Our Thoughts on the Venture Market
Like many of our peers in the venture community, we believe we’re entering into a new part of the venture cycle. We’ve already seen a dramatic reset of public market valuations — with impacts also affecting the private markets.
What has been the impact on existing venture portfolios?
During 2021, our funds raised more money than we’ve ever raised before (~$340M). Unlike many VCs, AV raises new funds each year and largely deploys capital over 12-24 months. This means that new investors will benefit by deploying much of their capital and reserves into a reset ecosystem. Additionally, with exits primarily 5-10 years in the future, investors will potentially be exiting into much different markets.
As for our outlook on the market, we believe there are big advantages.
Today, we’re seeing highly promising ventures that we’ve been wanting to back with whom we’re now getting good engagement. Smart CEOs are expanding their rounds to include incremental money. In general, we are seeing valuations that seem sensible.
In fact, many facets of building a great startup become easier during a correction.
For example, talent becomes more available and less expensive to acquire. Venture investors still have capital that they must invest, and the best startups are likely the beneficiaries. Businesses also self-correct and seek to strengthen their positions, becoming more disciplined about burn and runway.
In terms of pipeline, historically great companies have succeeded in all environments. In prior downturns and recessions, legendary companies like Google, Facebook, Uber, Airbnb, Stripe, PayPal, and Slack were launched.
Final thought: For those that want to get a sense of hundreds of conversations happening throughout the industry, check out the video below.
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