Q2 2022 PitchBook Analyst Note: Did VC fly too close to the sun?

A cloudy end to the VC day in the sun

Financial markets have taken a series of blows over the past two quarters. With growth stocks falling, a recent wave of layoffs and central banks scrambling to tame inflation, the tailwinds that VC funds enjoyed over the previous two years appear to have reversed.

As a result, recession fears and anecdotes of transaction problems have VC fund LPs wondering what will happen to their outsized paper yields.

Our latest analyst note takes a first look at the performance of venture capital funds in 2022 and the impact of growing pessimism on private markets portfolios.

Key points to remember

  • Preliminary data for the first quarter suggests declines in net asset values ​​have started to occur, with 68.1% of reporting venture capital funds showing valuations falling from their 2021 highs. venture capital funds in a worse position than other private fund strategies.
  • With more than $1.4 trillion of unrealized value in venture capital funds, a large and sustained decline in valuation multiples could result in billions of dollars in lost value from LP portfolios.
Contents
Key points to remember 1
Introduction 2
What goes up… 3
…can go down 4
A cloud with a silver lining seven
A note on data 9

About Dwaine Pinson

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