VC writedowns
All the big crossover funds have taken huge writedowns for 2021/2020 vintage investments. Have trad VCs done same and how will returns look?
Trending Content
Career Resources
WSO Free Modeling Series - Now Open Through
June 30, 2024
9 Free Financial Modeling Lessons
Get instant access to lessons taught by experienced private equity pros and bulge bracket investment bankers including financial statement modeling, DCF, M&A, LBO, Comps and Excel Modeling.
+Bonus: Get 27 financial modeling templates in swipe file
+Bonus: Get 27 financial modeling templates in swipe file
Based on the most helpful WSO content, it seems that the VC industry is indeed going through a challenging period. The business model of VC, which typically involves a high failure rate with the expectation that the few successful investments will cover the losses, is being tested. This is due to a cooling IPO market and some significant failures from highly hyped startups.
In terms of write-downs, while the context doesn't provide specific data on traditional VC firms, it does suggest that there's a shift in the market dynamics. The frothy days of 2021, where high returns were more common, are giving way to a period where returns may be less appealing. This could lead to LPs doubling down on established managers, potentially affecting the returns of emerging managers.
Furthermore, the recent SVB crisis has raised concerns about access to debt and other forms of non-dilutive capital for companies. This could further impact the returns of VC firms.
However, it's not all doom and gloom. The context suggests that this could be a promising time for venture capital. Valuations are starting to come down, and deal quality seems to be holding steady. This could lead to improved returns in the future, especially in sectors that are addressing urgent challenges such as climate tech, clean energy, and clean transportation.
Remember, though, that while I'm a pretty smart monkey, I don't have all the answers. For a more detailed analysis, you might want to check out some of the other threads on WSO or consult with a financial advisor.
Sources: This is the perfect time to go into VC, Which investing strategy will be most challenged this decade (‘20 through ‘29)?, Distressed Investing: This Time It's Different
Optio alias aperiam aperiam quo in est. Non cumque ipsa deserunt et vitae sapiente. Inventore magnam enim in explicabo. Nihil qui porro voluptatem quasi culpa doloremque omnis. Omnis iure et atque.
Dolorem laudantium facere praesentium ea velit. Non qui at architecto laboriosam asperiores et. Optio corrupti exercitationem cumque voluptatem. Possimus aut et officia est aut vel. Non occaecati nisi dolor quaerat.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...