Report: 61% of VC firms haven't invested during a market downturn - Business Insider

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Only 1 in 4 venture firms have lived through multiple downturns, and those few are mostly likely to reap outsized returns now, Silicon Valley's preeminent bank says

"It's a different playbook in a downturn," Silicon Valley Bank head of corporate finance and report author Bob Blee told Business Insider. "It's one thing to read the playbook, and another to have experienced it and have helped write it."

, choose which firms to invest in through particular funds, and then VCs deploy those funds by investing in startups. If one part of the ecosystem is disrupted, say if an LP decides not to back a venture firm's new fund, that erosion of the investment capital base could have significant downstream effects.

"In these downturns, adversity drives innovation," Blee said. "An outsized number of successful tech companies are founded, and investors can get in at valuations that are more apt to give them higher returns. The calibration is happening where they can pick up the pieces quickly and make the most out of the downturn ahead of us."are most likely to go under because younger startups are inherently risky, even in boom times.

 

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