Venture Capital’s ‘Yikes Moment’ – The Information
Welcome to Dealmaker, my new weekly column about venture capital deals and the people behind them, where I’ll tell readers where the money is going next, as well as who’s winning – and losing – in the race to back the next one. generation. Begin.
Since joining The Information three years ago, I’ve heralded the massive shift underway in venture capital, as a wave of hedge funds, private equity firms and solo venture capitalists rocked the island world of Silicon Valley. Today, a stock market crash has tarnished the reputations and returns of these deep-pocketed investors. In future columns, I’ll tell readers who’s caught up in the fallout and who stands to gain.
Take the example of the recent high profile departures of Tiger Global Management and Coatue Management. The two New York-based companies both raised monster funds and issued hundreds of big checks at lofty valuations during the pandemic-fueled seed venture capital boom. Then stocks tumbled, which weighed on private valuations. Tiger moved to smaller funds and Coatue aggressively courted startups with structured deals or investments with more investor protection.
A staff reshuffle was only a matter of time. But traditional venture capitalists should avoid getting too complacent about signs of dismay among their rivals. They, too, may need to take a closer look at their top ranks.