Chamath @ 00:34:05Right
venturemarkets
The current crisis in late‑stage/growth startup funding and valuations will not resolve quickly; instead, the growth-equity and late-stage VC market will remain ‘toxic’ and largely impaired for roughly 2–3 years from late 2022 (i.e., through about 2024–2025).
I thought that this growth stuff would get sorted out in 2 to 3 months, and now I'm worried it's 2 to 3 years. I think it's toxic.View on YouTube
Explanation
Available data show that late‑stage/growth VC did not snap back within a few months of late 2022 and instead stayed impaired for roughly the 2–3 year window Chamath worried about.
- In 2023, late‑stage venture activity and valuations fell sharply: one review notes that late‑stage capital deployed through Q3 2023 was far below 2022 and that median late‑stage valuations were down more than 20% versus end‑2022, with more companies facing down rounds and a still‑dormant IPO market. (eisneramper.com) This fits the idea of a “toxic” late‑stage environment persisting rather than resolving within months.
- Through 2024, the overall VC market remained well below the 2021 peak, with global VC investment in 2024 still ~55% under 2021 and heavily concentrated in a few AI mega‑rounds, indicating that broad late‑stage/growth funding was still constrained. (barrons.com) At the same time, private‑equity/VC exit value in 2024 hit a five‑year low, and commentators highlighted a liquidity drought and stalled exits—conditions that keep late‑stage and growth rounds difficult and valuation resets in place. (spglobal.com) Carta’s 2024 data showed 2022‑vintage VC funds had deployed only 43% of capital after two years, the slowest deployment of recent vintages, underscoring a persistently cautious market rather than a rapid rebound. (carta.com)
- By late 2024–2025, signs of recovery start to appear—e.g., a 2024 uptick in total VC dollars versus 2023 and, in Europe, 2025 data showing venture‑growth and late‑stage valuations rising again and the share of down rounds falling. (afurrier.com) That recovery timing (becoming meaningfully better in 2024–2025 rather than in early 2023) lines up with a roughly 2–3 year impaired period starting in late 2022.
So while conditions are improving by 2025, the evidence shows that the late‑stage/growth market stayed depressed and difficult for about two years (2023–2024) and only gradually began to normalize in the third year—consistent with Chamath’s prediction that the crisis would last years, not a couple of months.