Venture funding for startups suffered a 50% year-over-year drop in the 3rd quarter of 2022. While most participants in the startup ecosystem were expecting a downturn, this dramatic pullback in deployment is sure to send chills down the spine of many founders and funders.
Startups, Don’t Pin Your Hopes on VC Dry Powder
Even with $290 billion in committed capital, venture capitalists may slow their pace of investing — and focus on the companies they’ve already backed.
October 18, 2022
Summary.
The startup world is currently debating when venture capital investing will return to its pre-2022 heights. The bullish case is that VCs have lots of “dry powder” — capital that’s already been committed. That money will get invested one way or another, the thinking goes. But that’s not the whole story. In fact, VCs may slow their pace of investing and may focus on helping the companies they’ve already backed, making fundraising harder for newer startups. For that reason, startups should reconsider their fundraising strategy and some should consider aiming for profitability sooner than they’d planned.