Rising interest rates are putting VCs back in their lanes

March 14, 2023

Amid the Silicon Valley Bank-led chaos of the last few days, Y Combinator made an intriguing announcement: It’s pivoting away from late-stage investing. It won’t be the last venture group to pull back from an expansion of its traditional investing remit.

During the COVID-19 pandemic’s first years, the pace at which venture capital firms could raise money expanded. PitchBook data indicates that U.S. venture capitalists saw their capital inflows more than double from $23.5 billion in 2012 to $51.4 billion in 2016. But investing cohort was just getting started: It further bolstered its fundraising from $60.5 billion in 2018 to $154.1 billion in 2021 and $162.6 billion in 2022.

Data visualization by Miranda Halpern, created with Flourish

The Exchange explores startups, markets and money.

Read it every morning on TechCrunch+ or get The Exchange newsletter every Saturday.

This dramatic rise in capital available to venture investors had a number of interesting impacts on the startup market. First, startups were able to raise more, more quickly, more frequently. Some startups raised two or even three times in a year. This led to dramatic markups and paper valuations that today no longer align with reality.

Another result of the boom in venture fundraising was the ability of firms to expand their investing footprint. One trend that lasted for years during the final stage of the last startup boom was late-stage investors going early-stage. The logic here was that if large venture funds could invest a round or two earlier, they could get far greater ownership of great companies at a lower average per-share cost. This, in time, would lead to simply nasty returns.

To pick some examples of this effort, recall that Andreessen Horowitz, a firm that has raised 12 funds with more than $1 billion in them during its life, per Crunchbase data, announced a seed effort in 2021 and a pre-seed endeavor in 2022.

Rising interest rates are putting VCs back in their lanes by Alex Wilhelm originally published on TechCrunch

https://techcrunch.com/2023/03/14/y-combinator-late-stage-investing-interest-rates/

