#Venture capital fund administration windows

The reason we are spending so much time discussing exit windows is their impact on hold periods. For instance, despite Mobileye’s price uplift, market value has still lagged prior expectations ( CNBC). However, we would caution against expecting a wholesale reopening of the exit window for technology companies in the near-term. Additionally, we often hear from GPs that unspent M&A budgets from 2022 will also be a story in 2023, helping to produce exits. For instance, Mobileye experienced a post-listing pop in stock price in October of this year. However, compressed should not be misconstrued to mean entirely closed. With diminished activity within the two most prominent exit paths for VC-funded companies, suffice it to say the exit environment has compressed. As public company stock prices fall more quickly than private company valuations, take-private transactions become more attractive relative to acquiring private startups. This is due in part to the relative attractiveness of take-private transactions in down markets. M&A offers a viable exit route for venture-backed companies however, corporate activity thereof within the venture-backed market has also been subdued, at least through August ( Crunchbase). However, it’s important to remember IPOs do not represent the entire exit window and we would be remiss not to mention mergers and acquisitions (M&A). That is not to say the public market pullback is not meaningful-it most certainly is. Therefore, comparisons between the pullback in 2022 and the environment of 2021 can paint an overly stark picture. IPOs nearly double year over year ( FactSet) and global capital raised via IPOs reaching a new record ( Reuters). In fact, last year saw the number of U.S. As a result of this pause, public listings have fallen significantly relative to 2021, a banner year for public market debuts. Logically, it does not make sense for a company to invite revaluations when markets are trending downwards. Following significant drawdowns in listed stocks, particularly within the technology sector, VC-backed companies have pumped the breaks on making their public debuts. One consequence is a closing of the exit window, which, if continued, could lead to a build-up in liquidity needs, amongst other impacts. Recent public market movements are clearly impacting the VC market. How is the downturn in public markets impacting the venture capital market? Our overall approach remains informed, however, by the long-term nature of not only the asset class but the innovation economy to which it is closely tied. Our own preparations have taken the form of marginal adjustments to our manager selection criteria, some of which we will share as we tie in market views with suggested action items. In fact, now that rising tides are no longer lifting all boats, we would argue manager and asset selection are even more important today than ever. Such an environment poses both potential opportunities but also challenges, with successful manager selection required for successful navigation.

Specifically, we envisage an environment defined by more down rounds, increasingly investor-friendly terms and a greater proportion of leaner and cycle-tested startups. Why manager and asset selection may be more important than ever within venture capital markets todayīased on our expectations, we at Russell Investments believe investors should be preparing for continued adjustments within the VC market opportunity set. However, historical patterns and current events can provide guidance for nearer-term projections applicable to upcoming investment periods. In such a long-term asset class, forecasting exit environments over 10+ year horizons can prove difficult at best. We hope you find the articles useful for running your investment business.Public market volatility and macroeconomic uncertainty continue to affect the venture capital (VC) market. Thought Leadership Here we share product, market and regulatory changes that impact our clients, namely fund managers, superannuation trustees, listed companies, family offices and dealer groups.

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Venture capital fund administration