Written by Niket Nishant
(Reuters) – U.S. venture capital investors remain cautious about closing deals amid economic uncertainty, according to a PitchBook-NVCA report released on Thursday. Issues became apparent.
Approximately $37.5 billion in deals were completed in the third quarter ended Sept. 30, down nearly 32% from the previous quarter, the report said.
Limited liquidity has led investors to negotiate tougher terms for startups, leading many to postpone fundraising until conditions improve.
This report highlights the challenges in the VC space, as attention is focused on large rounds of artificial intelligence companies.
“AI companies are gaining the most attention in the venture industry,” the report states.
Despite the slowdown in trading, interest rate cuts by the Federal Reserve could stimulate economic activity.
“50 basis points isn’t enough to jumpstart venture business, but it’s a step in the right direction,” said Emily Jen, a VC analyst at Pitchbook.
A revival of the IPO market could further accelerate VC deals as investors will have more opportunities to exit their investments.
private for longer
Large startups such as Stripe, OpenAI, and SpaceX are choosing to remain private longer, providing liquidity to their employees through secondary stock sales instead of tapping into the public markets. Masu.
“Secondary is the best of both worlds. Companies can remain private for a long time, and investors looking for liquidity can get it,” Zheng said.
The growing appeal of private equity may also cause some to delay IPOs, especially if they have secured sufficient funding from private market investors.
“Democracy is coming. Private markets will continue to open and this new asset class is here to stay,” said Hau Ng, head of analytics and investment solutions at private marketplace Forge Global.
(Reporting by Niket Nishant in Bengaluru; Editing by Shailesh Kuber)
