Amid tech stocks' poor performance, especially IPOs, some venture firms are cutting back investments and startup valuations, as they renegotiate funding deals
As everyone with a brokerage account braces for emotional trauma they've rarely … Tweets: Eliot Brown / @eliotwb : Several large startup investors rapidly pulling back -prices for private shares dropping -deals getting repriced -IPO window seems to be closing -multiples are way down A chilly reset is underway in the $4 T startup market after a searing hot run https://www.wsj.com/... Eliot Brown / @eliotwb : Driving the startup chill: Share price change since listing publicly... DoorDash (-40%) Oscar (-81%) UIPath (-47%) Compass (-56%) Robinhood (-59%) Coupang (-28%) (first day closing price) https://www.wsj.com/... Ann Lipton / @annmlipton : well now i don't know whether to assign my students the NYT article from two weeks ago about the frothy startup market where investors throw cash at founders, or this article https://twitter.com/... Dan Gallagher / @djtgallagher : Cloud selloff is raining on VC deals. @eliotwb and @heathersomervil have the gory details- https://www.wsj.com/... Heather Somerville / @heathersomervil : The recent stock market rout is rattling the $4 trillion U.S. startup market after a pandemic-induced run of record investments. Now, investors are cutting valuations, passing on deals and warning of an end to good times. From me and @eliotwb https://www.wsj.com/...
Context & Ripple Effects
This is a familiar cycle repeating at larger scale. In 2015, sky-high valuations began backfiring on Silicon Valley companies trying to raise money or go public, and by early 2016 the squeeze had forced startups into convertible notes and investor protections like DoorDash's right to block an IPO. The 2020 COVID shock produced the same playbook — layoffs, halted IPOs, slashed prices.
What changed by February 2022 is that the markdowns are now visible in public markets: recent listings like DoorDash, Robinhood, Oscar, and Compass are trading far below their first-day closes, and a study of SPAC-era tech startups already showed average declines before this reset. Private-market pricing is being dragged down to match.
First-order effects
- Startups mid-fundraise face repriced rounds: investors are passing on deals, cutting valuations, and renegotiating terms with companies that raised at peak multiples.
- The IPO window closing removes the exit path for late-stage backers of recently listed names like Robinhood (-59%) and Oscar (-81%), locking their paper returns down with them.
Second-order effects
- Expect the 2016 toolkit to return: convertible notes, interest-bearing bridges, and investor veto rights like DoorDash's IPO block replace clean priced rounds for companies that can't accept lower marks.
- With private deals unattractive, large firms pivot to where prices have already cleared — the pattern that later showed up as Accel, Lightspeed, Sequoia, and a16z buying public tech stocks while the startup market stalled.
Third-order effects
- If the pattern holds across 2015, 2020, and 2022, private valuations are no longer independent of public multiples — every public-market rout forces a repricing cycle through the $4T startup market within months.
- Down-cycle deal structures (convertibles, blocking rights) shift power from founders to check-writers, and each cycle leaves more late-stage companies carrying structured debt into their eventual exits.
The trend: Private startup valuations are increasingly marked to public-market performance, turning every tech stock rout into a rapid repricing of the venture portfolio.