Venture Capital Report of 2023 and My Predictions for next two years

Valuation game is over 3 years ago and raising funds slow down will last years, however unrealistic valuations still being played by some VCs to get fees, real reset for ARRs and VC and PE investments not yet corrected and/or fully realized, it will come hot before July 2024(Q2–3) and may be persistent for a while and this’s going to happen globally as shown in below table, in 2023’s drop will be more significant than 2022, this will be affected further by rising and sticking inflation, rising interest rates , risk of regional and world war as well as economical slowdown followed by a crash due to geopolitical risks.

Number of Unicorns will keep dropping in 2023 and 2024 as showing below graph in 2022 due to further correction in valuations across the board for all sizes of funding deals.

The coming cycle reset will be like nothing seen before lots of hype AI, crypto, web3 ,metaverse and other bullshit hype startups will vanish.

Fund raising activity will slow further to drain the swamp of fake valuations and valueless/profitless startups/unicorns and technologies, only stupid and dump money from some investors in GCC region will keep flowing for a while into struggling to raise VCs’ GPs in silicon valley (Due to lack of local opportunities or/and experience) and other regions but even this will slow after getting burnt by first or max second quarter of 2024.

As shown above deployment of VC funds which already raised by GPs dropped significantly year over year in 2023 (Q1–3) which will drop further in 2023’s Q4 and 2024 .

Exit ramps

Globally, 2025 Q3 must be a target date for VC fund raising activities, any VC with funds that already raised funds , i would suggest support their existing portfolios (valuable and profitable startups), and new startups rounds limited to the minimum.

LBs, I would keep my money in banks for next two years, For money already promised to GPs, i would pressure deploying in local or specific portfolio startups .

Startups founders must look for ways to sustain money in their banks to reach 2025 , profitable is the main goal .

Unicorns should stop thinking about growth without profitability, no exit ramps for such unicorns till late 2025 , no IPOs , M&A or SPACs.

Cash is king for the next 2–3 years and some real LBs asked for their money back or asked not to be deployed, All of 2024 and at least first two quarters of 2025 risks are way bigger than anything seen in the last three decades, and if i would want to risk, i would risk in shorting stocks market globally and commercial properties globally even some bubbly housing markets in lot of countries (Canada, US )

Key takeaways:

• The valuation game is over, and a real reset for ARRs and VC and PE investments is coming.
• The coming cycle reset will be like nothing seen before in 2000s , 2008 or even 1980s , with many hype AI, crypto, Web3, and metaverse startups vanishing.
• Fundraising by VCs activity will slow further, with only stupid and dump money from some investors in the Middle East and GCC region keeping some US and local VCs afloat.
• Cash is king for the next 2–3 years, and real LBs (Limited Partners) know this.
• If you’re willing to risk it, you could short the stock market and commercial properties, and even some bubbly housing markets (Canada, UK, Australia , NewZealand , some US States, Dubai, Singapore).

Edits Of Dec5 and Dec6 :

Certainly, in my venture capital report, i didn’t address the following:

Highlighting the emergence of continuation funds and secondaries as a strategy to retain key stakeholders (Trap LPs for Longer Periods) so that raising more money, particularly concerning Goldman Sachs (in a previous post i highlighted that Morgan Stanley and Goldman Sachs have huge exposures that will bankrupt one of these institutions like Lehman Brothers did in 2008 Crisis , now with many very risky exposures, it’s clear that Goldman Sacks maybe the one might collapse in next very soon crisis) and Jefferies also will be on brink of collapse too if they continue providing exit ramps to these VC’s entitled kids who bet on risky and Unprofitable startups and business by buying these assets in secondaries.

The shifting landscape of investment avenues, emphasizing the substantial increase in secondaries (64 billion this year) compared to the cumulative figures of 2021 and 2022.

I have addressed the ongoing challenges faced by traditional IPOs, mergers and acquisitions (M&A), and Special Purpose Acquisition Companies (SPACs), stressing the industry’s scrutiny of dubious practices and unprofitable ventures (wave of VCs will vanish, LPs end up losing their money).

I have wanted to increased awareness among Limited Partners (LPs), urging caution against allocating funds to big and well known venture capitals firms endeavours , for Example, Tiger Global’s attempt to navigate the secondaries market by enlisting Evercore to sell off certain assets faced unforeseen challenges, Despite the strategic move, the venture to offload investments by Continuation Funds and Secondaries didn’t yield the anticipated results, showcasing the unpredictability and risks associated with such transactions in the current market environment.

It appears that Goldman Sachs Asset Management and Blackstone Strategic Partners engaged in acquiring certain assets from such VCs, possibly referring to less favourable investments.

The involvement of VC funds, like Sequoia, Andreessen Horowitz, and General Catalyst in obtaining RSAs, suggests a strategic approach to navigate these challenges, possibly through circumventing the issue of lack IPOs , M&A , SPACs and other exit ramps to keep this Ponzi scheme going for longer which underscores the dynamic nature of the venture capital landscape and century/ies’s long VC norms and practises .

It’s very important now more than any point in last 100 years for Limited Partners (Family offices , Pension funds , Endowments and Sovereign Wealth funds) to due diligence in light of recent exit ramps/offloading trends (continuation funds and secondaries), reaffirming concerns about potential risks in the market and reinforcing the need for a vigilant approach in investment decisions.

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