This post is by Fred Wilson from AVC
I like to bookend the New Year holiday with two posts, one looking back at the year that is ending and one looking forward to the year ahead. This is the first of these two posts. The second one will run tomorrow.
What happened in 2022 is the bottom fell out of the capital markets and the startup and tech sector more broadly.
Back in February 2021, I wrote a post called How This Ends. In it, I wrote:
I believe it ends when the Covid 19 pandemic is over and the global economy recovers. Those two things won’t necessarily happen at the same time. There is a wide range of recovery scenarios and nobody really knows how long it will take the global economy to recover from the pandemic.
But at some point, economies will recover, central banks will tighten the money supply, and interest rates will rise. We may see price inflation of consumer goods and labor too, although that is less clear.
When economies recover and interest rates rise, the air will come out of the asset price bubbles that have built up and the go go markets will hit the brakes.
I went on to say that I had no idea when all of that would happen, but I was confident it would.
Well, it happened in 2022.
The air came out of the asset price bubbles that had built up over the last decade and were accelerated/exaggerated by the pandemic. There have been a (Read more...)