Scores of newly public companies worth less than they raised from VCs

The IPO and SPAC boom of recent years was a once-in-a-decade opportunity for investors in tech startups to cash out. Now, public investors who bought in are paying the price.

Here’s a stark example of how the sell-off has played out: More than 140 VC-backed companies that went public in the US since 2020 have market capitalizations that are less than the amount of venture funding they raised, according to PitchBook data.
 

 

The analysis underscores the punishment that has been doled out to tech companies whose growth prospects have diminished. VCs are wrangling with how to price startups amid the volatility, and the ripple effects are being felt even in seed and Series A rounds.

Newly public companies have performed far worse than the broader market. PitchBook’s index of VC-backed IPOs has declined 57.7% this year, versus 24% for the S&P 500.

WeWork sports the largest difference between VC raised and current value: The company took in nearly $9.9 billion and now trades at a market cap of $3.7 billion.

Nearly a quarter of the companies that are worth less than their VC capital raised are headquartered in China—a reminder of the effect of Beijing’s regulatory crackdown on sectors ranging from fintech to edtech. Online grocer Dingdong Maicai and education company 17zuoye are each worth hundreds of millions of dollars less than they raised from private backers.

Mobility tech companies have also been hit hard. Electric carmaker Faraday Future is now valued in public markets at just $710 million after raising more than $3 billion in venture funding. Bird Rides raised nearly $1 billion from investors and now has a market capitalization of about $150 million.

Health insurer Oscar is now worth about half of its VC capital raised. Fellow insurtechs Root Insurance, Hippo and Metromile are also worth far less than their venture backers invested.

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