Public markets influence private venture capital
Running Point and its chief investment officer, Michael Ashley Schulman, CFA, were quoted by Reuters in an article—by Niket Nishant and Mehnaz Yasmin, “U.S. Startup Valuations Contract as Early-Stage Investors Turn Cautious”—regarding how a decline in initial public offerings and public stock market prices affect venture capital sentiment.
Where are venture capital valuations?
As much as we like specific venture capital (VC) funds and structures for the long-term, we currently see a renewed reluctance to invest in some venture backed business—like delivery models—that are difficult to scale and reliant on huge quantities of labor and people handling equipment. Conversely, we see a tilt towards software, intelligent drones, machines, and robotics that can supplement or enhance labor.
We have also seen some interesting venture trends in crop sciences aimed at reducing water use and improving agricultural hardiness as weather patterns shift—such endeavors seem especially timely.
I don’t expect lofty venture capital valuations to recover much ground in 2022.
Quoted article excerpt is below:
“VC managers are looking for low or advantageous pricing so they can achieve their targeted multiples, which may take longer since the IPO market has slowed,” said Michael Ashley Schulman, chief investment officer at multi-family office Running Point Capital.
Disclosure: The opinions expressed are those of Running Point Capital Advisors, LLC (Running Point) and are subject to change without notice. The opinions referenced are as of the date of publication, may be modified due to changes in the market or economic conditions, and may not necessarily come to pass. Forward-looking statements cannot be guaranteed. Running Point is an investment adviser registered with the U.S. Securities and Exchange Commission. Registration does not imply a certain level of skill or training. More information about Running Point’s investment advisory services and fees can be found in its Form ADV Part 2, which is available upon request. RP-22-52