Key takeaways
$182B
US VC investment in trailing 12 months
After 18 months of decline, VC investment levels show signs of stabilization in line with 2019-2020 levels.
+$1 trillion
Dry powder across Private Equity and Venture Capital
Record dry powder is a bright spot in the innovation economy, yet with a lack of limited partner (LP) pressure to invest, we expect capital deployment will remain slow.
95%
Of VCs advise clients on banking decisions
An SVB survey of 80 top venture capitalists (VCs) revealed they are overwhelmingly playing an active role in how founders manage their banking decisions.
Cautious optimism
Historically, 12-18 months into a down cycle VC investment reaches a floor. While US VC investment levels may still fall, they are showing signs of stabilizing.
Looking ahead, there are several key indicators that give pause, such as an inverted yield curve, falling corporate profits, muted LP distributions, increased down rounds and declining revenue growth among startups. Despite this adversity, we continue to believe in the resilience of the innovation economy.
Source: PitchBook, PitchBook NVCA Venture Monitor, NATO and SVB analysis.
Source: SVB proprietary data, PitchBook and SVB analysis.
Dwindling runway across the industry
In the next 12 months, only 46% of US VC-backed tech companies must raise — which is lower than historical pre-pandemic levels. Yet median runway continues to fall for all stages and sectors. Founders face depleting runway and few options to replenish it.
Runway has fallen, yet not as quickly as VC investment. Companies are managing runway by reducing burn and focusing on profitability and efficiency.
Growing importance of treasury management
When asked how founders should rank treasury management among other business challenges, VCs gave it near the same importance as navigating macro headwinds or managing regulatory risk – important but below more core business needs like product market fit.
Founders who might have put banking on the backburner in the past, must now actively manage their cash allocations as they do other business priorities.
Source: SVB survey, SVB proprietary data and SVB analysis.
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Written and researched by SVB experts
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