Alt Investments
VC Funds Market Adjusts To Chillier Financial Climate

For years, the world's wealth management industry has been regaled about the case for private market investing, whether it be venture capital, private equity, private credit, infrastructure or forms of real estate.
Last week, this news service
reflected on how family offices might pick up some of the
funding slack for startups and venture capital-backed investment
in the wake of the Silicon Valley
Bank blow-up and the trend of higher interest rates. Whatever
happens, the VC market has lost much of its fizz.
According to Preqin Research,
which tracks alternative investments, VC fundraising has been on
a downward trend from its peak in the first three months of 2022,
when a record $77.6 billion of capital was raised globally. It
totaled $29.6 billion in Q1 2023.
As asset valuations have fallen and deal flow has slowed,
investors' performance expectations have also declined, the firm
said. Its PrEQIn Private Capital Quarterly Index of VC returns
fell by 20 per cent in 2022.
Despite this, the mood at the GVCC it was cautiously optimistic.
Accelerating technological innovation still presents ample
opportunities for VC, although the current market softness may
force the industry to pay more attention to investment
discipline. The idea of scaling up at all costs is under
scrutiny, as are term sheets that are too founder-friendly.
(These are documents which outline the key financial and
other terms of a proposed investment.)
“Long-term investors could take advantage of the pricing
dislocation to get access to quality assets, while founders could
take the opportunity to set more realistic valuations,” Preqin
said.
Delegates at a recent venture capital conference in Singapore, it
said, hoped that SVB’s demise might open the way for other
alternative lenders to come into the market.
For years, the world's wealth management industry has been regaled about the case for private market investing, whether it be venture capital, private equity, private credit, infrastructure or forms of real estate. Since the 2008 financial crash and until 2021, interest rates were on the floor – negative in real terms – and this prompted investors to push into the less liquid private markets space in the hunt for yield. As central banks have hiked rates to curb inflation, some of that dynamic has slowed.