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Another Sector Hitting The Wall: Venture Capital

Aug. 01, 2022 7:05 PM ETSPY, IVV, VOO, VTI, DIA, IWM, QQQ6 Comments
John M. Mason profile picture
John M. Mason


  • The venture capital world has hit new highs in the past couple of years, but now is facing a time when the future looks dismal.
  • The venture capital sector is just the latest financial area that benefitted from the largesse of the Federal Reserve in recent years but is now facing a painful future ahead.
  • Some have said the venture capital world is "in the grip of a silent crash."
  • These revelations give further indication that although on the surface the U.S. economy may look like it is doing OK, underneath there are some real problems arising.
  • These realities just add to the job that the Federal Reserve is facing in the near future.

Venture Capital


I have been writing about retreating sectors in recent months, sectors of the economy that have boomed over the past two years or so due to the largesse of the Federal Reserve, but are now in retreat as the Fed

This article was written by

John M. Mason profile picture
John M. Mason writes on current monetary and financial events. He is the founder and CEO of New Finance, LLC. Dr. Mason has been President and CEO of two publicly traded financial institutions and the executive vice president and CFO of a third. He has also served as a special assistant to the secretary of the Department of Housing and Urban Development in Washington, D. C. and as a senior economist within the Federal Reserve System. He formerly was on the faculty of the Finance Department, Wharton School, the University of Pennsylvania and was a professor at Penn State University and taught in both the Management Division and the Engineering Division. Dr. Mason has served on the boards of venture capital funds and other private equity funds. He has worked with young entrepreneurs, especially within the urban environment, starting or running companies primarily connected with Information Technology.

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (6)

TheOldHand profile picture
There comes a time when the zombie companies must be killed off. That time is now and the magic bullet used is interest rates.
Iggy_de_la_Varga profile picture
looking for actual data showing a slowdown? KKR's earnings showed falling deal making (drop off in IPO, M and A, SPAC deals) in the VC/PE space that the author speculates about

contrarily, look at the activity levels of VC- focused BDC's like HTGC and RWAY. HTGC is having no trouble finding VC-backed late growth stage growth companies that are looking for debt financing to fuel their continued growth...HTGC cc also reported their portfolio companies raised as much equity financing in Q2 as Q1, so they are not seeing the contraction in ability to fund growth the author speculates about...

slowing? yes. apocalyptic/across the board? no (at least, not yet)
@Iggy_de_la_Varga beat me to the punch . . . VC orginations have clearly slowed and yes the class of '21 is likely to have poor returns but headline bears no relationship to reality, at least currently
Wait until PE is forced into liquidation of their residential real estate portfolios. The crash in housing prices will be greater than the GFC.
I raised $10 mil of VC money in a “Series A” round in mid February 2000 for a company I founded. Within a month, the NASDAQ peaked and dotcom companies like mine were disappearing daily. A website called f*ckedcompany.com popped up to chronicle the carnage. Now, at age 50, I have perspective and advice for anyone involved or invested in a profitless start up: Do not spend one second living in denial. The bubble has popped. If you’re the founder, get profitable fast. If you’re an employee, seek employment somewhere profitable. If you’re an investor, try to trade in your shares…give up the upside and try to salvage your principal.
@RenoGuy That is the key, have to aim to get profitable ASAP. Liquidity is drying up with the FED reducing the bloated sheet and M1 and M2 negative. Time is not on your side if you are spending money like a drunken sailor. UBER was "cash flow positive" but still managed to lose -$2.6 BILLION in one quarter, not the path to success, but crazy people seem to like it.
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