Are VCs Throwing In The Startup Towel?

Venture capitalists can be a cagey bunch, and now, they are a cautious bunch. The group, noted Bloomberg on Thursday (April 7), made fewer investments within the last quarter in the United States and actually loaded relatively more money into what Bloomberg termed as “mature private companies,” citing PitchBook Data.

In other words, back the horse that has been in the race longer than the others. That means that once-hot startups may not be as enticing for investors as they may once have been, with the implication that access to capital may be a bit scarcer. U.S. VC firms slipped in terms of their own fundraising by more than 9 percent, and the number of venture funds that closed grew by 19 percent.

As the data shows, the first quarter of this year saw funding rounds off by 12 percent, sequentially, over the fourth quarter of last year. The total investment funding came in at $17.7 billion, which also saw half of that amount go to later-stage technology firms.

What’s holding back the investment dry powder? Worries over valuations, namely valuations that have been rather high. The mutual fund industry, or at least a few mutual funds, has been souring a bit on investment values, marking them down on their books. And no tech company debuted on the public markets within the first few months of the year.

The U.S. is a dry patch, where others may be a bit more opportune. VC investment activity was up 50 percent year over year in China and India.

Among the bigger deals in the quarter was Lyft, which grabbed $1 billion in January. Snapchat, the messaging app, pulled in $175 million in financing via Fidelity last quarter, reported the newswire.