Valley VCs Sit on Cash, Forcing Startups to Dial Back Ambition
For most firms this is a pause, a reset—not a meltdown
This article is for subscribers only.
Once driven by fear of missing out on the next Uber or Airbnb, formerly frenzied venture investors have turned circumspect, waiting to see how far the tech market will fall. Dropping valuations often kick-start a fresh round of dealmaking, but anemic initial public offerings and billion-dollar markdowns for the likes of Snapchat and Dropbox are causing venture capitalists to sit on their hands -- leaving some startups to starve.
“Right now, we don’t really know what things are worth,” says Mike Volpi, a partner at Index Ventures, a firm that’s holding on to $1.3 billion tagged for startups. “When you don’t know what something’s worth, you don’t know whether you are getting a good deal or a bad deal, so the obvious thing to do is, not much.”