Rising interest rates are putting VCs back in their lanes <body> <h1> Array ( [0] => eising interest rates are putting vcs back in their lanes [1] => dising interest rates are putting vcs back in their lanes [2] => fising interest rates are putting vcs back in their lanes [3] => tising interest rates are putting vcs back in their lanes [4] => 5ising interest rates are putting vcs back in their lanes [5] => 4ising interest rates are putting vcs back in their lanes [6] => rusing interest rates are putting vcs back in their lanes [7] => rjsing interest rates are putting vcs back in their lanes [8] => rksing interest rates are putting vcs back in their lanes [9] => rosing interest rates are putting vcs back in their lanes [10] => r9sing interest rates are putting vcs back in their lanes [11] => r8sing interest rates are putting vcs back in their lanes [12] => riaing interest rates are putting vcs back in their lanes [13] => rizing interest rates are putting vcs back in their lanes [14] => rixing interest rates are putting vcs back in their lanes [15] => riding interest rates are putting vcs back in their lanes [16] => rieing interest rates are putting vcs back in their lanes [17] => riwing interest rates are putting vcs back in their lanes [18] => risung interest rates are putting vcs back in their lanes [19] => risjng interest rates are putting vcs back in their lanes [20] => riskng interest rates are putting vcs back in their lanes [21] => risong interest rates are putting vcs back in their lanes [22] => ris9ng interest rates are putting vcs back in their lanes [23] => ris8ng interest rates are putting vcs back in their lanes [24] => risibg interest rates are putting vcs back in their lanes [25] => risimg interest rates are putting vcs back in their lanes [26] => risijg interest rates are putting vcs back in their lanes [27] => risihg interest rates are putting vcs back in their lanes [28] => risinf interest rates are putting vcs back in their lanes [29] => risinv interest rates are putting vcs back in their lanes [30] => risinb interest rates are putting vcs back in their lanes [31] => risinh interest rates are putting vcs back in their lanes [32] => risiny interest rates are putting vcs back in their lanes [33] => risint interest rates are putting vcs back in their lanes [34] => rising unterest rates are putting vcs back in their lanes [35] => rising jnterest rates are putting vcs back in their lanes [36] => rising knterest rates are putting vcs back in their lanes [37] => rising onterest rates are putting vcs back in their lanes [38] => rising 9nterest rates are putting vcs back in their lanes [39] => rising 8nterest rates are putting vcs back in their lanes [40] => rising ibterest rates are putting vcs back in their lanes [41] => rising imterest rates are putting vcs back in their lanes [42] => rising ijterest rates are putting vcs back in their lanes [43] => rising ihterest rates are putting vcs back in their lanes [44] => rising inrerest rates are putting vcs back in their lanes [45] => rising inferest rates are putting vcs back in their lanes [46] => rising ingerest rates are putting vcs back in their lanes [47] => rising inyerest rates are putting vcs back in their lanes [48] => rising in6erest rates are putting vcs back in their lanes [49] => rising in5erest rates are putting vcs back in their lanes [50] => rising intwrest rates are putting vcs back in their lanes [51] => rising intsrest rates are putting vcs back in their lanes [52] => rising intdrest rates are putting vcs back in their lanes [53] => rising intrrest rates are putting vcs back in their lanes [54] => rising int4rest rates are putting vcs back in their lanes [55] => rising int3rest rates are putting vcs back in their lanes [56] => rising inteeest rates are putting vcs back in their lanes [57] => rising intedest rates are putting vcs back in their lanes [58] => rising intefest rates are putting vcs back in their lanes [59] => rising intetest rates are putting vcs back in their lanes [60] => rising inte5est rates are putting vcs back in their lanes [61] => rising inte4est rates are putting vcs back in their lanes [62] => rising interwst rates are putting vcs back in their lanes [63] => rising intersst rates are putting vcs back in their lanes [64] => rising interdst rates are putting vcs back in their lanes [65] => rising interrst rates are putting vcs back in their lanes [66] => rising inter4st rates are putting vcs back in their lanes [67] => rising inter3st rates are putting vcs back in their lanes [68] => rising intereat rates are putting vcs back in their lanes [69] => rising interezt rates are putting vcs back in their lanes [70] => rising interext rates are putting vcs back in their lanes [71] => rising interedt rates are putting vcs back in their lanes [72] => rising intereet rates are putting vcs back in their lanes [73] => rising interewt rates are putting vcs back in their lanes [74] => rising interesr rates are putting vcs back in their lanes [75] => rising interesf rates are putting vcs back in their lanes [76] => rising interesg rates are putting vcs back in their lanes [77] => rising interesy rates are putting vcs back in their lanes [78] => rising interes6 rates are putting vcs back in their lanes [79] => rising interes5 rates are putting vcs back in their lanes [80] => rising interest eates are putting vcs back in their lanes [81] => rising interest dates are putting vcs back in their lanes [82] => rising interest fates are putting vcs back in their lanes [83] => rising interest tates are putting vcs back in their lanes [84] => rising interest 5ates are putting vcs back in their lanes [85] => rising interest 4ates are