A VIX Volatility Index -graph on the floor of the New York Stock Exchange (NYSE) in New York, US, on Wednesday, March 19, 2025. Federal Reserve officials kept their benchmark interest stable for a second consecutive meeting, although they are the expectations for slow -rayer.
Photographer: Michael Nagle | Bloomberg | Getty images
Already under pressure in the midst of the routing of the stock market market of last week of the MultiTrillion dollar, the risk capital industry is now confronted with an even more difficult prospect in the midst of constant uncertainty due to American rates.
A lack of first public offers or mergers and acquisitions – in combination with the trend that startups now stay private for longer – has enormous pressure on VC funds. Venture capitalists can usually only realize a profit on their investments when a company becomes public or sold, so that they can pay.
Only a few days after the US President Donald Trump had announced plans to impose so-called mutual rates on a piece of countries, it turned out that two large technical unicorn-finish company Klarna and ticketing platform are postponing Stubhub plans to become public because of a sharp dip on the global Equity markets. In particular, both companies had submitted initial public prospectuses in recent weeks.
“Nobody can go out with this turbulence,” Tobias Bengtsdahl told, a partner at VC company Antler’s Nordics Fund, Thursday at CNBC. “When the market drops as it has now … you have to make the same prediction on private markets.”
Tough prospects for VC
Because private markets do not move in the same way as the government markets, it becomes more difficult for technical startups to go and attract capital – from the stock market or risk capital – because they can see their valuations fall.
“We are not only changing the ratings of our startups because the stock market is falling,” said Antler’s Bengtsdahl. The ratings of startups supported by the company only tend to change when they increase a new equity round.
“That currently has a huge impact on raising funds and startups that are collected from multi -phases investors,” he added.
That could quickly make it more difficult for startups and mainly to attract growth motors-to-use risk capital. Later-phase companies are usually more exposed to swings on the public markets than startups at an early stage, since they are closer than most when reaching the IPO mile pole.
Private markets are less liquid than public markets, which means that investors cannot easily sell shares. The most important way in which private equity owners sell a part or all their interests in a company is also known as an “exit” via an IPO or mergers and acquisitions. The other alternative is to sell shares to another investor in the secondary market.
“[General partners] will be under pressure from [limited partners] To ensure that these outputs happen, “said Alex Barr, partner and head of the management company Sarasin Bread Street of the private market fund, CNBC told Thursday, and added that IPOs remain a” very fickle beast “.
General partners are investors who manage a venture fund, while limited partners are institutional investors-such as pension funds and hedge funds or people with a high net value who deposit money into funds.
Investing limited partners in a venture fund in the hope that they will generate a considerable return during his life, which can extend up to 10 years. Funds at an early stage invest in the hope that a few startups in their portfolio will generate the kind of return results such as such as Uber And Spotify Harvested for their privatebackers.
Hope for Europe Tech?
On the other hand, the uncertainty can be a chance for Europe’s private technical startups to shine, according to Sanjot Malhi, a partner at the London -based risk capital company Northzone.
“The short-term break in IPO activity is a natural response to recent market turbulence, and we can expect to have more clarity about business positions as soon as a sense of stability has been restored,” Malhi told CNBC.
He added that: “If talent and liquidity find the American environment less hospitable, that electricity has to go somewhere and Europe has the chance to take advantage.”
Christel Piron, CEO of Startup Investor PSV Foundry, said CNBC that the “silver lining” of uncertainty is created by rates is how “Europe comes closer together in the midst of turbulence.”
“We see more founders choosing to stay here and scale up, driven by a growing sense of responsibility to help build a resilient European technical nation,” said Piron.
According to Northzone’s Malhi, there can also be other routes to leave for venture capital funds – including mergers and acquisitions.
“If the global IPO window limits in the longer term, we would still expect a strong M&A landscape, because stakeholders seek ‘problem-solving’ outputs,” he said CNBC.
He added that this increases the risk that companies are forced at the late stage to be forced into so -called ‘down rounds’, where startups raise money in the event of reduced valuations.
“We can also see an increase in fundraising in the later internship, because companies want to bridge the capital gap until they can find such opportunities, albeit with possibly lower valuations,” Malhi said.
Further on, investors keep hope for Big Tech IPOs to return to Trump’s presidency later. VCS had calculated on the Trump administration, which resulted in a new life of IPO market.
“Many people think that Trump has promised them to open the IPO market and open the M&A market,” said Bengtsdahl of Antler.
“It is now six months after his term of office,” he added and noted that the market can tolerate the failure of the new government to meet this promise in its early days. “But people demand that it happens within its term.”