A lot has changed in the global economy since 2020. Recently, in 2022 the unprecedented Russia-Ukraine war has given a tight jolt to the market. Free flow of market has seen a serious drop in the previous quarter of this year. However, the story of venture capital is quite different from the others.
According to Pitchbook, in the first quarter of 2022 US has raised more money in VCs than in 2019. But unfortunately, most of the money was not invested in more start-ups. The investment has fallen sharply in the first quarter. The lack of interest of the venture capitalist is showing the sign of their reassessment of the landscape due to global inflation Ukraine War and the poor IPO market.
Amongst this hobnobbed situation, experts have predicted certain areas where venture capitalists would like to throw the dice. First among those is seed deals. VCs are good to go with cooling down the public market. Start-ups’ ages are equally proportionate to the risk factor. Grass root companies are way behind in offering Initial Public Offering in the market. And VCs are targeting that particular point to deal with their investment.
Amidst all these hustles, crypto surprisingly has held high its reputation in the market. So naturally, VCs like Hodges and Zuberi are eager to invest more in the Crypto business. Crypto start-ups in the US in the first quarter of 2022 recorded a brilliant investment from VCs, crossing $6 billion. However, nothing can last forever. There might be a time when the deals in crypto will start to close in the near future.
Meanwhile, VCs in Europe did not face any downward movement like in the US. VCs invested €27.5 billion in the first quarter, slightly higher than COVD hit in 2021. Companies like London’s Checkout.com and France’s Qonto have had a strong quarter.
It is prominent that venture capitalists will seek new ways to invest with the advent of new techs. Overcoming the challenges is the biggest question right now in the market policy. Undoubtedly, the VCs will play a crucial role in creating and sustaining the innovation ecosystem.
Asia is emerging as the new future of start-ups. However, other countries have seen a reverse growth in tech start-ups except for India. Andreessen Horowitz is planning to invest there as well. The US will seek better opportunities in Asia as seed deals.
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Experts are hoping that by the end of the third quarter of 2022, US VCs will bring good news to the public market. Once the global inflation comes down and Federal Reserve chooses to cut down the repo rate, American start-ups will gain the old pace. The future of venture capitalists is no doubt on fair ground. The shift is whimsical due to uncertain circumstances, but the outcome will be generous in the end.
