Union Square Ventures partner Fred Wilson (SA 100 #3) is increasingly bearish about the financing environment for private start-ups. In an interview with Portfolio’s Sam Gustin, he explains that troubles in the public market will eventually lead to:
- Lower valuations for private companies
- Less venture financing
- Death of promising start-ups.
Fred has discussed the domino effect before, as have we. It happens every cycle. So raise money while you can…
“There has been a real ‘de-risking’ of the market, which will certainly affect the I.P.O. market…That will impact the late-stage venture market, because the I.P.O. market drives the late-stage venture market. And that will slowly impact the early-stage venture market.”
“Valuations will come down. There will be less exuberance about venture capital investments. What will probably take place is a flight to quality. Venture capitalists will want to invest more in the companies that look like they’re going to be successful and be a little less willing to take fliers on things that are hard to really handicap.
“If the financing environment changes, we’ll try to take advantage of that and invest in companies at lower valuations than we would otherwise be paying.”
Business Insider Emails & Alerts
Site highlights each day to your inbox.