Spring is in the air, but it is a challenging time to understand which way the wind is blowing in the emerging companies space. On the one hand, we saw a pause in investment activity at the end of 2022 and the first few months of 2023. On the other hand, we have seen a noticeable uptick in investment activity in the last six weeks. Again, on the one hand (a different set of hands), we recently saw a significant market correction in terms of valuations. But on the other hand, we have not seen a lot of the more punitive investment terms, such as multiple participating preferences or pay-to-play provisions that we witnessed in the great recession in 2009 and the post-bubble period in 2001.

So what should we make of all this? Despite the fact that there have been layoffs in many tech companies, unemployment remains at historically low levels. Interest rates have increased, but business activity remains robust. What we see is that while there has been a valuation correction in the private company sectors, good companies with solid business plans are still getting funded. Further, new and interesting companies continue to be created at a strong pace. Perhaps we are in a period of “rational investment” as compared to “irrational exuberance.” Time will tell, but it feels like it may be a good time to invest, as valuations have corrected yet business activity remains strong.

We lead this issue with an interview of Dan DeWolf that was recently broadcast on FINTECH.TV. We follow this with an interesting piece on generative AI (which is at the top of all of our minds). Our company spotlight is on a data-focused company called Coefficient.

Dan DeWolf talks with Vince Molinari on FINTECH.TV about the state of the venture capital markets and why Congress needs to look at some "common sense" legislation that will help drive the economy.