2 minute read
tech outlook Facing the challenge: Raising capital in a period of lackluster IPO volumes
Tech valuations are down, making it challenging to invest in late-stage companies. At the same time, VC partners are eager to cash in on their investments. Find out what the possible exit options look like in the full article.
Monique Renta | National Transformative Technology Group Executive | Bank of America
Key takeaways
- Valuations have come down dramatically from the peak numbers of 2020 and 2021, making late-stage capital difficult to come by.
- With the IPO market effectively frozen, limited partners have not been able to replenish investments and redeploy capital.
- The tech marketplace needed a reset — too many ill-considered startups were funded in the flush of money during 2020 and 2021.
What drives the supply and demand of capital and the status of the equity markets? This article covers challenges and opportunities, business types we predict will get funding in 2024, bank vs. private debt liquidity and changes in liquidity sources.
We also explore the reasons the market for IPOs has dried up, where the cash is going and what factors are likely to keep tech investors on the sidelines through the end of 2024.
For the time being, investors have their choice of a wide range of investments with more liquid exit options, like stocks, money market funds and U.S. Treasury bonds. These alternatives are likely to keep IPO markets in the doldrums for the foreseeable future.
