Venture capitalists and private equity investors worried about valuations – Preqin

Venture capital is the asset class the research firm sees as most at risk from the current volatility in the economy and market, as venture capital-backed companies have much in common with listed technology companies. stock exchanges that have suffered significant investment losses since the start of 2022, according to the report. The report cites as an example the year-to-date loss of 53.2% of ARK Investment Management’s Innovation exchange-traded fund.

Of those surveyed, 68% said they had concerns about the exiting environment, compared to just 33% who expressed concerns about exiting in the previous survey a year ago.

Additionally, only 26% of venture capitalists intend to increase their pace of capital deployment over the next 12 months, compared to 43% who expressed this intention in the survey a year ago. while 33% plan to deploy less over the period, compared to just 13% in 2021.

For private equity, only 30% of investors plan to increase their pace of capital deployment over the next year, compared to 43% who expressed this intention a year ago.

Private equity investors echoed the same concerns as venture capitalists about the exit environment, according to the report. A total of 67% of private equity investors said the exit environment is a concern that could lead to lower returns, compared to 28% who said it was a concern a year ago. a year.

“The post-COVID-19 stimulus hangover – combined with geopolitical events – has created the perfect storm for risk assets in 2022. In private markets, we have seen a relative shift in preferences towards real assets and away from higher-risk private equity and venture capital investments, Cameron Joyce, senior vice president, head of research studies at Preqin, said in a press release announcing the survey results. “New allocations to alternative assets are likely to continue in the current environment, but at a slower pace. That said, more defensive asset classes such as hedge funds and private debt should do relatively well.”

The report also indicates that more and more private debt investors are shifting their preferences towards distressed debt from direct lending strategies due to an expectation of more opportunities resulting from the impact of recessionary pressures on the economy. Mondial economy.

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