So many things about VC-backed startups right now can be explained with one word: hangover.
For 5 quarters (Q1 2021–Q1 2022), the collective US VC world kinda lost its mind.
Massive rounds on ephemeral traction. Eye-watering valuations. Term sheets in hours, not weeks.
And then interest rates changed and suddenly the music stopped, so we got this cycle:
The expected next round never materialized.
Startups thrashed about to make cash last longer.
Layoffs and software spend cuts were the first levers to pull.
Down rounds and de-valuations became common.
Graduation rates from one round to the next plummeted.
Bridge rounds rose sharply, though with little data to back them up.
LPs got nervous due to lack of returns.
VC fund managers found their next fundraise 2-5x harder than their last one.
...and now AI is here?
Not sure what happens next. But I'm confident so much of the trends we look at are explained by those 5 quarters in orange below.
#startups #foudners #venturecapital
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