Plunging shares of tech stocks have prompted venture capital firms to take an unusual step: buying publicly traded stocks.
Thrive Capital early this year bought beaten-down shares in online used-car marketplace Carvana, according to securities filings. Andreessen Horowitz bought shares in Jack Dorsey’s Block, which partner Marc Andreessen has said he regretted not backing when it was private. And GGV Capital in May bought more than 400,000 shares of HashiCorp, a newly public software company it first backed in 2014.
“VCs know a fair bit about the companies they’ve taken public recently,” said GGV Capital managing director Glenn Solomon. “A lot of those companies’ prospects are strong, yet valuations have been hit pretty hard.”
Like GGV, firms including Sequoia Capital have added to prior investments in companies after their stocks have fallen steeply. Others like Andreessen Horowitz and Thrive are investing in companies for the first time. The investments indicate that venture investors, who are sitting on record levels of dry powder, are still on the hunt for deals—especially if they think there’s a good opportunity. The extended stock sell-off means many of these investments are not yet paying off, however.