Beacon Macro View: Q1 2022
As we have all seen by now, the much-anticipated correction in the public markets is well underway with cloud-based companies driving the BVP Index down 50% from its peak in Q1/21. Few investment professionals were surprised by the correction, even fewer will admit it and none will not have, by now, a plan in place of how to weather it!
Capital markets are currently experiencing the longest extended period of high volatility since the 2008 financial crisis. Having weathered Covid, the markets now have a smorgasbord of issues to tackle: geo-political tension, the war in Europe, slowing GDP growth, and high inflation. European markets are down 17% and the US S&P 500 is 18% from its 2021 highs. Tech-focused hedge funds like Tiger Global saw the value of their holdings tumbling by 34% in Q1, and the bellwether of the innovation economy, ARKK, dropped 60% from its peak.
Are the private markets decoupling from the public ones or are they following suit?
The turbulence in the public markets is trickling down into private markets though not (yet) everywhere in the world. Global venture investments reached $160 billion in Q1/22, 7% higher than the same quarter last year but 13% lower than the $184 billion invested in Q4/21 — an all-time record-breaking quarter.
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