Volatility in the public stock markets is setting the private markets up for uncertainty this year.
“In general, the public market and the volatile nature of that does not create a good environment for the private markets in terms of valuation,” said Himalaya Rao, managing director of the seed-stage fund Black Founders Matter.
While stocks briefly showed signs of recovery earlier this week, they fell again Thursday after Facebook parent company Meta shed $250 billion in market value in a single day following a quarterly earnings report that didn’t impress investors.
Late-stage companies are affected more by the activity of the public markets because they’re closer to reaching that stage.
When their stock is up, they’ll look at a slew of companies, but when shares are down they tend to be more selective.
“At current levels, I think what’s going on in the public markets is healthy,” Flager said.