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Q2 2022 PitchBook Analyst Note: Did VC Fly Too Close to the Sun?

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A cloudy end to VC’s day in the sun

Financial markets have sustained a series of gut punches over the last two quarters. With falling growth stocks, a recent wave of layoffs and central banks scrambling to tame inflation, the tailwinds benefiting venture capital funds over the prior two years appear to have reversed. 

As a consequence, fears of recession and anecdotes of dealmaking troubles have VC fund LPs wondering what will come of their outsize paper returns.

Our latest analyst note takes an early look at 2022 VC fund performance and the impact of growing pessimism on private market portfolios.

Key takeaways

  • Preliminary data for Q1 suggests markdowns in net asset values have started occurring, with 68.1% of reporting VC funds showing a drop in valuations from their 2021 peaks. That puts VC funds in worse shape than other private fund strategies.

 

  • With over $1.4 trillion in unrealized value sitting in VC funds, a sizable and sustained drop in valuation multiples could result in billions of dollars in value wiped away from LP portfolios.
Table of Contents

Key takeaways 1
Introduction 2
What goes up… 3
…Might come down 4
A cloud with silver lining 7
A note on the data 9

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