Venture capitalists sitting on billions of dry powder: will this lead to a wave of investment? – Company law and corporate law

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A buzz is starting to build that we could see a return to blockbuster venture capital investments in 2023. Although companies have been wary of investing in recent months, that should change. If VCs start rolling out the massive amount of dry powder they’re currently sitting on, we could see investments next year along the lines of what we’ve seen in 2021 or even longer.

Jon Sakoda, founder of venture capital firm Decibel Partners, analyzed nearly a decade of fundraising and investment activity, and recently said
information that venture capitalists are currently sitting on $290 billion of dry powder, of which $162 billion is earmarked for new investment.

So what is dry powder? This is money raised by venture capitalists, but not yet deployed. And venture capitalists currently have a record stack of them.

Venture capitalists have curtailed their investments in 2022 with the economy stalling, inflation soaring and the market on a rollercoaster ride. But there will be pressure on these companies to deploy this substantial sum of money that has been held up.

sakoda commented information, “At some point, the floodgates will open.” And that’s true. With startup valuations lower than last year, this could be the perfect time for investors to increase their investment in startups that have proven successful despite extremely difficult conditions over the past year.

This could represent a significant opportunity not only for investors, but also for founders who are able to position themselves correctly and take advantage of this incredible opportunity. Investors will be looking for the next big thing, those companies that are forward-thinking, incredibly innovative, and ready to take off once the economy corrects.

It’s already arrived. Tech startups that were funded during previous downturns when valuations were lower have seen great success, and their investors who saw the potential and the opportunity have reaped great returns.

Startups need to cautiously start preparing for funding to start flowing again and how to best position themselves with investors. Startups will likely still face falling valuations, but if all goes according to plan, funding should become easier to secure in the coming months.

This could be a very exciting time for investors and founders, and it’s possible we could see the next big tech giant being born during this time.

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.

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