Venture capital’s $300bn question
Why isn’t the industry spending its enormous pile of cash?
Consider the following puzzle. In 2021 venture capitalists raised $150bn in fresh cash, a record amount. Despite a market slowdown, they broke the record once again in 2022, raising more than $160bn. Chunks of this have already been spent, but close to $300bn of “dry powder” sits waiting to be put to use. Indeed, spending fell throughout 2022. Fledgling firms appear cheap. Why, then, are venture capitalists sitting on the cash?
This article appeared in the Finance & economics section of the print edition under the headline “The $300bn question”
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