Hedge Funds Pumped Up Silicon Valley. Now They’re Pulling Out.
March 24th, 2016Just in time for…
Via: Bloomberg:
In recent months, venture capital firms and mutual funds have become choosier about which technology startups they’re prepared to back. Now hedge funds, after helping push valuations to dot-com-era heights, are getting more picky, too.
Last month, hedge funds participated in the fewest number of venture capital rounds in U.S. tech companies since 2013, inking just two deals, according to research firm PitchBook Data Inc. Even Tiger Global Management LLC, an early backer of Facebook and LinkedIn with $20 billion under management, has pulled back. Smaller firms are getting out altogether.
Like VCs, hedge funds are more circumspect because some startups have failed to live up to their billing. Plus, in the wake of several disappointing tech IPOs, many of the most promising firms are choosing to stay private longer, meaning it takes longer to cash out. Investors’ stinginess is forcing startups to cut costs, fire workers and accept more stringent terms when raising money.
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