Future Retirement Success
  • Politics
  • Business
  • Investing
  • Stocks
  • Politics
  • Business
  • Investing
  • Stocks

Future Retirement Success

Business

Cash crunch could wipe out venture-backed firms this year, Morgan Stanley warns

by March 29, 2023
March 29, 2023
Cash crunch could wipe out venture-backed firms this year, Morgan Stanley warns

Start-ups backed by venture capital (VC) could be wiped out in droves this year as cash dries up and investors turn off the taps, analysts have warned.

The venture capital sector globally has been buffeted by rapid interest rate hikes and wild market gyrations in the past 12 months, with investors dramatically scaling back investment and companies slashing their valuations to raise money.

Venture investment in the fourth quarter of 2022 plunged to less than half of the frothy peaks recorded in the final three months of 2021, as firms raised just £75.6 billion across 7641 deals.

In the US, analysts at Morgan Stanley have now warned that “challenges abound” and the average VC-backed firm could face collapse this year.

“At current cash burn rates, the median VC-backed company will run out of cash in [the second half of this year],” the bank’s analysts said in a note yesterday.

“Broader impacts could be significant, VC-backed companies employ upwards of five million people, and drive revenue in important public equity segments,” they warned.

Limited partners, which back VC investors with funds, face over $500bn of capital calls at a time when portfolios had been marked down in value, they added.

The warnings come amid a tectonic shift in strategy for start-ups and VC investors, who have soured on the high-growth cash burn strategies that dominated for the past decade.

Investors have placed a premium on profitability and called for start-ups to rein in ‘growth at all cost’ business plans.

Read more:
Cash crunch could wipe out venture-backed firms this year, Morgan Stanley warns

0
FacebookTwitterGoogle +Pinterest
previous post
Founders Forum in talks to take over Tech Nation’s functions as wind-down date looms
next post
Next buys Cath Kidston brand for £8.5m with remaining UK stores to close

You may also like

London’s Groucho Club set to open new club...

March 14, 2024

Tech tycoon Mike Lynch missing after yacht sinks...

August 19, 2024

Missing older workers ‘weigh on economy’s growth potential’

February 3, 2023

Bordeaux & Burgundy achieves £2m growth with SaaS...

February 2, 2023

72% of UK firms face skills gaps, turn...

September 13, 2024

Millions of gig workers and people with side...

October 12, 2023

Somerset-based family cheese maker expands globally with £30M...

November 3, 2022

Farmers accuse government of ‘betrayal’ over inheritance tax...

November 19, 2024

Signs of confidence returning to UK’s 5.5m SME’s

May 30, 2023

Unveiling the Secrets of Success with Gina Battye,...

March 22, 2024

    Get free access to all of the retirement secrets and income strategies from our experts! or Join The Exclusive Subscription Today And Get the Premium Articles Acess for Free

    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Recent Posts

    • Trump warns of ‘serious consequences’ if Elon Musk funds Democrats

      June 7, 2025
    • Musk jokes about reconsidering stance on Big Beautiful Bill after Schiff’s praise

      June 7, 2025
    • Musk deletes explosive posts about Trump and Epstein files

      June 7, 2025
    • House witness flips script on Dem who ambushed him during hearing with unearthed tweet: ‘Iceberg is ahead’

      June 7, 2025
    • Call with China’s Xi, and Trump-Musk exchange fueled barbs during 20th week in office

      June 7, 2025
    • Trump’s conservative allies warn Congress faces critical ‘test’ with $9.4B spending cut proposal

      June 7, 2025

    Categories

    • Business (8,152)
    • Investing (2,019)
    • Politics (15,568)
    • Stocks (3,136)
    • About us
    • Privacy Policy
    • Terms & Conditions

    Disclaimer: futureretirementsuccess.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2025 futureretirementsuccess.com | All Rights Reserved