Friedberg @ 01:18:56Inconclusive
ventureeconomy
The roughly $250B of VC dry powder available as of mid‑2022 will be deployed over the following years in a way that is significantly stimulative to the real economy, funding new technology companies that in aggregate create substantial new employment and new areas of economic growth, offsetting much of the prior speculative excess.
We’ve never had this much dry powder sitting on the sidelines. And this is where the free money should go. It should go to creating new companies that create new jobs. And it is it's found its way there... some amount of it made its way into funding the creation of new companies that are going to create jobs. And that is the good thing of what's happened over the last couple of years, despite the asset implosion of all these bubbly things that have happened.View on YouTube
Explanation
Available data are mixed and the time horizon is probably too short to judge this strong, long‑run macro claim.
On the deployment of dry powder:
- U.S. VC firms had about $311.6B in dry powder at the end of 2023, more than the “~$250B” cited in mid‑2022, indicating that uncalled capital has grown, not been substantially run down.(nvca.org)
- Globally, PE+VC funds held a record $2.62T of uncommitted capital as of July 2024, with a rising share of “aging” (4+ year‑old) capital, suggesting significant difficulty deploying existing dry powder.(forbes.com)
This contradicts the idea that most of the mid‑2022 dry powder has already been actively deployed in the subsequent few years.
On actual VC investment levels:
- U.S. VC investment fell from $242.2B in 2022 to $170.6B in 2023, and global VC fell from $435.7B in 2022 to $260B in 2023, a ~40% drop, consistent with a broad pullback.(spglobal.com)
- In 2024, there was some rebound: U.S. VC funding rose to about $209B, with AI startups taking a record ~46% share, and global VC rose modestly to $314B, still ~55% below the 2021 peak.(reuters.com)
So capital is being deployed, but not at clearly extraordinary levels relative to the pre‑bubble trend, and not in a way that visibly exhausts the 2022 dry‑powder overhang.
On real‑economy impact (jobs and new growth areas):
- Historical work shows venture‑backed firms are important for jobs and GDP, but those studies mostly cover periods up to ~2020 and don’t isolate the post‑2022 dry‑powder deployment.(ventureforward.org)
- There are localized signs of VC‑linked job creation (e.g., Virginia’s 10,000+ new high‑growth, high‑wage startups in 2022–2023, supported in part by rising VC investment in the state), but these are not enough to conclude that, in aggregate, new VC‑funded firms have already “offset much of” the speculative excess of the 2020–2021 bubble.(axios.com)
- The post‑2022 period also saw major tech layoffs and a sharp slowdown in startup funding outside of hot areas like AI, which cuts against a clear narrative of broad, net‑new employment gains driven by that specific pool of dry powder.(spglobal.com)
Because:
- a large share of the dry powder present in mid‑2022 is still uninvested by 2024–2025;
- the deployment that has occurred is heavily concentrated (e.g., in a few large AI rounds) rather than clearly broad‑based; and
- it is inherently hard, after only ~3 years, to measure whether this capital has “offset much” of prior speculative excess via net job creation and new growth sectors,
there is not enough evidence yet to decisively label the prediction as either right or wrong. The fairest assessment as of late 2025 is that it is too early to tell, i.e., inconclusive.