We see serious price inflation in the start-up market and I do wonder when it is going to peak. We might not be there yet but probably close.
Price matters. Buying high is never a good idea. Nor is buying at the top of a market. Buying high at market tops has long-term consequences. So, there is danger ahead.
If price increases flatten or reverse, it will happen at the later stages first. You will see IPO prices drop first, then pre-IPO, then the later stage and eventually the early rounds.
Money is no longer cheap and with each Fed rate hike getting more expensive. Institutional investment capital won’t be nearly as plentiful as it has been. More investment capital will be going into bonds as their interest rates move higher. For start-ups, this might be the top of the market. Prices are still going up but should soon peak. I believe we’re entering a dangerous time for start-up investors.
IPO prices are already under pressure. Many start-ups are seeing their prices fall once they join public exchanges. Lack of capital will only make those drops bigger.
Sven Franssen