Somehow June is over in just a few hours, meaning we’re trotting to the third quarter starting line.
Aside from the uncomfortably fast pace at which time flies by, the start of a new financial reporting period is an excellent time to pause, reflect, and work out key questions for the quarter ahead. After all, we’ve seen so much quarterly change lately that each quarter feels like a year.
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Consider Q3 2021, for example. After a lighter second quarter, the IPO market regained a foothold last July, forcing this column to batch public offerings just to stay on top of it. And then Q3 set a huge record in total venture capital investment to boot. Robinhood went public. It was crowded.
The last quarter of 2021 was different. Given both the spike in valuations of many tech companies and their initial decline, last year’s fourth quarter marked a line between the end of a long-running bull market and an upward correction. Q1 2022 continued that trend, but with more bear than bull, and the second quarter – although we have yet to collect all the data – featured a dying IPO market, soaring startup layoffs, a crypto winter and more.
So what will Q3 2022 bring to global startups? Let’s talk about what we follow, expect and maybe even fear.
Since we’re on the cusp of a Friday before a long weekend, I know you’re mentally on the beach with one foot. I promise we’ll be short today. Let’s talk about the three questions we have for Q3:
Will valuations recover?
For a brief period in the final weeks of the second quarter, it appeared that software stocks were rallying in what could have been described as a modest recovery. The Bessemer Cloud Index ETF closed at 25.93 on June 16, before tapping at 31.21 on June 24. That increase did not last.
Since the small boomlet in software stocks, the same basket of companies has now fallen to 27.99 points, returning most of its profits. With the ETF trading as high as 65.51 last year, the recovery was modest at best. That it was also transient almost feels rude.