices in my region go down for fuel and food as well as mundane purchases on Amazon, Target, and Home Depot. So if they're cooking the books, they're definitely doing it wrong. Like all periods of inflation, it's a great opportunity to raise prices, generally and all businesses take advantage of it...until they decide it's time to compete on price again. However, official data shows inflation is down significantly and 1st hand data shows it down from peaks. If your pr
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Biden's DOJ (Score:1)
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Re: Um... duh (Score:5, Informative)
Neither of those articles says he wants there to be layoffs. He acknowledges that there might be layoffs, and is perhaps willing for that to happen, but he's not explicitly targeting that. What he *wants* to do is reduce inflation to 2%. Reducing inflation can be as simple as raising borrowing costs so people donâ(TM)t have so much disposable income. Itâ(TM)s a spectrum though and a difficult bouncing act, and he acknowledges that.
Re: Um... duh (Score:2)
s/bouncing/balancing/g
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Re: Um... duh (Score:2)
If peopleâ(TM)s and companyâ(TM)s debt servicing goes up, they have less money to spend elsewhere. This includes, for example, mortgage rates going up. Increased debt costs also reduces how much people/companies borrow to spend elsewhere. So while youâ(TM)re right, job losses are not the only way to reduce spending. Even the fear of job losses reduces spending. Iâ(TM)m sure the Fed though would prefer a softer landing without mass job losses, even if itâ(TM)s just because it
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Oddly enough, we're at the LOWEST unemployment rate.
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Counterfactual (Score:2)
Inflation is down. [usinflatio...ulator.com] Jobless rates are at historic lows. [cnn.com] The only jobs and businesses that seem to have been hurt are bullshit jobs at scam startups and the financial infrastructure that undergirded them.
If VCs are running out of money... (Score:2)
... It would seem to imply that their assorted strategies for choosing businesses is flawed. It doesn't have to be perfect, because it's a scattergun approach and only a percentage need to succeed to yield profit. But they're self-evidently under that percentage.
Re: If VCs are running out of money... (Score:2)
Crypto investments made 5 years ago are not going to pay off. A lot of the free money is gone, survival of the fittest has left us only with the risk adverse VCs. And they have dumped everything into AI startups that have ties to major tech companies, so not even startups in the traditional sense.
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The thing about venture capital is even if the business fails, some of the key investors can get some or all of their money back out. This is how the startup churn in silicon valley has operated for decades.
Mostly you only need to follow the money to figure out the answer to your questions. Where are the VCs? They either ran out of money (unlikely) or they have tied their money up into something other than the startup VC treadmill. This makes sense, as fewer and fewer unicorns have popped up. Ultimately the
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Ah I see you haven't really been paying attention. There are different tiers of investors. And if you have preferred stock that also means something in US bankruptcy courts. What is especially important is if a startup makes an IPO, then the investors can almost always get out ahead. Even if the stock completely tanks. Because it's OTHER investors that are getting screwed, not the angels and VCs.
But even without an IPO I've seen VCs get their money back, while the rest of us have penny private stock options
I think the VC bubbles are a symptom (Score:5, Insightful)
Obviously too many idiots have too much money when they can throw piles of it at stupid business plans just because they have the latest buzzword in their name.
Current wealth distribution is not healthy in the West, and the only system we have is permanently set to 'concentrate it further'.
Or the money is worthless (Score:2)
Worthless is probably too strong, but inflating too rapidly for traditional ROI to compensate.
Start Up (Score:2)
The whole startup model is poisonous anyway: management is poor, workers are abused and using investor funds to allow the company to wipe out the competition through artificially low prices (before jacking them up later) is anti-competitive.
gutted (Score:1)
Re: gutted (Score:2)
It's a labor cost issue. The US has advanced industrialized farming plus very poorly enforced regulations around immigrant labor. So food is cheap to produce here. But Russia still beats us on wheat export, and India beats us on rice export.
For manufacturing. Asia, especially China, Invested big time in production of synthetic textiles like polyester. They ended up with a production capacity way above what the US could manage and by the 1980's it was cheaper to setup sewing machines in a warehouse in China
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>>Adam Smith made it very clear; only raw materials were to be imported and manufactured goods exported.
And if every country followed that advice then no one would sell you raw materials and no one would buy your manufactured goods. Even for a giant country with lots of resources, it's difficult to have a completely self-sufficient economy (just ask the Soviet Union). Also, that is definitely NOT what Adam Smith wrote. Time to re-read Wealth of Nations.
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