US venture capitalists hope a rising tide will save them from admitting some investments are stuck in the mud.
The valuations of public tech stocks are jumping amid excitement about generative artificial intelligence. But private markets are yet to recover. Start-ups are eking out cash to avoid down rounds. That leaves billions of dollars of potential investment sitting on the sidelines.
The past decade has been very prosperous for VCs. Low rates drove more money into risky, early-stage investments. Last year set a new record for VC funds. They raised close to $163bn, according to PitchBook data. Tiger Global, for example, closed a $12.7bn fund. Global venture firms had close to $586bn of unallocated capital, so-called “dry powder”, by October last year.