Extra Edition VC Update
(Friday, Apr. 11th)

Hello Reader,

Can you believe it's been a week?? Here are the latest developments and various takes on the current Economic situation, along with their implications for venture capital (April 6th to Friday, April 11th, 2025):

Public Markets and Asset Valuations (with VC Relevance):

• Significant market volatility, driven by tariff announcements, continued to create a challenging environment for public market exits, impacting VC liquidity. [Natasha Mascarenhas, 03.04.2025] noted that former President Trump’s new tariffs are expected to significantly impact venture capital markets, particularly by delaying IPO timelines due to increased market volatility. Klarna pulled back its $15B U.S. IPO due to market volatility, blamed on new Trump-era tariffs. StubHub and eToro also paused IPO plans due to market uncertainty tied to U.S.-China trade tensions.
• The Nasdaq entering a bear market and the S&P 500 experiencing significant drops put downward pressure on late-stage VC valuations. [Fintech Brainfood by Simon Taylor, 06.04.2025] highlighted the Nasdaq’s 21% drop and the S&P 500’s substantial two-day fall. Companies relying on high public comparables for valuation will face compression as public markets retreat.
• Despite public market headwinds, early-stage VC activity showed resilience, particularly in specific sectors like AI and fintech infrastructure. [The VC Corner, 06.04.2025] indicated that fintech startups are regaining momentum, and VCs are doubling down on this sector. Several new VC funds with a focus on fintech, AI, and early-stage investments were announced. Moneta Ventures raised $250M for a fund focused on fintech, AI, and enterprise software.
• Down rounds and secondary sales became more prevalent in late-stage VC as IPO prospects dimmed. [Sifted Newsletter, 04.04.2025] highlighted Plaid’s $575M secondary round at a lower valuation than in 2021, indicating a trend of valuation resets. This reflects a broader VC trend of fewer IPOs and more hybrid funding strategies to retain talent.
• Investor sentiment in VC remained cautiously optimistic for the long term, especially in transformative technologies like AI, but short-term fundraising may become harder. [Natasha Mascarenhas] noted that early-stage VCs remain optimistic despite macroeconomic headwinds, citing long-term horizons and the ongoing AI revolution. However, short-term fundraising may become harder, with investors emphasizing DPI (Distributions to Paid-In Capital) and liquidity.

Trade (with VC Relevance):

• The implementation and partial pause of U.S. tariffs created significant uncertainty for startups with global supply chains, potentially impacting their valuations and growth prospects. [Morgan Stanley Five Ideas, 09.04.2025] confirmed that tariffs are hitting investor sentiment and increasing risk aversion. Protectionist tariffs can derail global procurement and weaken startup supply chains, particularly in hardware, cleantech, and advanced manufacturing.
• VCs are increasingly evaluating startups that help businesses adapt to supply chain disruptions and cost inflation caused by tariffs. [Natasha Mascarenhas, 03.04.2025] mentioned logistics software and enterprise efficiency tools as examples. Startups solving tariff challenges, such as warehouse optimization or digital trade finance, are seeing more investor interest.
• The push for reshoring and sovereign control over logistics could create new investment opportunities for VCs in domestic or regional supply-focused innovations, dual-use defense technologies, and domestic infrastructure. [Finanz und Wirtschaft, 10.04.2025] highlighted the growing importance of sovereign resilience themes. Venture capitalists should be cautious on cross-border business models and bolster investments in domestic or regional supply-focused innovations.

Business Confidence (with VC Relevance):

• Uncertainty stemming from tariffs and potential recession risks dampened business confidence, potentially leading to delays in corporate innovation initiatives and impacting the customer base for some startups. Larry Fink’s 2025 letter highlighted general economic anxiety. Howard Marks also emphasized that in an uncertain world, people are likely to be loath to make decisions
• Despite the broader uncertainty, some VCs see the market chaos as an opportune time to invest in or build new companies. [Sifted Newsletter, 09.04.2025] suggested that now, amid market chaos and looming recession fears, may be the best time to start a company.
• The chaotic nature of tariff policies reportedly deterred investment and paused some deal and IPO preparations, directly affecting VC-backed companies looking for exits or further funding. [“Term SheetFortune”, 08.04.2025] noted that tariffs could trigger a VC reckoning. Klarna’s IPO pause is a concrete example.

Further Insights Relevant for Venture Capital:

• AI continued to be a dominant sector for VC investment. Andreessen Horowitz is reportedly aiming to raise a record-breaking $20 billion AI-focused fund.
• Fintech and insurtech sectors showed continued early-stage activity, with new funds and deals emerging, particularly in areas like infrastructure and emerging markets. [The VC Corner, 06.04.2025] indicated a fintech comeback. Several early-stage fintech and insurtech deals were highlighted, such as Vivere Partners ($7.5M Series A), Miss Moneypenny Technologies ($8M Seed), and Luzern Risk ($12M Series A).
• The IPO market freeze is pushing VCs to focus on alternative exit strategies, such as M&A and secondary sales, and to prioritize portfolio companies with sustainable business models and profitability potential. [Wall Street Rollup, 06.04.2025] highlighted the emerging divide between funds that returned DPI (realized gains) and those with paper gains, emphasizing the importance of exits.
• Geopolitical factors, particularly tariffs, are becoming a significant consideration in VC due diligence, with investors assessing portfolio company exposure and favoring domestic or regionally-focused businesses. [StrictlyVC, 09.04.2025] noted the increasing relevance of geopolitics (e.g., tariffs) as introducing new macro uncertainty for startups globally.
• New VC funds with specific sector focuses (e.g., cybersecurity, climate tech, early-stage) were launched, indicating continued dry powder despite market uncertainty. [VC - April 2025 - 4] listed several new VC funds. SignalFire announced a >$1B new AI-focused VC fund.

These points collectively illustrate that the macroeconomic environment during this week presented both challenges and opportunities for venture capital.

​
​Unsubscribe · Preferences​