Summarize this content to 2000 words in 6 paragraphs in Arabic Unlock the Editor\u2019s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Two years ago, US venture capital giant Sequoia issued a stark warning to tech start-ups. Recovery from the market downturn would be slow. The kind of assistance that supported the economy in the pandemic would not be repeated and cheap funding was no longer an option. The bleak prognosis was correct. The US start-up sector is still wading through the most significant drawback in funding since the dotcom crash.\u00a0The pile of unallocated capital, aka dry powder, is vast. Data from Silicon Valley Bank puts the total at $277bn, while the National Venture Capital Association says it is closer to $312bn. Either way, it is a record high and more than double the sum available in the dotcom bubble \u2014 adjusted for inflation. Caution about allocating funds means the ratio of dry powder to investment is lower. The low interest rates that drove nearly $27bn into crypto start-ups in 2022 and turned robot pizza start-up Zume into a $2bn company are gone. In the first quarter of 2024, US VC funding deals fell to the lowest point since 2017, according to PitchBook. With a diminishing prospect of rate cuts this year, this is likely to continue. In public markets, valuations for the largest tech companies have already rebounded. High multiples on which they trade have pushed the broader S&P 500 Shiller price-to-earnings ratio, aka the cyclically adjusted p\/e ratio (CAPE), up from less than 30 times in late 2022 to 34 times.\u00a0\u00a0Yet the start-up downturn continues. Startups blame an inhospitable IPO market and regulators constraining M&A. Without exits, it becomes more difficult to persuade investors to part with their money. It is taking longer for VCs to close new funds. Over a third closed below their target last year, according to Silicon Valley Bank data.New VC firms are having the toughest time. By the end of last year the US had 3,417 VC firms,\u00a0says the NVCA. That\u2019s up from about 1,000 in 2008. A squeeze on funding could lead to a reduction. There is a good reason for investors to be wary about allocating their money. The start-up sector needs to take responsibility for never fully pricing in the downturn that hit public markets. There have been bankruptcies, including Zume, but many start-ups conserved cash and opted not to raise funds at lower valuations.\u00a0When share prices fell, their valuations remained ostensibly the same. Without a reality check, VC powder will remain dry. elaine.moore@ft.com<\/p>\n","protected":false},"excerpt":{"rendered":"
Summarize this content to 2000 words in 6 paragraphs in Arabic Unlock the Editor\u2019s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Two years ago, US venture capital giant Sequoia issued a stark warning to tech start-ups. Recovery from the market downturn would be slow. The kind of<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[63],"tags":[],"class_list":{"0":"post-13314","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-tech"},"_links":{"self":[{"href":"https:\/\/globetimeline.com\/ar\/wp-json\/wp\/v2\/posts\/13314","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/globetimeline.com\/ar\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/globetimeline.com\/ar\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/globetimeline.com\/ar\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/globetimeline.com\/ar\/wp-json\/wp\/v2\/comments?post=13314"}],"version-history":[{"count":0,"href":"https:\/\/globetimeline.com\/ar\/wp-json\/wp\/v2\/posts\/13314\/revisions"}],"wp:attachment":[{"href":"https:\/\/globetimeline.com\/ar\/wp-json\/wp\/v2\/media?parent=13314"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/globetimeline.com\/ar\/wp-json\/wp\/v2\/categories?post=13314"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/globetimeline.com\/ar\/wp-json\/wp\/v2\/tags?post=13314"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}