putting vcs back in their lanes [86] => rising interest rztes are putting vcs back in their lanes [87] => rising interest rstes are putting vcs back in their lanes [88] => rising interest rwtes are putting vcs back in their lanes [89] => rising interest rqtes are putting vcs back in their lanes [90] => rising interest rares are putting vcs back in their lanes [91] => rising interest rafes are putting vcs back in their lanes [92] => rising interest rages are putting vcs back in their lanes [93] => rising interest rayes are putting vcs back in their lanes [94] => rising interest ra6es are putting vcs back in their lanes [95] => rising interest ra5es are putting vcs back in their lanes [96] => rising interest ratws are putting vcs back in their lanes [97] => rising interest ratss are putting vcs back in their lanes [98] => rising interest ratds are putting vcs back in their lanes [99] => rising interest ratrs are putting vcs back in their lanes [100] => rising interest rat4s are putting vcs back in their lanes [101] => rising interest rat3s are putting vcs back in their lanes [102] => rising interest ratea are putting vcs back in their lanes [103] => rising interest ratez are putting vcs back in their lanes [104] => rising interest ratex are putting vcs back in their lanes [105] => rising interest rated are putting vcs back in their lanes [106] => rising interest ratee are putting vcs back in their lanes [107] => rising interest ratew are putting vcs back in their lanes [108] => rising interest rates zre putting vcs back in their lanes [109] => rising interest rates sre putting vcs back in their lanes [110] => rising interest rates wre putting vcs back in their lanes [111] => rising interest rates qre putting vcs back in their lanes [112] => rising interest rates aee putting vcs back in their lanes [113] => rising interest rates ade putting vcs back in their lanes [114] => rising interest rates afe putting vcs back in their lanes [115] => rising interest rates ate putting vcs back in their lanes [116] => rising interest rates a5e putting vcs back in their lanes [117] => rising interest rates a4e putting vcs back in their lanes [118] => rising interest rates arw putting vcs back in their lanes [119] => rising interest rates ars putting vcs back in their lanes [120] => rising interest rates ard putting vcs back in their lanes [121] => rising interest rates arr putting vcs back in their lanes [122] => rising interest rates ar4 putting vcs back in their lanes [123] => rising interest rates ar3 putting vcs back in their lanes [124] => rising interest rates are outting vcs back in their lanes [125] => rising interest rates are lutting vcs back in their lanes [126] => rising interest rates are -utting vcs back in their lanes [127] => rising interest rates are 0utting vcs back in their lanes [128] => rising interest rates are pytting vcs back in their lanes [129] => rising interest rates are phtting vcs back in their lanes [130] => rising interest rates are pjtting vcs back in their lanes [131] => rising interest rates are pitting vcs back in their lanes [132] => rising interest rates are p8tting vcs back in their lanes [133] => rising interest rates are p7tting vcs back in their lanes [134] => rising interest rates are purting vcs back in their lanes [135] => rising interest rates are pufting vcs back in their lanes [136] => rising interest rates are pugting vcs back in their lanes [137] => rising interest rates are puyting vcs back in their lanes [138] => rising interest rates are pu6ting vcs back in their lanes [139] => rising interest rates are pu5ting vcs back in their lanes [140] => rising interest rates are putring vcs back in their lanes [141] => rising interest rates are putfing vcs back in their lanes [142] => rising interest rates are putging vcs back in their lanes [143] => rising interest rates are putying vcs back in their lanes [144] => rising interest rates are put6ing vcs back in their lanes [145] => rising interest rates are put5ing vcs back in their lanes [146] => rising interest rates are puttung vcs back in their lanes [147] => rising interest rates are puttjng vcs back in their lanes [148] => rising interest rates are puttkng vcs back in their lanes [149] => rising interest rates are puttong vcs back in their lanes [150] => rising interest rates are putt9ng vcs back in their lanes [151] => rising interest rates are putt8ng vcs back in their lanes [152] => rising interest rates are puttibg vcs back in their lanes [153] => rising interest rates are puttimg vcs back in their lanes [154] => rising interest rates are puttijg vcs back in their lanes [155] => rising interest rates are puttihg vcs back in their lanes [156] => rising interest rates are puttinf vcs back in their lanes [157] => rising interest rates are puttinv vcs back in their lanes [158] => rising interest rates are puttinb vcs back in their lanes [159] => rising interest rates are puttinh vcs back in their lanes [160] => rising interest rates are puttiny vcs back in their lanes [161] => rising interest rates are puttint vcs back in their lanes [162] => rising interest rates are putting ccs back in their lanes [163] => rising interest rates are putting bcs back in their lanes [164] => rising interest rates are putting gcs back in their lanes [165] => rising interest rates are putting fcs back in their lanes [166] => rising interest rates are putting vxs back in their lanes [167] => rising interest rates are putting vvs back in their lanes [168] => rising interest rates are putting vfs back in their lanes [169] => rising interest rates are putting vds back in their lanes [170] => rising interest rates are putting vca back in their lanes [171] => rising interest rates are putting vcz back in their lanes [172] => rising interest rates are putting vcx back in their lanes [173] => rising interest rates are putting vcd back in their lanes [174] => rising interest rates are putting vce back in their lanes [175] => rising interest rates are putting vcw back in their lanes [176] => rising interest rates are putting vcs vack in their lanes [177] => rising interest rates are putting vcs nack in their lanes [178] => rising interest rates are putting vcs hack in their lanes [179] => rising interest rates are putting vcs gack in their lanes [180] => rising interest rates are putting vcs bzck in their lanes [181] => rising interest rates are putting vcs bsck in their lanes [182] => rising interest rates are putting vcs bwck in their lanes [183] => rising interest rates are putting vcs bqck in their lanes [184] => rising interest rates are putting vcs baxk in their lanes [185] => rising interest rates are putting vcs bavk in their lanes [186] => rising interest rates are putting vcs bafk in their lanes [187] => rising interest rates are putting vcs badk in their lanes [188] => rising interest rates are putting vcs bacj in their lanes [189] => rising interest rates are putting vcs bacm in their lanes [190] => rising interest rates are putting vcs bacl in their lanes [191] => rising interest rates are putting vcs baco in their lanes [192] => rising interest rates are putting vcs baci in their lanes [193] => rising interest rates are putting vcs back un their lanes [194] => rising interest rates are putting vcs back jn their lanes [195] => rising interest rates are putting vcs back kn their lanes [196] => rising interest rates are putting vcs back on their lanes [197] => rising interest rates are putting vcs back 9n their lanes [198] => rising interest rates are putting vcs back 8n their lanes [199] => rising interest rates are putting vcs back ib their lanes [200] => rising interest rates are putting vcs back im their lanes [201] => rising interest rates are putting vcs back ij their lanes [202] => rising interest rates are putting vcs back ih their lanes [203] => rising interest rates are putting vcs back in rheir lanes [204] => rising interest rates are putting vcs back in fheir lanes [205] => rising interest rates are putting vcs back in gheir lanes [206] => rising interest rates are putting vcs back in yheir lanes [207] => rising interest rates are putting vcs back in 6heir lanes [208] => rising interest rates are putting vcs back in 5heir lanes [209] => rising interest rates are putting vcs back in tgeir lanes [210] => rising interest rates are putting vcs back in tbeir lanes [211] => rising interest rates are putting vcs back in tneir lanes [212] => rising interest rates are putting vcs back in tjeir lanes [213] => rising interest rates are putting vcs back in tueir lanes [214] => rising interest rates are putting vcs back in tyeir lanes [215] => rising interest rates are putting vcs back in thwir lanes [216] => rising interest rates are putting vcs back in thsir lanes [217] => rising interest rates are putting vcs back in thdir lanes [218] => rising interest rates are putting vcs back in thrir lanes [219] => rising interest rates are putting vcs back in th4ir lanes [220] => rising interest rates are putting vcs back in th3ir lanes [221] => rising interest rates are putting vcs back in theur lanes [222] => rising interest rates are putting vcs back in thejr lanes [223] => rising interest rates are putting vcs back in thekr lanes [224] => rising interest rates are putting vcs back in theor lanes [225] => rising interest rates are putting vcs back in the9r lanes [226] => rising interest rates are putting vcs back in the8r lanes [227] => rising interest rates are putting vcs back in theie lanes [228] => rising interest rates are putting vcs back in theid lanes [229] => rising interest rates are putting vcs back in theif lanes [230] => rising interest rates are putting vcs back in theit lanes [231] => rising interest rates are putting vcs back in thei5 lanes [232] => rising interest rates are putting vcs back in thei4 lanes [233] => rising interest rates are putting vcs back in their kanes [234] => rising interest rates are putting vcs back in their panes [235] => rising interest rates are putting vcs back in their oanes [236] => rising interest rates are putting vcs back in their lznes [237] => rising interest rates are putting vcs back in their lsnes [238] => rising interest rates are putting vcs back in their lwnes [239] => rising interest rates are putting vcs back in their lqnes [240] => rising interest rates are putting vcs back in their labes [241] => rising interest rates are putting vcs back in their lames [242] => rising interest rates are putting vcs back in their lajes [243] => rising interest rates are putting vcs back in their lahes [244] => rising interest rates are putting vcs back in their lanws [245] => rising interest rates are putting vcs back in their lanss [246] => rising interest rates are putting vcs back in their lands [247] => rising interest rates are putting vcs back in their lanrs [248] => rising interest rates are putting vcs back in their lan4s [249] => rising interest rates are putting vcs back in their lan3s [250] => rising interest rates are putting vcs back in their lanea [251] => rising interest rates are putting vcs back in their lanez [252] => rising interest rates are putting vcs back in their lanex [253] => rising interest rates are putting vcs back in their laned [254] => rising interest rates are putting vcs back in their lanee [255] => rising interest rates are putting vcs back in their lanew ) </h1> </body>