The cycles are extreme in venture. Back in 2005 and 2006, we saw an even wilder time in venture. Deployment doubled in 2005 to $47bln up from $23bln in 2004, and then tripled to $154bln in 2006 from $47bln in 2005. Those are deployment explosions in excess of what we saw in 2021 and 2022. Venture capital goes through cycles, and we’re coming out of one now which is a good thing. There will be other big up cycles in the future, as well as equally large down cycles.
Timing is uncertain. When will that dry powder get deployed? Is 2024 going to be a bonanza given deployment in 2023 is lighter relative to 2022 and 2021, but dry powder is so high? It’s impossible to tell. Dry powder has hit a new high every year since 2012, but deployment has not grown consistently with dry powder. The 2017 and 2018 periods really stand out as the level of deployment in those years ($13bln each) was a low not seen since 2011 ($15bln) despite ever increasing dry powder. Ignore discussions of ‘dry powder’. There is no relation between capital on the sidelines and velocity of deployment.