The tech sell-off has some venture capitalists worried the good times may be coming to an end
Summary
Private companies such as Stripe and Klarna saw their valuations swell to the tens of billions of dollars, aided by a flood of cash as a result of ultra-loose monetary policy and the acceleration of digital adoption during the Covid-19 pandemic. Now, with the Federal Reserve hinting at plans to hike interest rates in a bid to cool rising prices, investors in high-growth tech firms are getting cold feet. The Nasdaq Composite has fallen over 15% so far this year as fears of tighter policy has led to a rotation out of growth stocks into sectors that would benefit from higher rates, like financials. Hedge fund giant Tiger Global became a significant driving force in the market, backing tech firms at much earlier stages than before as traditional investors sought out returns via alternative assets. Brown thinks some of the reaction in both public and privately-traded tech stocks has been overdone, however, and that most start-ups should be able to weather a changing economic cycle given the mountain of cash available in private markets.