Some VCs say they are rooting for a market dip to counterbalance an overheated startup market, with a VC at IVP predicting valuations will drop 10%-40% in 2019
Erin Griffith / New York Times : Tweets: @nytimesbusiness and @nytimes Tweets: @nytimesbusiness : Anticipating a downturn, venture capitalists make wish lists and wait http://www.nytimes.com/... @nytimes : “What's happening right now isn't sustainable and it won't go on forever. It can't.” Some venture capitalists are hoping for a dip in the market to cool an overheated start-up scene. http://www.nytimes.com/...
Context & Ripple Effects
This is at least the second round of this exact call. In early 2016, an Upfront survey found 91% of VCs expected valuations to fall within six months, and the same summit circuit heard that a cooling market would favor startups with real business models. Instead, per the New York Times' own later accounting, the correction never came — a decade-long timeline of bubble warnings shows things got bubblier rather than bursting.
Against that record, the IVP partner's 10%-40% drawdown forecast for 2019 reads less as analysis than as wishful positioning: VCs sitting on large funds want cheaper entry prices, and saying so publicly doubles as a signal to founders that today's marks won't hold.
First-order effects
- Founders raising in 2019 face investors who have publicly pre-announced a valuation reset — term sheets will price against the predicted 10%-40% decline, giving VCs leverage to demand lower marks or structured terms.
- IVP and firms sharing the view are signaling they intend to deploy into weakness, effectively telling limited partners their next fund buys assets at a discount.
Second-order effects
- If valuations do slip, deal terms harden before headline prices move — the 2016 squeeze showed the mechanism, when DraftKings raised $100M via convertible notes paying 5% interest and DoorDash handed investors IPO-blocking rights.
- Late-stage startups that priced off 2018 marks would be forced into renegotiated or bridge financings, shifting bargaining power from founders to the check-writers mid-cycle.
Third-order effects
- The deeper pattern is that these calls keep not coming true: the same industry that predicted a 2016 correction spent the following years funding ever-larger rounds, suggesting 'rooting for a dip' functions as cyclical rhetoric rather than a forecast — and that private valuations are sticky because no forced seller exists until the IPO window closes.
- If a genuine drawdown finally arrives, expect it to be triggered by public-market repricing flowing into private marks, not by VC wishes — making the gap between private valuations and liquidity the structural fault line.
The trend: Venture's recurring ritual of publicly predicting a valuation reset keeps colliding with a market that gets more expensive instead, leaving the private valuation–liquidity gap as the unresolved pressure point.