As VCs turn conservative, innovation must still be funded 

THERE is little doubt that it is already happening. The free money days of 2021 are pretty much over for now. According to data compiled by Crunchbase, global venture funding in 2022 totalled US$445 billion – lower by 35 per cent compared to the previous year.

Venture capital (VC) firms are cautious as the cost of capital goes up and investors have less allocation for private equity and venture capital. So, VCs are focusing on keeping their portfolio companies afloat.

These are tough times, and many startups are finding it a struggle to raise the capital to grow and are cutting costs. Some might say it was a bubble waiting to burst; the relentless chase for growth which led to an unrealistic valuation of companies was not sustainable and made little business sense. Unfortunately, funding winters are a natural part of the VC funding cycle that, in fact, help to keep companies more or less on the right track over time.