Leaders | Back to its roots

The tech slump is encouraging venture capital to rediscover old ways

Small, profitable firms in strategic industries are now all the rage

Mar 2nd 2023

Until last year, venture capital (vc) had been riding high. With interest rates close to zero and little yield to be found elsewhere, large companies, hedge funds and sovereign-wealth investors began ploughing cash into startups, sending valuations upwards. In 2021 alone the amount of money flowing to startups doubled to nearly $640bn. Then soaring inflation and surging interest rates brought the market crashing down. Last year the investments made in startups worldwide sank by a third. Between the final quarter of 2021 and the same period in 2022, the valuations of private startups tumbled by 56%.

This article appeared in the Leaders section of the print edition under the headline “Back to its roots”