The Venture Capital Apocalypse is coming...it might even be here already. The venture capital asset class is facing a watershed moment. Orphaned/Zombie VC software companies are everywhere.
The problems really start in 2020/2021. Massive amounts of dollars poured into every stage of Venture Capital. The number of unicorns exploded. This will come in later as a major issue.
There were simply too many dollars facing the same number of generational companies.
Eventually, interest rates got JACKED UP and a combination of public market valuations and private equity skepticism led to an early decline in M&A. The only way VCs make money is on long tail M&A outcomes. This eventually led to skyrocketing numbers of down rounds.
The lack of M&A continued to compound. Public markets now started to care a LOT more about profit and real accretive acquisitions. You couldn't just buy a high growth start up and see a share price pop. Not only that, there was a ton of software M&A in 2021 and those acquisitions started to fail.
This chart is particularly damning. For the technical chart nerds among us, exit values generally followed a long term trend upward. This made the VC asset class viable. We have seen a massive gap form between the trend line for acquisition price and actuals in software.
Finally, we are seeing exit multiples (acquisition prices) for both growth software companies and rule of 40 stay stubbornly low.
This is DIRE for the VC asset the class. All the ROI is in the long tail outcomes...and they aren't happening.
All of this has manifested in lows for distributions for most VC funds.
- VCs invested in businesses at lofty valuations.
- VC. backed software acquisitions are plummeting
- Down rounds are sky rocketing All of this results in VCs not distributing much to LPs.
So, where do we go from here?
- Many VCs will likely shut down. This sucks.
- Overall LP allocation to VC will likely go down.
- There will be many 'orphaned' VC backed software companies that don't have a path forward in the new environment.
Most Venture Capital Firms are absolutely cooked. This chart is so damning for the industry. To make it clear: the 2021 VC investments are VASTLY underperforming previous years at 36 months post inception. Same with 2022.
The age of distressed software investing is just beginning
venture backed zombies failing to scale
private equity backed software businesses loaded to the BRIM with debt
Whole new asset class is dropping in real time
But what about the cryptocurrency market, which is directly connected to the venture industry and completely dependent on it?
Oh, it's much worse here. The consequences have already begun to manifest themselves and this is only the beginning!
- How Long Can Verbal Interventions Sustain the Cryptocurrency Bubble?
- The Inevitable Burst of the Crypto Bubble: What Needs to Happen?
- Genuine Crypto Projects Are Rare: 96% of All Crypto Projects Are Scams
- The Cryptocurrencies, Meme Coins, and the "Dead Cat Bounce" Phenomenon in 2025
- Crypto Exchanges: A Colossus with Feet of Clay - Fake Volumes, Fake Traffic, and Fake Users Introduction
- The Crypto Market: "No Matter How You Move, The Cow is Dead"
- The Meme Epidemic DOGE, $TRUMP, SHIBA, $MELANIA: Very Few Remain Uninfected: whos next?
- Is the Crypto Market Dead? $TRUMP Might Help, but Not Anytime Soon
Take care of yourself!
