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Rising interest rates are putting VCs back in their lanes

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. Missing Attachment 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


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