Finally starting to see significant write downs on many startups last few mths. Will do my proper year end mark to market but offhand both VC and startup side is at 2.08 TVPI, 0.3 DPI, 14-15% IRR. Big 13% drop on TVPI last 6 mths.
My prediction is next 12 mths is when asean Vc funded startups finally either raise new funds, turn cashflow positive or close down/distressed M&A. Those lucky ones that raise will mostly be on lower valuation unless their financials have improved dramatically and are clearly going to be or are very profitable.
And the VC funds that backed them will also finally correspondingly mark down the valuations of their portfolios. Already finally seeing some writedown of Vc value from the very unrealistic 2021/22 highs.
As mentioned before, it’s good for the ecosystem to clean things up, recycle talent and resources. But all this means less new money will be investing into Vc funds or startups until the later stage ones and their VCs prove they can make good money for investors. And the new money will be very demanding on valuation and quality. It’s actually great time to invest.
What can make things change? 4-5 ipo or giant exits of our late stage startups that make solid returns for investors and founders. And/or macro environment change with regards to IR and prospects. Then sentiment may improve.
For us personally? We are still patiently optimistic for certain winners in our portfolio and hope to still get a 2-3x on invested capital when we finally stop for good probably in a few years time. Already more than halved investing budget annually so that our cash inflow from PE exceeds outflow.
IRR of 14-15% is decent but below what we have been getting last 13 years on listed tech stock investing. Of course compared to STI it’s better but that’s not really any consolation.
Rooting for the remaining founders to navigate this issue of lack of profits and exits and show the world we are a quality ecosystem.
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