TLDR:
- Less than 10% of venture capital funds raised in 2021 have provided returns to investors within three years.
- Factors such as rising interest rates, geopolitical tension, and a presidential election have caused VCs to pull back.
New research shows the startup world is struggling
Recent research indicates that the startup world is facing significant challenges, as reported by Inc. magazine. A study conducted by Carta revealed that less than 10% of venture capital funds raised in 2021 have been able to provide any returns to their investors within a three-year period. This is a troubling statistic, especially when compared to previous years like 2017 where 25% of funds had distributed capital by the same checkpoint.
The declining performance of venture capital funds can be attributed to various factors, such as rising interest rates, geopolitical tensions, and the uncertainty surrounding a presidential election. These developments have led to a significant pullback among venture capitalists, with the total investment in VC falling from $329 billion in 2021 to $209 billion in 2022, and further down to $149 billion in 2023.
Overall, the challenges facing the startup world highlight the importance of carefully evaluating investment opportunities and considering the broader economic and political landscape before making any decisions.
