From roughly Q1 2023, there will be a 1–2 year period (through about Q1 2024–Q1 2025) during which companies that raised venture funding in the 2020–2021 peak and are now running out of cash, without sufficient revenue growth or with high burn, will experience distress: specifically, most will face down rounds, restructurings, or will be unable to raise new capital on acceptable terms.
“I think there's going to be a 1 to 2 year period of distress for all these companies that raised in the peak 2020, 2021 and are now running out of money, and they don't have enough revenue, they're not growing fast enough and or their burden is too high. And all of those companies are going to be facing down rounds or restructurings or they're not going to be able to raise well.”
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Explanation
Startups that raised at 2020-2021 peak valuations broadly faced a multi-year period of down rounds, restructurings, and difficulty raising through 2024.
Over the 1–2 years following early 2023 (approximately through early 2025), "bubble" startups that raised at peak 2020–2021 valuations will be in a general period of financial distress, while at the same time there will be a relative resurgence in funding activity and opportunity for newly founded startups.
“So we're going to have probably a 1 to 2 year period of distress for all those bubble companies. While we have a little bit of a resurgence for new companies.”
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Explanation
The predicted 1-2 year distress period for bubble-era startups, alongside relatively better conditions for new companies, broadly played out through 2024.
Brad Gerstner
Partly Right
attribution: medium
00:32:53
ventureeconomy
Of the roughly 1,000 private "unicorn" startups that existed at the end of 2021, essentially all of them (approaching 100%) will eventually raise capital in a down round relative to their peak valuation before the current valuation reset is complete.
“remember we had a thousand unicorns at the end of 2021. And I've said 100% of those are going to do a down round. And we're still in the early stages of that reset to occur.”
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Explanation
Many but not literally all 2021-era unicorns took down rounds; the '100%' framing was an overstatement even though the broad trend of valuation resets was real.
Brad Gerstner
Right
attribution: medium
00:55:48
marketsventureeconomy
Starting in the near term after August 2023, there will be a new wave of technology IPOs, including both high‑quality ('first class') offerings and a significant number of 'down‑round' IPOs (companies going public at materially lower valuations than their last private rounds).
“the world's normalized fear of Covid has passed, hyperinflation has passed, etc. first class IPOs are coming and a bunch of down around IPOs are coming.”
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Explanation
2023-2024 saw a wave of tech IPOs including higher-quality offerings (Arm) and several down-round IPOs (Instacart, Klaviyo) at reduced valuations.
Brad Gerstner
Partly Right
attribution: medium
00:58:07
marketsventuretech
In the IPO market for tech and growth companies: (1) During Q4 2023 there will be roughly 5–7 sizable IPOs; (2) During Q1 2024 there will be closer to 10 sizable IPOs; (3) By the second half of 2024, the IPO market will be materially more open/active than in early 2023.
“I don't think it'll look like a light switch, but it will be. I think we're going to see five, six, seven IPOs, good size IPOs in Q4. We'll probably see closer to ten in Q1. And then it will start opening up in the back half of next year”
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Explanation
The IPO market did gradually reopen through late 2023 into 2024 as predicted, though the specific quarterly deal counts cited were only roughly approximate to what occurred.
From mid‑2023 forward, the software and startup sector will experience an ongoing period of distress and pain (e.g., weak demand, layoffs, pressured valuations) that continues beyond the one year of 'software recession' already experienced up to that point.
“I think we're in for a period here of just continued distress and pain, even though the market has sort of normalized or stabilized. Now, again, I just think we've been in a huge software recession for the last year.”
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Explanation
The software sector continued to experience distress (layoffs, pressured valuations, slower growth) well beyond mid-2023 into 2024.
Given exceptionally high current sea surface temperatures (including ~90°F off Florida and record North Atlantic warmth), the upcoming Atlantic tropical storm and hurricane season following August 2023 will have an elevated probability of severe storms and hurricanes compared with historical average seasons.
“there was 90 degree ocean temperatures off the Florida coast. The sea surface temperature in the North Atlantic is the highest it's ever been by, I think seven. ... the sea surface temperature, which increases the probability of severe tropical storms and hurricanes in the coming season.”
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Explanation
The 2023 Atlantic hurricane season was above-average with 20 named storms, consistent with the elevated risk predicted from record sea surface temperatures.
As predicted on the All‑In podcast around early 2023, by the end of 2023 the dominant macro narrative in the U.S. will have shifted from inflation to disinflation (i.e., public and media discussion will focus more on slowing or falling inflation than on high or rising inflation).
“Bloomberg's headline today was the Summer of disinflation. And we said on this pod six months ago, we said it's more likely by the end of 2023, we're going to be talking about disinflation than inflation.”
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Explanation
By the end of 2023, US inflation had fallen substantially and 'disinflation' became the dominant macro narrative, as predicted.