Finding an exit from the ‘messy middle’ • TechCrunch


to predict what 2023 will look like venture capital, we need to start understanding where we are right now. We are entering a chaotic middle where prices continue to fall and the “2021” deal, which is industry slang for an investment made at an exorbitant price, is long gone.

Companies can no longer raise $5-10 million from incorporation rounds with nothing but a deck and the assumption that revenue multiples will rise exponentially beyond historical standards. The venture capital landscape is starting to split, and will continue to do so through 2023 to raise funds and investments.

Fundraising: A Tale of Two Worlds

Although the best grapes arise during downturns, it can be difficult to allocate something that you are already overexposed to.

In 2023, we will see the emergence of two worlds. The companies with the best talent, products, and locations would get capital at normal market rates, and everyone else would see a stagnant market.

Due to higher interest rates at the Federal Reserve and geopolitical tensions, the macro environment has slowed and inflation has reached record levels. Investor confidence has plummeted across the board, and growth rounds are pretty much dead on arrival, with both the Initial and Series A valuations dropping 30% to 50%. It is now questionable to pour money into a company that does not have the oomph to support its value.

But that does not mean that all deals are off. Venture companies still have tens of billions of dollars to spread, but they are more reluctant to do so now — growth, in particular, is seeing a choppy effect that is likely to continue as the overall macro environment remains depressed.

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