Startup Investors Cut Valuations Amid Tech Stock Rout, Dismal IPOs

The recent stock rout is rattling the multitrillion-dollar market for startups after a long run of record investments, nosebleed valuations and rapid-fire deal-making. From a report: Venture capitalists say a significant reset in investment behavior is beginning to take hold that is poised to reduce initial public offerings, leave some companies short of funding and crimp valuations. Investors say several large startup backers are cutting back their investments, curtailing a flow that sprayed at full blast for most of the pandemic, particularly for older, more mature startups. And venture firms say they are advising their companies to prepare to conserve cash in a tougher funding environment. Tiger Global Management, one of the most prolific startup investors of the last two years, in recent weeks has been renegotiating investments that had been under discussion for numerous companies, reducing the valuations, people familiar with the deals said. Venture capitalists say other investors are doing the same. Dbt Labs, a fast-expanding business-software company, recently scaled back its fundraising plans. It struck a deal with investors for a funding round that values the Philadelphia-based company around $4 billion, down from the more than $6 billion it initially negotiated, according to people familiar with the deal. Jared Carmel, managing partner at Manhattan Venture Partners, a startup investor and adviser to venture-backed companies and their shareholders, said he watched prices for certain stock purchases of some private companies fall 10% in the past month.

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