Get to Know Hayley
After an incredibly strong run in venture capital, public market weakness is beginning to show through in the VC space, with comparisons to the dot-com era emerging. The venture capital ecosystem, however, remains steadfast in the opportunity set due to the advancement of technology and the dry powder available. As of September 30, 2022, global venture capital fundraising activity reached $224 billion, approaching the $265 billion raised in 2021 and not far off the record $298 billion raised in 2018.¹
Technology is almost synonymous with venture capital. Through the third quarter, technology made up 85% of the U.S. deal value in 2022. In the 2000s, the technology space was less developed than it is today. Venture technology investing was mostly in hardware and telecom. Today, the focus is largely on cloud-based software. The speed at which companies across sectors are adopting technology has increased, leading to a lot of white space for innovation. Furthering momentum, COVID-19 pulled forward adoption trends, pushing companies to embrace technology in new ways. Industries like banking, agriculture, and consumer goods, which have historically been more technology-resistant, were forced to pivot in order to survive. Estimates suggest the pandemic accelerated digital adoption trends in these mega industries by 5–10 years.
The amount of dry powder in venture capital today also gives the asset class some stability. Dry powder levels are hitting all-time highs — $585 billion as of March 31, 2022 — providing a buffer to ensure there is still capital available for startups in the coming years. Ongoing investment in VC companies allows innovators to continue innovating, even in times of market stress.
While there may be some similarities with the dot-com period, there are many differences that could support a quicker recovery than the industry saw then. While we cannot predict the future, we can remain disciplined in our due diligence and look to align our clients with the VC managers that should be best positioned to navigate the volatility.
Research alerts keep you updated on our latest research publications. Simply enter your contact information, choose the research alerts you would like to receive and click Subscribe. Alerts will be sent as research is published.
We respect your privacy. We will never share or sell your information.
If you have questions or need further information, please contact us directly and we will respond to your inquiry within 24 hours.Contact Us >