The next couple of years are going to be brutal for VCs.

Too much money invested in '20 and '21 at too high valuations in, on average, not high enough quality opportunities means investor returns will be terrible.

Non-zero interest rates mean investors have other opportunities to earn decent returns - they don't have to take so much risk.

Expect fewer emerging managers to raise, those with just funds I and II to be most affected (because most of their returns are affected), VC mergers that are distressed acquisitions in all but name, and zombie funds that can never raise again but have to manage their investments to expiry.

If you're an emerging manager considering raising, you may have to be as creative as the businesses you are considering investing in.

It will be easier for startups.

Fewer businesses getting funded since then and everyone managing their burn aggressively means there will be fewer companies asking for less money less often.

Startup funding will normalise first.

#founders #startups #venturecapital #buildinginpublic #investinginpublic