Venture capitalists have spent years aggressively buying stakes in cash-burning technology startups, valuing more than 1,000 of them at at least $1 billion apiece, even though many remained far from turning a profit. Now the cratering share prices of mature tech companies have dimmed the prospects for startups that were working toward their own initial public offerings. This has led venture investors to slow their pace of writing checks—and led startups to take on increasing amounts of debt.
Debt remains a small slice of total venture funding, but its share of the market is increasing. With interest rates low, venture debt increased significantly over the past several years, according to data from PitchBook Data, Inc. Volumes in the US hit $17.1 billion in the first six months of 2022, up 7.5% from the same period in 2021. VC funding is down 8% over the same period to $147.7 billion.
