In 2021, investors pumped a record $330 billion into U.S. tech
startups – twice as much as the previous year, which was
itself twice the level of three years earlier. But investments in
startups has plummeted this year.
This Financial Times article points to an important, and
sometimes overlooked, difference between the current downturn and
past downturns: the amount of capital invested into startups the
past several years by investors other than traditional venture
capital funds.
Corporate VCs, hedge funds, sovereign wealth funds, mutual funds
and others that historically invest most or all of their money in
public companies and mature private companies have invested
billions in startups in an effort to capture higher returns. With
valuations cratering and losses mounting, these investors will pull
back and likely be extremely shy about investing heavily in
startups again any time soon. While investments in startups by
traditional VC funds will likely rebound
