VC and private equity are in a mess of their own making
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Illustration: Aïda Amer/Axios
Last week we wrote than an economic downturn could create upside for venture capital and private equity, particularly as a forcing mechanism on revaluations.
- While waiting for that to play out, another thought: Boy, did private market investors blow it.
VC and PE pros like to talk about how they aren't market timers, unlike those heathen hedge fund managers.
- But that's exactly what they've been for several years, waiting for "better conditions" before taking their companies public or actively seeking buyers. Cheered on by timid bankers who wouldn't risk a lemon in their sparse baskets.
- It was just such a ludicrous thing to say in the midst of a prolonged bull market for public equities, and contributed to a distribution drought.
- Sure, there were legit antitrust concerns. But anyone assuming that Trump's regulators would be much more lenient, or less capricious, wasn't really paying attention. Well, unless you're a crypto investor.
Today's economic warning signs and market declines aren't anywhere near as dire as they were five years ago — today's the anniversary of the NBA shutdown — but at least then we had expectations that Washington D.C. would (and could) ride to the short-term rescue.
- That's not too likely right now, particularly given that much of the tumult is coming from inside the house. What we might be left with is stagflation, which is the antithesis of "better conditions."
There are a handful of strong startups that have been planning first-half IPOs. This includes Hinge Health, which just flipped its S-1, and CoreWeave, which yesterday inked a giant strategic deal with OpenAI.
- Expect inertia to keep both processes moving forward, but that they'll seek to avoid pricing into extreme turbulence.
The bottom line: You can't cry over spilt milk. But you can shake your head at the obstinance that led to it.
