2022 was one of the worst years on record for venture spending,
but it's a new year and here to help us forecast what's on tap
for 2023 is Columbia business school professor
and founder of investing Network 37 Angels?
Angelelli
Angela, thank you so much for joining us this morning.
VC funding hit a nine quarter low in 2022 with only $74 billion in spending
in the third quarter. What was behind this contraction in spending?
I think it's an abundance of caution on both sides.
We heard a lot of founders saying, you know what I was going to raise,
but I'm gonna wait till you know, middle of next year and a lot of VC saying, you know,
I would have done this deal nine months ago,
but look what's happened in the public markets were going to pull back a little bit
now. Angela, do you consider this a bad sign for the industry?
Is it a harbinger of tough times ahead for
the industry or are things likely to turn around?
Absolutely not. I think it's actually fantastic for the industry.
First of all,
there's data to show that VC and entrepreneurship do
better in a little bit of a downturn.
And the other thing is, you know, a couple of fun facts.
One is that as of last year about three quarters
of VCS had never managed money during a downturn.
Um, so I think that irrational exuberance had to come back at some point.
So I don't think it's a bad thing at all,
You know, looking forward into this year, what do you do,
you anticipate that BC spending will continue to shrink
or to your point that you just made here,
are these bases going to learn lessons from this contraction
and apply that moving forward.
So I think if you separate late stage versus early stage on the late stage side,
I do think things are corrected to the point where we're not
going to see a ton more dip unfortunately on the early side,
I do think that the worst is yet to come.
Early stage is going to lag late stage in public markets.
If you look at 2008, half of all rounds and
10 were down around, but we didn't see that for about two years.
So I do think that unfortunately the worst is
yet to come on the early stage venture capital
now Angela,
let's shift gears here and talk about big tech companies like apple meta amazon,
of course they're dealing with serious cost cutting and lower demand right now.
A pullback in digital ad spending are smaller tech companies,
maybe some startups gonna suffer the same fate here?
I do think they are.
You know a question that uh those of us in the industry talked about a lot years
ago was are you a painkiller or are you a vitamin meaning are you nice to have,
are you solving a real pain?
And so I think for the vitamins in the
world they're going to see even more cost cutting.
But one of the silver linings,
I think of all these big tech companies and what they're going through is I
think that now smaller companies are going to have less of a war on talent.
So with everything there is a bit of a silver lining.
Absolutely. Angela. We love to hear that
now.
We saw fintech,
retail technology and global health funding
all fall pretty dramatically last year.
So what industries are you watching right now? Um, given that decline
to industries that we have always really liked,
but that are doing particularly well right now.
One is the future of work which you can kind of
separate into adult uploading and then the other would be um,
uh, worker automation.
So if you think about the robot overlords coming for us.
And so that's a really interesting space,
especially the former for me as an educator.
And then the second space is logistics technology.
It's interesting to see that the Suez Canal is making headlines
again right now because the whole last two years has shown such
a light on how little data we have around our supply chain
and it's a great time to be investing in the space.
Such interesting topics here.
Angela,
thank you so much for joining us this morning and thanks for breaking that down