Q2 2022 PitchBook Analyst Note: Did VC fly too close to the sun?
Financial markets have taken a series of blows over the past two quarters. With growth stocks falling, a recent wave of layoffs and central banks scrambling to tame inflation, the tailwinds that VC funds enjoyed over the previous two years appear to have reversed.
As a result, recession fears and anecdotes of transaction problems have VC fund LPs wondering what will happen to their outsized paper yields.
Our latest analyst note takes a first look at the performance of venture capital funds in 2022 and the impact of growing pessimism on private markets portfolios.
Key points to remember
- Preliminary data for the first quarter suggests declines in net asset values have started to occur, with 68.1% of reporting venture capital funds showing valuations falling from their 2021 highs. venture capital funds in a worse position than other private fund strategies.
- With more than $1.4 trillion of unrealized value in venture capital funds, a large and sustained drop in valuation multiples could cause billions of dollars in value to be lost from LP portfolios.
|Key points to remember||1|
|What goes up…||3|
|…can go down||4|
|A cloud with a silver lining||seven|
|A note on data||9|