The Current Landscape
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Year IN RevieW
The Winter of Venture Capital:
Navigating the Inflection Point
In the past 18 months, the venture capital landscape has undergone a significant and unforeseen downturn. Within the confines of co-founding partner Jared Carmel’s office, a plaque bearing the phrase "Winter is Coming" carries more gravitas than a mere nod to popular culture; it encapsulates Jared's conviction that a market correction was looming and necessitated proactive measures. Each year, Jared, crafts an internal recap for the MVP team. This year, we've made the decision to extend this transparency beyond our internal circle and share this message with the public.
Jared's candid letter to the MVP team delineates the harsh realities of the current venture capital terrain. His foresight was validated as an icy chill descended upon the venture capital sphere, catching many off guard with the severity of its impact. This correction can be attributed to various factors, including escalating interest rates, geopolitical uncertainties, inflationary pressures, and a turbulent climate for tech equities. As we retrospectively assess 2023, it becomes apparent that this period marked a pivotal juncture for the VC industry.
2022 and 2023 were tough, and not all venture firms were prepared. Some are now in the unenviable position of facing harsh conditions while being ill-equipped. The venture capital industry has historically experienced boom-bust cycles, and we were ready for this winter.
2023 Challenges
IPO markets remained frozen for most tech offerings, fundraising declined significantly, and startups face challenges in raising their next rounds. The collapse of Silicon Valley Bank in Q1 2023 added to the gloom.
OUR RESPONSE
We were prepared for this winter. Our "Disruptive Companies, Distressed Sellers" theory and Secondary-as-a-Service™ approach started to come to fruition in 2023. With 70% dry powder in MVP All-Star Fund IV, we seized opportunities in primary rounds of promising companies, ensuring we adapt to the shifting landscape.
PORTFOLIO NEWS
Welcoming New Innovations
We highlight five promising companies added to our portfolio this year. Each of these companies brings fresh solutions and perspectives, diversifying our investment landscape beyond our prior holdings.
Hawkeye 360
$86B
A defense technology leader providing Radio Frequency (RF) data analytics
Rapid SOS
$86B
Linking life-saving data from connected devices with 911 and first responders
BlueVoyant
$86B
Proactively defending business ecosystems with industry-leading cybersecurity analytics and technologies
Cohere
$86B
Unlocking unprecedented ease-of-use, accessibility, and data privacy with AI
Platform Science
$86B
Connecting fleets across the nation with the tools they need to take control of their technology since 2015
These changes reflect our commitment to continuous improvement and resilience in the face of challenges. Our dedication to fostering innovation and supporting transformative ideas remains unwavering. We look forward to the positive impact that these strategic shifts will have on our portfolio in the years to come.
THEMES WE BELIEVE IN
Resilience and Growth
We believe cybersecurity, enterprise software, defense technology, and generative AI embrace the synergy of resilience and growth. Together, they empower us to adapt, innovate, and thrive in an ever-evolving world. Dive deeper into these topics and review the reports produced by our research team over the past year on these themes.
RESEARCh HIGHLIGHTS
Outlook Presentation & Enhanced Reporting
Over the past year, we have proudly curated an insightful outlook presentation, featuring industry thought leadership at its forefront. Complementing this endeavor, we've bolstered the capabilities of our research marketing suite, amplifying the reach and impact of our insights. Together, these initiatives stand as testament to our commitment to delivering unparalleled value and innovation to our audience.
Outlook 2023: Volatile. Vulnerable. Valuable.
A presentation that dives into US economic and macro views, liquidity between the public and private markets, strategies from an active CEO, and trends in investing hosted by MVP & moderated by Bloomberg’s Paul Gulberg, CFA.
Anna Wong
Chief US Economist | Bloomberg LP
Paul Gulberg
CFA | Senior Equity Analyst — Financials | Bloomberg Intelligence
Adam Green
Co-founder & CEO | YieldX
Manhattan Venture Research
We enhanced our research suite offering industry insights across six categories.
Liquidity Watchlist
A proprietary list of top 25 promising private companies in the TMT space that are candidates for a liquidity event – either an IPO or a merger - within the next 12 to 18 months.
Venture Bytes
A monthly insight report with two lead articles, our takes on topical news items, selected funding rounds, and exits
Initiation Reports
A monthly insight report with two lead articles, our takes on topical news items, selected funding rounds, and exits
Quick Takes
In our Quick Take reports, we highlight the core thesis, key differentiation, and market opportunity, along with the potential investment risks.
Industry Sector Reports
This report serves as a comprehensive analysis, aimed at identifying and evaluating the dynamic landscape of startups and emerging ventures.
Fact Sheets
A concise and informative overview, designed to provide essential insights into privately-held companies.
CONCLUSION
2023 Horizon
The New Landscape
Winners and losers are clearly defined in this altered competitive landscape. Concentrated power has shifted to visionary firms with dry powder, allowing them to cherry-pick bargains in the most promising companies. On the flip side, some once-prominent firms and unicorns have faltered.
The Road Ahead
Our experience positions us to thrive in turbulent times. MVP All-Star Fund V, our latest fund, is built to seize opportunities that present themselves when markets are dislocated as they are today. We have a successful track record of executing in these market conditions along with resilience.
Reasons for Optimism
Dry powder reserves, M&A interest from tech giants, and shifting focus from survival to opportunities bring cautious optimism. Startup founders are gaining confidence in a warmer investment climate.
Secondary Market Opportunity
The secondary market looks promising in 2024, with high demand for liquidity and favorable dynamics for deals. MVP is poised to capitalize on this opportunity. This is across both GPs LPs and other shareholders.
In Conclusion
While the road ahead may have twists and turns, we remain confident in our ability to navigate. Stick with those who anticipate the challenges and opportunities of stormy seas.
Together, we will continue to shape a brighter future for technology and innovation.
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