Goodbye VCs
If interest rates do continue (dot plot and B/S run off) valuations will continue compress, and as such the time it takes to take a company public will be lengthened. Rates regime starting to cause VC returns to have negative convexity as time horizons are extended as interest rates push upwards.

Modern Growth Investing's avatar
for most VC's yeah, top 10%ile will still kick ass
Deer Point Macro's avatar
@growthinvesting Agreed, those who were conservative, and didn't fund crap (RIP tiger) will be okay\.
Nathan Worden's avatar
Incredible to see the delta between the NASDAQ and the Refinitiv Venture Capital Index between March 2020 and Q1 2022. If the Fed reversed course and stopped raising interest rates, would the assumption be that this dynamic would return?
Deer Point Macro's avatar
@nathanworden I think the paradigm would shift. They will come back way more conservative.
Nathan Worden's avatar
@deerpointmacro Probably a good assumption— coming back more conservative would be an example of complex adaptive systems “learning” in action.
Golden Lake Partners's avatar
More pain to come? I believe so
Johan Eklund, CFA's avatar
Make VC great again? (= Fund early-stage innovative long-shot ideas, rather than supplying late-stage growth fuel at inflated valuations.)
Deer Point Macro's avatar
@piggyback 100% agree
Carter Kilmann's avatar
Woof. That's a helluva drop.