SVET Investor Sentiments Update (July 5, 2022)
Here’s my brief update of the prevailing investor sentiments (including, those in the Silicon Valley):
Overall, markets participants gloom-and-doom dispositions have not been fundamentally negated, yet.
All key negative macro-factors playing into the indefinite prolongation of the current bear market remain unchanged: FED is set to suppress US consumers demand as aggressively as it seems to be politically feasible, the European war is going on and China is largely in a lock down state.
Moreover, there have been added to that four additional bearish impulses — one geopolitical, one economic and two related to crypto markets, specifically:
1) Russian military forces taking hold of the important strategic region in Ukraine, which, combined with a growing tension between two major nuclear powers and a persistent Ukrainian resistance backed (although ambivalently) by the EU, almost guarantees the continuation of all military atrocities till, at least, the winter of 2023;
2) A growing certainty of the upcoming US (and global) recession, confirmed by several largest institutional investments powerhouses (including JPMorgan);
3) Continuing unraveling of under-collateralized cryptocurrencies lending centralized platforms (Celcius) and over-leveraged crypto-funds (3AC);
4) The approaching regulatory crack-down on all non-KYC crypto-currencies, heavily aggravated by largely unsubstantiated fears of the Russian gov using crypto to avoid sanctions. Those concerns have been accentuated by strong anti-Russian sentiments widespread among EU bureaucrats as well as a significant part of EU population.
Understandably, Valley based private capital holders are now patiently sitting on their hands expecting private equities (as well as all other categories of risky assets, cryptocurrencies including) to correct further on the downside, providing them with a better entry position.
Additionally, the abrupt reduction of VC financing flowing into blockchain startups affects most platforms ability to retain old (not to mention getting new) users.
On a positive side, however, many businesses have experienced an influx of devs requests for jobs with their remuneration appetites significantly moderated by looming low-employment perspectives, which now threaten to affect event always job-lucrative crypto-space.
Additionally, we, in the Valley, witness some rejuvenation (although a very slow one) of meetups activities both in crypto and non-crypto spaces, driven, mostly, by psychological factors. After most of restrictions on social interactions lifted off, many professionals are actively using all available grouping opportunities tired of the prolonged self-isolation period.
That might serve as an early impulse for a risk-tolerant part of VC community to join that micro-trend in an attempt to get discounted deals from most promising startups founders.
Overall, however, given the severity of underlying macro-conditions it might take the next three to six months for any certain indications of investment climate improvements to be manifested.