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GOOD-BYE VENTURE CAPITAL

By Staff Reporters

SPONSOR: http://www.MARCINKOASSOCIATES.com

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DEFINITION: Venture capital (VC) is a form of private equity and a type of financing that investors provide to start-up companies and small businesses that are believed to have long term growth potential. Venture capital generally comes from well-off investors, investment banks, and any other financial institutions. Venture capital doesn’t always have to be money. In fact, it often comes as technical or managerial expertise. VC is typically allocated to small companies with exceptional growth potential or to those that grow quickly and appear poised to continue to expand.

CITE: https://www.r2library.com/Resource/Title/082610254

DEFINITION: Disruptive innovation is a business that creates a new market or value network, or enters at the bottom of an existing market and eventually displaces established market-leading firms, products, and alliances. The term, “disruptive innovation” was popularized by the American academic Clayton Christensen and his collaborators beginning in 1995, but the concept had been previously described in Richard N. Foster‘s book “Innovation: The Attacker’s Advantage” and in the paper Strategic Responses to Technological Threats.

CITE: https://www.r2library.com/Resource/Title/082610254

Start-Ups and industry disruptors: Here are just a few of the recent collapses, as per the New York Times:

• WeWork, which raised over $11 billion as a private startup, went bankrupt earlier this fall.
• Hopin, the virtual events startup that rode a Covid Virus wave to a $7.6 billion valuation, sold its primary business units for $15 million.
• The e-scooter company Bird, which became the fastest startup ever to land a $1 billion valuation, was de-listed from the NYSE and is now worth $7 million.
• We [Don’t] Work: https://medicalexecutivepost.com/2023/11/07/wework-officially-bankrupt/

Overall, more than 3,200 private venture-capital backed US startups that have collectively raised $27.2 billion have gone out of business this year, according to the New York Times and PitchBook. So, why are the disruptors doing down?

MORE: https://www.cnbc.com/2021/05/25/these-are-the-2021-cnbc-disruptor-50-companies.html

Well, the Federal Reserve raised interest rates to a 22-year high. The cost of capital has become far more expensive, and investments that are less risky have gotten more attractive. This year has been particularly bad.

It’s a sad and instantaneous end to the golden Venture Capital years fueled by low interest rates and the growth of the mobile interne. Investment in US startups jumped by 8x between 2012 and 2022 to $344 billion dollars.

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Filed under: Career Development, Financial Planning, iMBA, Inc., Investing, Research & Development | Tagged: Bird, clayton cristensen, disruptor, Federal Reserve, FOMC, Hopin, inflation rates, inflatioon, IRS, New York Times, NYT, Pitchbook, Private Equity, Richard Foster, start-ups, VC, Venture Capital, WeWork | Leave a comment »