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If billion-dollar tech start-ups have gone from ultra-rare unicorns to crowded invasive species, then 2022 could mark the start of open hunting season.
Just as public company big brothers such as Meta, Alphabet and Amazon are facing major stock market declines to start the year, private venture capital-backed tech start-ups are seeing their stock valuations plummet in trade. private.
Silicon Peaks and Valleys
In 2020, start-ups turned out to be the winners of the pandemic, securing a record $166 billion in funding, according to data from Pitchbook. Last year, start-ups not only surpassed that record, but nearly doubled it, raising nearly $330 billion, according to Pitchbook, and hitting a record 340 new unicorns along the way.
But what goes up must come down. Market volatility is scaring away investors, creating a chasm between the prices buyers and sellers are looking for and causing a strong sell-off, and start-ups are starting to feel the effects:
- Zanbato, a private equity trading platform, says its index that tracks more than 100 of the most traded private companies just posted its first negative quarter since the pandemic began, the platform said at FinancialTimes.
- Forge Global, a major venue for private start-up trading, told the FT company prices on its platform fell nearly 20% in February and March compared to the last quarter of 2021.
For reference, the tech-heavy Nasdaq Composite Index is down about 15% so far this year, while Cathie Wood’s tech-devoted ETF ARK Innovation is down 38%. so far in 2022, and down more than 50% in the last 12 months.
The silver lining? : Where one man sees disaster, another can see opportunity. While venture capitalists are slowing deals compared to a year ago, investment activity is still above historical norms. “We see this as an opportunity,” said Hans Swildens, managing director of Industry Ventures, a private company focused on the aftermarket. FT. “You want to buy when the market is down.”
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.