Investors Brace for Nasdaq Selloff to Hit Giddy Startup Valuations

  • Plummeting public markets in 2022 could hit the valuations of VC-backed tech. 
  • The tech-led Nasdaq is down more than 13% this year with private investors expecting an impact.
  • Fintech is still seen as a resilient sector by investors despite major IPOs disappointing. 

January has been a rough month for the world’s biggest tech companies with Apple, Amazon, Tesla, and Microsoft all contributing to what has been described as a correction of the tech-heavy Nasdaq.

Investors fear rising inflation while pandemic darlings like


and Peloton were hammered due to underwhelming subscriber numbers and a temporary halt on production respectively. As a result, the Nasdaq 100 is down as much as 13% in the year to date.

Now, there are signs that investor uncertainty toward tech stocks may begin to bleed into the private markets. Venture investors pumped a record $643 billion in private startups last year, double that of 2020, in a bonanza for private startups that saw their valuations soar.

However, the start to 2022 has started to indicate the brakes might soon be applied to startups.

“Everything in the public markets puts downward pressure on private ones,” one London-based VC partner told Insider, who also said that the likely losers would be late-stage and pre-IPO companies. Another London-based investor suggested that VCs will be wary of the tech sell off indicating a rotation away from growth to value, which could continue for an undefined period of time. 

Many major funding rounds have already been announced at the start of 2022, including major deals for Qonto and Back Market in France, a $40 billion valuation for London fintech, and US NFT minting company OpenSea raising $300 million, to name but a few. However, most of these deals will have been negotiated last year meaning there will likely be a lag between this current sell-off and its impact on private funding. 

“The declines haven’t hit the private markets yet, but it’s coming,” Jules Maltz, a partner at Hopin and Coinbase-backer IVP, told Insider. “I expect private investors to be more discerning on valuation going forward and the days of raising a follow-on round 3-6 months after the last round may also be ending.”

The IVP partner added that the most valuation pressure would come in “later-stage and pre-IPO rounds” with Series A and B rounds for

fintech startups

like to “stay the strongest.”

Maltz isn’t alone in thinking that fintech, one of the biggest sectors for VC investment, will be resilient despite a possible downturn. One London-based fintech investor said the finance industry could serve as something of a hedge given its somewhat counter-cyclical role. 

Despite that, companies looking to go public this year may not be so sure. The performance of some of last year’s biggest fintech debuts has left a lot to be desired despite booming equity markets.

For example, trading app Robinhood’s stock is down around 63% since its public debut while card issuer Marqeta, which counts Square and Klarna as clients, has seen its value drop 62% since its June 2021 float. Similarly, crypto company Coinbase is down around 44% while in Europe, cross-border payments fintech Wise is down around 36% since it went public in London. 

The obvious caveat is that not all companies are created equal from a hype vs. potential standpoint (see Peloton stock for details) but the biggest names in fintech looking to go public, such as Klarna, Stripe, or, will still find ample demand, investors told Insider.

In the short to medium term, VC investors may see a bifurcation in prices from more traditional hotspots like payments towards sectors like crypto and Web3 where there is clear potential upside, with Maltz adding that there is a clear “race” across tech to invest into the volatile but exciting world of blockchains and DeFi.

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