While the fundraising market looks bleak for startups, the test continues to be unsustainable for their investors.
When the public market The pressure begins to affect venture capital in the spring of 2022, companies and VC companies are not ready. Companies cannot justify their valuations, and investors must act to keep their portfolio businesses afloat.
But this focus on testing is not sustainable. VCs spend all their attention and capital on helping their existing portfolio companies get on board in the increasingly difficult fundraising market. Funds aren’t set up to support that strategy, and venture firms’ fiduciary duties to their investors mean they can’t put resources into companies they know won’t deliver a return.
Some companies are also likely to spend time trying to shore up their portfolios somewhat towards 2023, perhaps before an annual LP meeting, or before launching a roadshow for a new funds.
But a year into this market slowdown, the testing time is over.