Cartoon: Hotel California
“Hotel California” by Ian Foley
This new cartoon illustrates the challenge start-ups are facing to find exits.
With the large increase of money into venture capital as an asset class over the last decade, many start-ups are primed for exits and many limited partners are waiting to see the promise of venture returns.
However, since the banner year of 2021, the market for IPOs has dried up and many strategic buyers are staying on the sidelines. According to the NVCA and PitchBook, last year saw a 94% year-on-year drop in IPOs and 2023 has only seen 53 to date. Similarly, KPMG saw a 91% drop in tech M&As in the US in 2022 compared to 2021, with the expectation that low volume will continue through the rest of the year.
With no exits, “pressure continues to build within the ecosystem”, remarked the authors of the NVCA and PitchBook report, in perhaps one of the understatements of the year.
On the positive side, Ringo Choi, EY’s IPO leader for Asia Pacific, believes Asia will see the first signs of a recovery that will then spread to the US markets, as “peaking inflation, energy prices softening and the rebound of mainland China’s economy” help investors regain confidence.
You can find more of Ian’s cartoons here.