Many of the tech names that outperformed throughout the past decade have seen the steepest falls . Some have seen 70 % or more wiped off their values since the start of the year , depending on the sector . Shares in technology giants Netflix and Meta dropped 70 % and 51.5 %, respectively , over the first half of 2022 , while ‘ at-home tech ’ companies like Zoom and Peloton are down around 36 % and 73 %. Even Apple and – Google ’ s parent company – Alphabet have seen shares slide by around 20 %.

While many would argue a correction has been on the cards for some time , the speed and depth of this correction have caught many off guard , triggering a period of ‘ shell shock ’ in many private company boardrooms , as well as venture capital ( VC ) funds and private equity ( PE ) funds . This is particularly true for companies and founders who only started after the last correction in 2008 .

In valuation terms , we are now back to 2018 – 19 valuation levels . The sell-off has largely erased the pandemic premium when tech valuations rose significantly as digital-first businesses achieved consistent growth , while other economic sectors stagnated or reversed . Although there has been a lot already written about the negatives , as with previous market downturns context and perspective are essential .

Venture capital firms are re-evaluating economic uncertainty mean VC firms are re-evaluating investment plans .

Whenever there is a crash , investment from VC and PE funds investment slows significantly as they sit back and take time to reflect on the market . This allows them to assess which companies in their portfolio need help . However , this is more difficult if the portfolio comprises many business-to-consumer companies that can be severely and more quickly hit during a recession .

The dot-com period showed just how sensitive VC investment is to market downturns . When the bubble burst in the US , VC investment dropped by about 42 % in just one quarter at the beginning of 2001 , according to figures from the Organisation for Economic Co-operation and Development ( OECD ). By the end of the first quarter of 2003 , venture investment had fallen by a massive 85 % from the first quarter of 2000 .

Historically , VC and PE have thrived after recessions and market disruptions . So , despite the economic downturn , we could soon see a pick-up in VC and PE investment as lower valuations make more and more investment ‘ sense ’. A valuation

Marc Deschamps , Co-head , DAI Magister

reset provides an opportunity for VC and PE funds to back companies at more realistic prices than the boom period of the past two years , with the potential of healthy gains in the long run .

The good news is that despite the market storms , VC and PE firms are awash with dry powder reserves , which have been raised for only one purpose – to fund the growth of promising private tech companies .

Low-interest rates and an abundance of investors had made it easy for tech entrepreneurs to launch and grow businesses in the past decade , but the savage drop in valuations and level of

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